Crypto 101: No Keys?!?!? No Coins!

So, you’ve officially joined the blockchain revolution? Awesome. Welcome!

Now that you’ve taken the leap and invested in some crypto – let’s get one thing clear, right away… do you control your private keys? If you do, that’s perfect. If you don’t – then you don’t really control your new coins. That’s a big problem.

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

Don’t be intimidated. If you need a quick refresher on what a public address or private key is, then take a second and read: Crypto 101: What’s an Address? Oh, go on. It’s a very quick read. We’ll continue momentarily…

Crypto Exchanges

If you’re like most new crypto owners, then you bought your coins on an exchange such as Coinbase. That’s the simplest route and the most convenient option for the majority of people. However, the convenience of exchanges can lull you into being irresponsible after your purchase. Let’s examine…

You traded some government-issued money for some crypto. Your exchange then updated your account accordingly in their system to reflect this purchase. You can log on to their exchange at any time and your account reflects your ownership. You know what you own and so does your exchange.
All is well enough, right? NO (emphatically). All is not well – not at all.

If you logged in to your exchange tomorrow and their website didn’t show the correct amount of crypto in your account – what would you do? Sure, you’d call them – referencing screenshots, banks statements, etc etc. “No different from buying anything else,” you might think. Wrong. So wrong.

Imagine your phone call and paperwork couldn’t resolve the problem. Imagine it couldn’t resolve the problem because your exchange couldn’t resolve the problem. Imagine they had been hacked. Maybe it only affected your account, or maybe the entire exchange was compromised.

It could get even worse: imagine your exchange completely vanished. Maybe they closed up shop and took all the valuable crypto that their customers left on their system. Maybe the entire exchange was shut down by the government. Either way, you go log on – and everything is just gone. Maybe you couldn’t even log on. Game over.

Do you see how vulnerable your ownership is when it’s just between you and your exchange? You have to trust, blindly and completely, that your exchange will be forever infallible when it comes to managing technological, financial, and political risks.

This is a very real and highly relevant problem. It is, in fact, the very problem that the blockchain itself solves. The blockchain gives you the power to control your own crypto. If you’re not taking advantage of that option – then you’re not fully participating in the crypto revolution – more importantly, you are putting yourself, unnecessarily, at risk of losing your crypto.

Exchanges have been hacked before. They will be hacked again. They can be hacked anonymously and from anywhere in the world. Their staff could stage a hack and the world could never know that it was an inside job. It’s up to you to protect your assets.

Trust the blockchain. Trust yourself.

Alright, enough with the firm warnings – the good news is that the blockchain eliminates these kinds of risks. You can simply transfer your ownership onto the blockchain where your future control of your crypto is guaranteed. Then, you don’t need to trust anyone but yourself.

Please note: trusting yourself is not as daunting as it sounds. A hardware wallet makes managing your assets very simple and eliminates the possibility for many user mistakes that new crypto owners might make.

I strongly suggest that you get a hardware wallet to protect your crypto. If you are comfortable running an offline computer or can be certain your personal computer will remain uncompromised, then you can use a software wallet instead. I’ll shortly be publishing step-by-step guides for both wallet types. Getting control of your private keys, in any way you are able, is imperative.

If you don’t currently control the signing of your transactions, then you do not currently control your crypto. End of story.

Take control of your wallet, your private keys, and your digital assets.

You can do this. Oh, and, welcome to the point of – the blockchain revolution.

 

As promised:

I’m passionate about blockchains. I’m excited about decentralization, autonomous organizations, cryptocurrencies, and uncensorable dApps.

I’m also overwhelmed – with questions about these cutting edge technologies. I want to understand the tech, the politics, and the implications of the blockchain revolution.

Most of all, I want to share what I discover – because broader understanding will lead to greater participation, more rapid adoption, and, subsequently, a better world.

Ledger Nano S - The secure hardware wallet