Not Your Keys, Not Your Coins

The phrase “Not your keys, not your coins” is a fundamental principle in the cryptocurrency world emphasizing the importance of personal control over one’s digital assets. This adage highlights the risks associated with storing cryptocurrencies on centralized exchanges or in wallets where the private keys are managed by third parties.

In the context of cryptocurrency, a “key” refers to the private key, which is a critical piece of cryptographic data that enables the holder to access and manage their cryptocurrency holdings. Owning the private key to a wallet means having full control over the assets contained in that wallet.

The phrase serves as a warning and advice:

Warning: It cautions users that if they do not control the private keys to their cryptocurrency wallets, they do not truly own their cryptocurrency holdings. In such scenarios, the assets are under the control of the entity managing the keys, typically a cryptocurrency exchange or wallet service. This arrangement poses risks, including the potential for loss of assets due to hacking, fraud, or the failure of the third-party service.
Advice: It advises users to store their cryptocurrencies in wallets where they control the private keys, advocating for the use of hardware wallets, paper wallets, or other forms of cold storage. This ensures that the user retains full control over their assets, reducing the risk of loss from third-party failures and enhancing security.

The essence of this phrase reflects the decentralized ethos of cryptocurrency, promoting sovereignty and personal responsibility in managing digital assets.

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This page was last updated on February 15, 2024.

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