This Week's Topic - "Not your keys, not your coins."
What does "not your keys, not your coins" actually mean?
This common phrase refers to storing your Bitcoin, or other cryptocurrencies, yourself instead of using a third-party service such as an exchange.
If someone else is holding your coins, are they technically yours? This is an important topic for many reasons.
- Major crypto exchange collapses, like Mt. Gox and FTX, where innocent people lose their investments at the hands of others.
- Government control over your funds (potential CBDCs).
- Banks "holding" our money, even though we know it is not truly there as it is constantly being loaned out.
Before we can discuss how you can store your own Bitcoin to gain true financial freedom from the powers that be, we need to dissect the phrase "not your keys, not your coins."
Not your keys. There are two types of keys you need to know about; private keys and public keys.
- Private Keys - A secret code that lets someone use and control their digital money. If you have this code, it's like having control over the money linked to it.
- Public Keys - This comes from the private key code and is used to create places where digital money can be sent to. Everyone can see it, unlike the secret code.
If you don't control the private keys to your cryptocurrency — for example, if they're held by a third-party service like a centralized exchange — then you don't truly own or control the cryptocurrency.
Not your coins. If you don't have control of the private keys, then the associated coins aren't truly yours. Even if a platform shows you a balance, it's essentially an IOU. The real ownership (and power to spend or transfer) lies with whoever controls the private key.