Cryptocurrencies

Two Minute Crypto – Not Your Keys, Not Your Crypto

Please click the link to listen to the 61st episode of my weekly crypto podcast ‘Two Minute Crypto.’ These are intended to be short, single-topic ramblings on some aspect of the cryptosphere. Consider dropping a like and or a review on iTunes or Podbean if you enjoy the podcast. Comments and critiques welcome.



https://podcasts.apple.com/au/podcast/two-minute-crypto-not-your-keys-not-your-crypto/id1441492450?i=1000456049632

or

https://www.podbean.com/eu/pb-ch4kh-c632f0


Transcript

Not Your Keys, Not Your Crypto

Welcome to Two Minute Crypto. This week’s episode examines the key concept of ownership or possession (the same thing) in the cryptocurrency space.


If you’ve spent any time at all focused on cryptocurrencies then you’ve very likely encountered the statement, ‘Not Your Keys, Not Your Crypto.’ However, this truth bears repeating, reflection and if necessary, action.

A Few Caveats

If you only have a small position in crypto amounting to less than 1% of your liquid net worth then parking it on an exchange doesn’t really matter.


In addition, if you are a frequent trader a certain percentage of your assets are inevitably going to be locked up in orders and open positions. Of course, if that’s more than roughly 10-15% of your trading account -you’re exposing yourself to unnecessary counter-party risk.

Also, if you are not currently tech-savvy enough to move your funds off an exchange - take some time, seek some help and move your crypto as soon as you are comfortable doing so (the sooner the better).

‘Not Your Keys, Not Your Crypto.’

Getting your hands on crypto is rarely easy, it is a friction-rich experience. There are many steps to take before you can even claim to own any cryptocurrency. Research, signing up to an exchange, going through KYC, learning to navigate an order book, setting up a wallet, backing up that wallet, sending your first transaction, trying not to freak out when you see the words ‘unconfirmed’ and on and on it goes.

Many people seem to make it only as far as an exchange. They buy but don’t take possession. While this takes some of the friction out of the user experience, it also critically undermines the whole appeal of crypto.
To be absolutely clear – the cryptocurrency on an exchange is not under your control – it is simply an IOU by a third party. The balances you see are entirely under their jurisdiction. Indeed, your very access to those balances is something they may choose to cut off if, and when, the exchange deems it in their own interest to do so.

At any time, their circumstances may change – they may go out of business, be hacked, simply exit scam you, or be shut-down by some regulatory authority. Were any of these to occur you are likely out of luck. Sure, large exchanges such as Binance and Coinbase are more robust than their lesser peers but the fundamental reality of the IOU nature of their relationship with their customers remains the same.

This helplessness is highly ironic given the incredible freedom possession of an asset like Bitcoin imparts. You are essentially forfeiting the trustless, uncensorable quality of BTC for what exactly….oh yeah the false comfort of a third party holding your asset for you…like a bank might do…except crypto exchanges are much more unstable than even their banking counterparts…here today, gone tomorrow.

Not your keys, Not your crypto. Not simply a slogan but a fact.

Thanks for listening.

Related posts

Bitcoin’s watershed day – 1 April 2019

Bit Brain

CryptoMood – an app review

Bit Brain

Analyzing Bitcoin, EOS, XRP, ETH, BNB, LTC and BAT: Quick Updates

Workin

Get involved!

Comments

No comments yet
s2Member®