Cryptocurrency has become a popular asset class over the past decade, with Bitcoin being the most well-known and valuable cryptocurrency in the world. As more people invest in cryptocurrency, the importance of securing one’s crypto assets becomes increasingly important. One popular phrase among the cryptocurrency community is “not your keys not your crypto.” In this article, we will explore what this phrase means, why it is important, and how to ensure your crypto assets are secure.
What does “not your keys not your crypto” mean?
If you haven’t already you should have heard the phrase “not your keys not your crypto” that refers to the idea that if you do not control the private keys to your cryptocurrency wallet, you do not truly own your crypto assets. Private keys are essentially a secret code that enables you to access and manage your cryptocurrency. When you buy cryptocurrency on an exchange, the exchange holds your private keys on your behalf. However, this means that you do not have full control over your crypto assets, and you are essentially trusting the exchange to keep your assets safe.
Why is “not your keys not your crypto” important?
The importance of “not your keys not your crypto” lies in the fact that cryptocurrency is decentralized, meaning that there is no central authority controlling it. While this decentralization provides many benefits, such as increased security and privacy, it also means that you are responsible for the security of your own crypto assets. If you do not control your private keys, you are essentially trusting a third party to secure your assets for you. This creates a risk that your assets could be stolen or lost if the third party is hacked or goes bankrupt.
There have been numerous cases of cryptocurrency exchanges being hacked, resulting in the loss of millions of dollars worth of crypto assets. In 2014, Mt. Gox, once the largest Bitcoin exchange, was hacked and 850,000 Bitcoins (worth over $450 million at the time) were stolen. Similarly, in 2019, the New Zealand-based cryptocurrency exchange Cryptopia was hacked and over $16 million worth of crypto assets were stolen. In both cases, users who had left their crypto assets on the exchange lost everything.
By controlling your private keys, you eliminate the risk of losing your crypto assets due to a hack or bankruptcy of a third-party. This provides greater security and control over your assets, which is particularly important given the value and potential growth of cryptocurrency.
How can you ensure your crypto assets are secure?
To ensure your crypto assets are secure, you should follow these best practices:
- Use a hardware wallet – A hardware wallet is a physical device that stores your private keys offline, making it much more difficult for hackers to access your crypto assets. Popular hardware wallets include Trezor and Ledger.
- Keep your private keys secure – If you choose to store your private keys on your computer or phone, ensure that they are encrypted and stored in a secure location. Do not share your private keys with anyone and use strong passwords.
- Use multi-factor authentication – Most cryptocurrency exchanges and wallets offer multi-factor authentication, which adds an extra layer of security to your account. This typically involves entering a code sent to your phone or email in addition to your password.
- Research exchanges and wallets – Before using an exchange or wallet, research its reputation and security measures. Look for exchanges and wallets that have a good track record and are transparent about their security practices.
The phrase “not your keys not your crypto” emphasizes the importance of controlling your private keys when investing in cryptocurrency. By controlling your private keys, you eliminate the risk of losing your crypto assets due to a hack or bankruptcy of a third-party. To ensure your crypto assets are secure, it is important to use a hardware wallet, keep your private keys secure, use multi-factor authentication, and research exchanges and wallets before using them. By following these best practices, you can enjoy the benefits of cryptocurrency while keeping your assets secure.
It is important to keep in mind that cryptocurrency is still a relatively new and evolving asset class, and regulations around it are still developing. It is important to stay informed about changes in the regulatory landscape and to comply with any applicable laws and regulations. Overall, it is a reminder of the importance of taking control of your cryptocurrency assets and ensuring their security. By following best practices and staying informed, you can enjoy the benefits of cryptocurrency while minimizing the risks associated with it.
*Please note that the information provided in the above article is for educational and informational purposes only and should not be considered as financial advice or investment recommendations. Investing in cryptocurrencies or any other financial instrument involves risk and can result in the loss of your entire investment. Before making any investment decisions, please consult with a professional financial advisor and carefully consider your own financial situation and risk tolerance. The author and publisher of this article do not accept any liability for any financial losses or damages that may arise from the use of this information.
