Not Your Keys, Not Your crypto: the safest place for your crypto is in your wallet.

in LeoFinance3 months ago (edited)

Your crypto, in your wallet, secured by your keys.

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When I first learned about Bitcoin I had to learn about the blockchain and the concept of decentralization.

The main goal goal of cryptocurrency has always been control over your money.

Your cryptocurrency, in your cryptocurrency wallet, secured by your keys.

The possession of your private keys always guarantees this control and concurrently, the safety of your money.

As long as you keep your keys and your seed phrase safe.

This brings us to the next concept; The Irony of Centralized Exchanges.

The Irony of Centralized Exchanges.

Ironically, this movement founded on the core concept of self custody, which means you keep your cryptocurrency in your cryptocurrency wallet. And that wallet is controlled by your keys. And you controlled the keys.

However, in order to trade cryptocurrency tokens on centralized exchanges, you send your cryptocurrency from your wallet, secured by your private keys and your seed phrase, to an exchange wallet.

Which is secured by their private keys and their seed phrase.
While your exchange account has a password, it is not the same as the keys to a wallet.

When you send your crypto to a centralized exchange, you are surrendering your cryptocurrency tokens to them and you must trust them to return your property.

They then control your cryptocurrency.

You might not believe what I am writing, and feel like you have control over your account.

But if the exchange freezes all trading on your crypto, or if the exchange just freezes trading in your account, you can't get withdrawal your crypto to your wallet or transfer it to another exchange.

You then have to wait until they say you can have it, and they dictate how much, when and sometimes where you can send it. Sometimes, it is only when you come to this particular spot in your cryptocurrency journey, that you truly understand; Not your keys, not your crypto.

Your crypto on the exchange is in their wallet, controlled by their keys.

Now in that moment you understand why centralized exchanges are the antithesis of decentralization.

Last words…

The most important things about cryptocurrency are cryptographic security, and transparency.

The most important lesson we should learn from the fall of FTX, Terra Luna, Blockifi, 3-Arrows and every other centralized exchange or centralized project failure is the giving up cryptographic control over your assets and accepting the lack of transparency about what these exchanges do with your money are both huge mistakes.

@shortsegments

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It's ironic but it's the truth. Almost all of the financial Youtubers have lost faith in the financial exchanges and they think either sell or store in a cold wallet.

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Yes, indeed, it’s finally sinking in..

Not your keys, not your crypto.
The first lesson of crypto, and the most important!

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