Bitcoin is Money: The Unique Power and Risk of Bitcoin in Self-Custody

Bitcoin is a bearer asset, meaning you can directly own and control it without relying on any institution. This is one of its most powerful features, but also one of its most demanding responsibilities.

One of Bitcoin’s defining characteristics is that it is a form of money you can custody and send anywhere in the world without relying on a financial intermediary. It is truly permissionless and fully controllable, but with that sovereignty comes significant responsibility.

As Bitcoin appreciates and gains global awareness, investors must consider new threat vectors when managing their holdings. Greater adoption and higher prices are positive for long-term holders, but they also attract unwanted attention and increase risk.

Why Physical Attacks are Becoming More of a Concern

When Bitcoin was worth $1,000 or even $10,000, there was little incentive for bad actors to orchestrate physical attacks on its owners. However, as the price rises above $100,000 and beyond, the risks escalate. Physical threats are becoming increasingly prominent, and the Bitcoin community is beginning to acknowledge the severity of this issue.

The so-called “$5 wrench attack” refers to the idea that someone could physically coerce you into handing over your Bitcoin. While often cited jokingly, it minimizes a serious concern. We are now in an era where people store life-changing sums of money within reach, sometimes in their own homes. This is not unlike keeping large amounts of cash or gold at home. There is a reason why most people do not do this. It invites violence.

You cannot Rob a Brokerage Account, but Bitcoin is Different

Unlike cash or gold, Bitcoin leaves a public footprint on the blockchain.

Sophisticated criminals can use blockchain data to identify wallet ownership patterns and make educated guesses about who controls which wallets. The pseudonymous nature of Bitcoin does not make it immune to targeting. In fact, forensics, referred to as chainalysis, can sometimes make it easier to track than traditional forms of wealth.

Now consider this. If someone were to attempt to access the portfolio of a wealthy investor at their home, they would likely fail. His assets are protected by institutional controls. You cannot simply rob someone of their brokerage or bank account holdings with a threat. But Bitcoin can behave differently if it is stored in a way that relies entirely on personal security.

This is the critical tradeoff. Bitcoin empowers individual sovereignty, but that same strength can become a weakness if custody is not handled with care. Personal safety and the safety of one’s family become a critical part of the equation.

Recent Breaches Highlight Rising Risks

Reports of kidnappings, ransoms, and even physical harm are growing. Though still uncommon, there have been documented cases of violence, including finger severing, as reported in outlets like the Wall Street Journal.

These attacks often target executives, public figures, or people in the crypto space. But many incidents involve everyday investors whose information has been leaked in data breaches.

Exchanges and custodians have experienced numerous compromises over the years, with customer names, emails, addresses, and balances exposed. This has occurred in the United States, Europe, and Latin America.

One recent example involves Coinbase, where overseas employees were bribed to hand over sensitive client data. While the company claimed the incident only affected 1% of its users, that represents 100,000 customers, and it is far from the only breach.

This compromised data is now being used to orchestrate real-world attacks. It is no longer just about online hacks and social engineering. These cybersecurity issues now translate into real world physical security concerns.

The Custody Dilemma: Personal Control Versus Personal Risk

As a result, many investors are reassessing how they custody their Bitcoin. They are no longer comfortable keeping large amounts within their personal reach. However, they also do not want to rely on a single custodian or exchange. We explored this tension in our article on Bitcoin custody, where we compared self-custody with third-party custody.

No custody model is perfect. But for clients who want to reduce their exposure to coercion or physical risk, multi-institution custody is a compelling option.

How Onramp’s Multi-institution Custody Reduces Personal Threat Exposure

Multi-institution custody introduces robust verification and controls to safeguard you, your family, and your Bitcoin wealth. Rather than having keys in your direct access and control, three independent institutional-grade custodians protect your wealth.

Your Bitcoin is secured in a segregated vault, and any movement of funds out of your wallet requires you to move through a robust, standardized process with two independent institutions.

This structure is designed to withstand physical coercion. If someone tries to force you to send Bitcoin, they will quickly discover that you cannot do so on your own. You do not have the keys, and you cannot override the safeguards in place.

Even if attackers were to access your login credentials, they would encounter multiple layers of verification and oversight. Every withdrawal request is subject to review by two separate businesses, each with protocols to detect coercion and ensure the client is acting of their own free will.

We explain this in more detail in our article, "How Does Multi-Institution Custody Work?" but here are the key points.

• Clients must verify their identity and intent with two independent institutions via a live video verification call
• After the call, each institution conducts checks to confirm that the client is not under duress
• Withdrawals are intentionally structured to take 24-48 hours to add time-based protection

In addition, Onramp clients can opt for a seven-day delay between key signatures. For example, Onramp can sign first on your behalf, but BitGo cannot sign until seven days later. This delay is specifically designed to reduce the risk of rushed decisions under pressure.

Private clients can also opt for in-person verification. That means showing up at an Onramp branch in person to confirm their identity and authorize large movements of capital.

We believe these risks are growing and have built protections with those future threats in mind.

The inherent structure of multi-institution custody dramatically reduces the likelihood of a physical threat, resulting in the loss of a client’s wealth.

Building a Bitcoin Custody Plan that Addresses Your Concerns

Many of us were initially drawn to Bitcoin for the sovereignty and control that self-custody offers. But as the price continues to appreciate and the threat landscape evolves, investors are realizing that institutional-grade custody is not just a convenience. It is a necessity for long-term protection.

We are not suggesting that everyone should avoid self-custody. For many, it remains a powerful and important way to hold Bitcoin. But we do believe it is worth reassessing your specific risks, responsibilities, and concerns as conditions change.

It may not make sense for every investor to hold a significant portion of their Bitcoin in self-custody. For some, diversifying across custody models can provide better protection for both their assets and their families. Multi-institution custody can play a role in reducing risk, improving access, and adding resilience to a long-term Bitcoin strategy.

In addition to reducing personal risk, multi-institution custody also simplifies inheritance planning and legal continuity. These safeguards help ensure that your Bitcoin is not only protected today but also accessible to future generations.

This is not about choosing one approach over the other. It is about building a custody plan that matches your goals, your capabilities, and your comfort with the real-world risks involved.

Multi-institution custody is quickly becoming the standard for investors who want to secure their Bitcoin while preserving peace of mind amid increasing threat vectors.

If you are evaluating your custody setup and want help thinking through the trade-offs, our team is happy to walk through your options. Whether you choose self-custody, multi-institution custody, or a combination of both, we are here to help you think through and design a custody plan that works for your needs and your long-term vision.

Our team is here to support you in your decision-making process. We’ve guided thousands of clients and can help you make the right decision for your circumstances - book a consultation.