Safety Sessions | "Not your keys, not your coins"
Updated: Jan 25
History doesn't repeat, but it often rhymes
What does it even mean?
History doesn’t repeat, but it often rhymes.
That is a familiar saying in all walks of life. However, its truth seems to hit home much more in the world of Bitcoin and crypto.
For starters, Bitcoin has maintained a cyclical phase since its beginning back in 2009. Below is a demonstration of this recurring pattern.
Although the Bitcoin chart is just a visual representation, the pattern is evidently present. Most recently, Bitcoin had a bull year in 2021 which was subsequently followed by a bear year in 2022.
If history is any indication, 2023 will likely be a sideways year and 2024 will become the year of accumulation. Once again, there is no guarantee of anything and history will never repeat itself 100% the same. But it does often rhyme.
This blog, though, is not about the eerily close pattern in Bitcoin’s price. Instead, it is about the same old mistakes made by newcomers and then quickly followed with the same message from Bitcoiners.
Not your keys, not your coins
What does it even mean?
In a previous safety session blog, we highlighted the importance of protecting your Bitcoin and crypto with a cold storage device. For those unaware, a cold storage device such as a Ledger or Trezor allows you to take full ownership of your Bitcoin or crypto.
As the Bitcoin chart shows, there are waves of newcomers to the space that contribute to the tremendous spike in the price. However, the majority of newcomers are unknown of the importance of taking self-custody.
Unfortunately, many people believe that the Bitcoin or crypto that is purchased on an exchange is theirs. That comes as no surprise. Myself and Rhys also thought the same to begin with. After all, we have made a purchase with our money, why wouldn’t it be ours?
When in actual fact, a centralised exchange makes it known in its terms and conditions that they have the right to halt any withdrawals and thus keep the crypto you have purchased.
During times of prosperity and confidence in the market, this doesn't appear an issue. However, time and time again there is fraudulent activity and bad actors that exist within crypto. As a result, when centralised exchanges go bankrupt, thousands of people are left unable to withdraw their Bitcoin or crypto.
It is incredibly sad and frustrating when this happens. Unlike the stock market, there is no regulation for the most part in cryptocurrency…yet. On the occasion something bad happened to your funds in the stock market, you are protected up to £80,000. With crypto, if you don’t take self-custody, you run the risk of losing everything.
So, that’s why you hear Bitcoiners saying “not your keys, not your coins”. It refers to the fact that if you don’t have your own private keys in self-custody, you don’t properly own your Bitcoin or crypto.
It’s for these reasons that we believe education is so important. Unless more people become aware of the risks of crypto, the same thing will continue to happen. We have seen this issue rhyme an awful lot throughout the lifespan of crypto:
Mt Gox exchange
And many more…
Alongside education, we should soon expect regulation in the crypto space that should prevent the illegal activities of certain centralised exchanges that claim they are functioning as normal when in fact they are far from it.
But what is also extremely important is that we learn what self-custody is all about. It’s actually a fantastic thing. Bitcoin is about freedom and taking control of your own money. Self-custody does that in ways a bank does not.
That said, becoming your own bank requires responsibility and self-ownership. As our previous blog explained, you must look after your seed phrase and take the correct safety precautions. Otherwise, you run the risk of losing your Bitcoin or crypto forever.
In summary, we are optimistic that the notion of “not your keys, not your coins” will continue to grow in importance and awareness. The more this is done, along with incoming regulation, the safer we will all be.
Bitcoin is resilient and will continue to grow as more people build and innovate on it. We want you to be part of the success of Bitcoin and not fall victim to the dark side of crypto.
Stick around and join in on the conversation over on the community page.