Sunday, February 11, 2018

So Let's Talk Crypto Storage

The cool thing about cryptocurrency, which is a very rare property in investments, is the lack of counterparty risks in ownership.

Admittedly, counterparty risks is one of the most overlooked risks that many people assume. Usually because they have no choice to accept it.

But in the crypto world, there is little excuse to assume counterparty risks. Why let a 3rd party hold and own your funds when you can own it yourself?

Are you too cheap to pay $1-10 USD to withdraw your crypto from exchanges?
Are you too lazy to manage your own private keys?
Convenience?

Well, then sooner or later, you might lose your crypto.

Gox.
Coincheck.
Bitgrail.

This one specific unlucky guy lost $1.4M USD that was on a compromised exchange.

How many more exchange hackings do we have to go through for people to finally get this?

Got crypto in an address not controlled by your private key? Not your crypto.

Lack of hardware wallet support is just a lame excuse.

In most cases, there are software wallets and also paper wallets.
If there aren't, it's a shitty crypto to begin with anyway.

As much as I didn't like the idea of keeping my crypto on a webwallet, I didn't want to run a fullnode/wallet for Raiblocks, so I took that risk and used a webwallet. Why? At least I still have ownership of my private keys, and therefore my crypto.

With the whole shitshow happening with Mercatox and Bitgrail for the past several weeks, if you didn't withdraw your XRB/Nano while you could, you really might be too naive for crypto.

While I am sorry for the loss of funds of Bitgrail users, I think that the learning point to be had here is that you shouldn't trust exchanges to store your crypto.

Do you know who you should trust? Yourself.
Do you know who else you can trust? No one. Not even me.

If you can't trust yourself, you're already dead meat in this space.

I have about 10% of my crypto on exchanges (Binance and Bittrex) and with 3rd parties. This is much more than I am comfortable with. I have already planned how and when I will reduce my holdings when them. By the end of Q2, I should have more than 95% of all my crypto in cold wallets for the long hodl.

I keep most of my crypto in my Ledger Nano S, or in private keys which only I have access to. I would recommend for you to consider doing the same.

One of the advantages of crypto is that it allows you to be your own bank. I would implore people to massively improve both their personal and crypto opsec and take custody of their own crypto instead of leaving it on exchanges.

If you don't look after your own money, no one else will.

6 comments:

  1. Is the so call private key is the 24 words we wrote down during the set up of the wallet? Thanks

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    Replies
    1. That is the mnemonic seed that will be transformed to your private key, but for simplicity, yes, that is your private key.

      Delete
  2. To be fair this guy could not withdraw out most of it from bitgrail due to the withdrawal limits from bomber

    ReplyDelete
    Replies
    1. True, he had massive amounts though, he should have started leaving early! I was withdrawing to my maximum limit for days in a row until I had cleared out from Bitgrail. Probably much harder for him due to his huge stack.

      Delete
  3. "If you don't look after your own money, no one else will."

    LOL i said the same in my blog except that I was referring to insurance agents LOL

    ReplyDelete
    Replies
    1. Soon after I grow it, my money will look after me! Haha!

      Delete

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