CryptoCurrencies – No Keys No Coins

Whoever controls your private keys controls your crypto. If that’s not YOU, that’s not good.

So what does this really mean?

Let’s first look at Fiat currencies like USD, ZAR or any currency for that matter.  Most of the currencies you “own” is in some bank account.  Now you might think that you own that money but you are wrong.  The bank owns that money and only have some form of IOU (I owe you) with you, with other words the bank promises to give you back your money when you come to ask for it. If something goes wrong with that bank and it goes bankrupt then you have a problem and there is a real possibility you will lose some of that money.  So you have to trust the bank that they will look after your money and keep their word.

When it comes to cryptocurrencies and bitcoin in particular, you do not have to trust anybody and can keep control of your “money”.  This means you have to store your cryptocurrency somewhere where you have control of your Private Keys – if you do not know what Private Keys are, then have a look here. It is basically the “key” to prove that you are the owner of the coins at a certain Public Address or simply called the Address.

Now how do you keep control of your coins?

You use a wallet where you have access and control of your Private Keys.  That means you do not store your coins on some exchange for long-term storage.  Yes, sometimes you have to put your coins on an exchange to convert it to either another coin or back to fiat currency.  But only keep it on an exchange for the period of the transaction and then move it back to where you have control of your keys.  If you do day trading then you have to keep it on the exchange but be aware of the risks of keeping your coins on the exchange.

There are lots of wallets out there, some better than others but the most important factors is not to use an online one since about all of them do not give you your keys which mean you do not own the coins.

What do I use?

My main wallet is one on my Mac Laptop and that is Exodus which is a multicurrency wallet.  However, I only store a very small amount of my coins here, the rest is stored on a Ledger hardware wallet. By using either of these options I keep control of my keys and hence I own my coins.  It does not matter what a government or anybody do, they cannot get hold of my coins and hence take my coins.

However, with this comes a responsibility and that is that you need to keep your keys and access to your keys safe.  If anybody gets hold of your keys then they can take your coins.

Keep your keys safe and with that, you are keeping your investment in cryptocurrencies safe.

For reference, I use the following exchanges:

  • For converting from and to fiat (ZAR): Luno.
  • For trading and converting of coins: Binance.

One Response to “CryptoCurrencies – No Keys No Coins”

  1. […] my previous post, I wrote about the importance of owning your own keys instead of keeping your coins in an online […]

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