ADSactly Crypto: The Importance of Private Keys
Money is not a foreign concept to any of us, we all know how to use it, store it and how to attain money. We often refer to money as my money, our money and like to think we hold possession of money when in fact it couldn't be further from the actual reality of the situation.
Fiat money isn't an asset it has no value, we only use it because it is backed by our various governments and we've become so used to using it. It is only a promissory note of value but has no actual value itself.
Centralised money isn't your money
When most of us receive money for goods or services rendered we give it to a 3rd party (the banks) to store it in our name. We would then have some sort of security to access the funds if and when we need it.
You never really have ownership of those funds and if you perhaps did something these authorities did not like, such as speaking out against corruption or starting a competing business, you could be shut down in seconds and have your funds confiscated.
So now you'll say but I can protect against that by storing money under my mattress right? Well, that is only a half measure as all the money you own is tied to your government. They printed it and they own it, while you accepted this money as payment, governments can though poor economic decisions devalue money even faster than it already does each year through general inflation principles.
We've seen countries go through hyperinflation and they can attest to the fact that government sovereign currency isn't worth the paper it is printed on.
Image source: - medium.com
Owning your own money
Since we've been raised in a system where we entrust control to third parties, the concept of owning your own money seems weird and foreign to most of us. Having to take complete responsibility for your own funds, how you manage it and transfer it is something we've been robbed of and a right we need to get used to having and fighting for against central financial control
This is why cryptocurrency is so important and why people need to start paying attention to the shit in mentality it brings.
A fundamental property of owning your own money is your private key.
What is the private key?
When creating a hot wallet or cold storage wallet for yourself you will receive a public address and a private key to start managing the funds in the wallet.
The first one — the public key — can be used anywhere to send and receive coins and tokens. Basically, it is the address of the wallet itself. It is quite simple and can often change with every transaction.
Your public keys are simply a way to receive funds and are attached to you private key which manages the actual wallet. The private key allows you to restore a wallet on any device and move funds to wallets should you require them.
Who has access to a private key?
The short answer is only you if the wallet you're using is a custody-free service. When choosing between wallets and exchange accounts, you must know the difference between custodial and custody-free services.
A custodial account is similar to a bank account in that you may have access to the funds via a security service logins + 2FA but the funds remain in the possession of the third party.
A custody-free service is one that you have full control and ownership of your funds.
Keeping your private key private
It is important to note that with a custody-free service you have the responsivity to store your private keys and passphrases in a safe place and in multiple locations both physical and digital as a security measure.
Do not sure your private keys with anyone and if you're planning to store your crypto long term you may even want to add it in your WIll and testament.
I cannot express how important it is to guard your private keys. Having ownership of your own funds is a big responsibility and for many, I can understand why it would make them nervous.
I don't advocate you keep all your funds in one wallet, a good idea is to split it across a number of wallets in case you do make a mistake and give away a private key.
A person would not have access to all your funds but only the ones within that specific wallet.
Private ownership of funds may feel uncomfortable now but if we are to further the ideals of cryptocurrency, it is a user behaviour we need to start making a habit.
Image source: - twitter.com
Not your keys not your coins
Now that you know what a private key is you can understand why certain cryptocurrency sites such as exchanges and other services that hold your funds for you can be a risky option for using and storing funds.
Trusting third parties isn't by definition wrong but if we want to protect our funds against elements out of our control, then storing funds where you are the only one with access is the ideal option.
Author: @chekohler
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We know that money is a kind of fiction; however, how it moves the world!
Being able to control your own funds without having to depend on a third party is an important advance in economic relations. The so-called "private key" is a good concretion of this advance.
Thank you for your valuable information, @chekohler.
It does move the world but and by definition isn’t a bad system but mismanagement and no way of regulating the powers that be have turned it Into something else! Unless we have options that allow us to opt in and out of various mediums of exchange then we don’t have much power to regulate them through a more natural movement of capital to various systems
Rightly man... Money is simply a note that we have given value.
Rightly man... Money
Is simply a note that we
Have given value.
- adesojisouljay
I'm a bot. I detect haiku.
Until more people realize it they won’t see the value of moving to a hard money system and why it is important to keep your wealth and buying power in a range of assets
Great tips.
Venezuela is one of the best modern examples of totally useless money
Well, not totally useless.
Some people have come up with creative ways to reutilize the bills
Wow that is amazing how creative people can be and take a bad situation and turn it into something else! I really think more countries will be following Venezuela in destroying their fiat system and and crypto will take strong hold in those regions
Every day I read how some Hackers have stolen private keys because they are too weak or decryptable. Although it is said that there is little chance that one key will be generated the same as another, there are some that are very vulnerable. Hence the importance of recommending that users carefully choose their crypto-money purses, and opt for reliable applications, downloaded from secure websites. Any foresight, when it comes to money, is little. Thank you very much for your infoemation, @chekohler
That is true it has happened, no system is full proof and human error can also creep in. Which is why practising safety is important bu splitting your wallets, keeping some in cold storage, creating a few paper wallets and so on. The tech will also gradually improve and make it safer for users who aren't so safety conscious to use with ease. But for now, its better safe than sorry
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Great information that I needed to hear. I for one have no idea what is going on with my wallets - it's all very new to me. I've stored the keys in a number of places and not needed them very often.
You're right that we need to keep control of our money. I know someone who had to leave his country and was not allowed to take any of his money with him, but he could take his belongings, so he bought a lot of jewelry and art. Musical instruments also might retain some value in the worst case scenarios.