Bitcoin is a revolution in many ways. Among its many benefits, Bitcoin allows you to regain control over what you own. In today’s monetary and financial system, banks are increasingly blocking transactions from their customers.
Some even go so far as to close people’s accounts because they have dared to criticize them on social networks.
This censorship is going further and further, and we are probably only just beginning. So the money in your bank account does not really belong to you since you cannot dispose of it as you wish.
With Bitcoin, no one can stop you from making a transaction. You can use your Bitcoin as you wish.
In order to take full advantage of the benefits of Bitcoin, however, you must take responsibility for securing what you own.
Securing your Bitcoin means keeping three essential things secret, as I will explain in the following.
1. Private Keys Associated With Your Bitcoin
In the traditional banking system, the bank guarantees the amount you have in fiat money in your account.
Your bank is responsible for what you have in fiat money.
If your bank gets hacked and loses millions of dollars, you will get your funds back because the bank is insured against this type of risk. More and more often, banks are abusing their rights with what you have in your account. As I explained earlier, many people have their transactions blocked by their banks, or even their assets were frozen.
This is happening more and more often when individuals wish to send part of their fiat currency to trading platforms such as Coinbase, Kraken, or Binance. The banks use the fact that they want to protect you from danger as a justification for this censorship. But you are probably well aware of what you are doing, and you just want to enjoy your hard-earned money as you want. But you can’t.
With Bitcoin, things are totally different.
First of all, you need to understand that the expression “own Bitcoin” is a shortcut. No one actually owns Bitcoin. In reality, you own the cryptographic keys to part of the Bitcoin Blockchain. This subtlety is essential to understand what is to come.
If you buy Bitcoin via a trading platform, and then leave your Bitcoin on that trading platform, then the trading platform will have the private keys to your Bitcoins. The trading platform will then own your Bitcoin. You will have the same risk of censorship as with the current monetary and financial system.
To really take care of your Bitcoin, you must transfer them immediately to a hardware wallet where you will be able to control the private keys of your Bitcoin. Never forget the following sentence which is simple to remember:
Not Your Keys, Not Your Bitcoin.
Once you have secured your Bitcoin on a hardware wallet, you should then be careful never to divulge your private keys to anyone else.
By taking these two precautions, you will be able to truly protect what you own in Bitcoin, while still being able to use them as you wish without the risk of censorship.
2. How Many BTC You Own
I guess you all know the Fight Club movie starring Brad Pitt and Edward Norton. That movie became legendary for a lot of people. Do you remember the rules of this famous Fight Club which are laid out by Brad Pitt during the film?
If you forgot them, that’s all right, I’ll refresh your memory.
Here are the first two rules of Fight Club, which I would like to go over with you more precisely:
The first rule of Fight Club is: you do not talk about Fight Club.
The second rule of Fight Club is: you DO NOT talk about Fight Club.
Now that I’ve refreshed your memory, I’ll be able to draw a parallel by telling you what should be two essential rules of Bitcoin:
The first rule of Bitcoin is: you do not reveal how many Bitcoin you own.
The second rule of Fight Club is: you DO NOT reveal how many Bitcoin you own.
This rule is paramount if you want to stay safe. There have been times when people have revealed how much Bitcoin they have been extorted by malicious people. So the golden rule is to never reveal what you own in Bitcoin to anyone.
Besides, it shouldn’t be difficult to do, because I imagine you don’t tell anyone how much cash you have in your bank account. For Bitcoin, it’s exactly the same thing, and it’s even more important.
3. Addresses You Use for Transactions in Bitcoin
Bitcoin works with a system of public and private keys. When you are going to make a Bitcoin transaction in which you are the recipient, you will need to create an address on the Bitcoin Blockchain from your Bitcoin wallet.
You should consider that an address on the Blockchain is like an invoice that should only be used once.
For each Bitcoin transaction, the recipient must generate a new unique address. Therefore, you should never reuse the same address for different Bitcoin transactions. In addition, you must not reveal to anyone the Bitcoin addresses you use when you receive a transaction.
By allowing certain people to associate your real identity with addresses in the Bitcoin Blockchain, you will be taking significant security risks.
You know that the Bitcoin Blockchain is completely transparent and pseudonymous. In fact, anyone can access all transactions made since its inception on January 3, 2009. From a simple Bitcoin address, it becomes possible to probably trace back to old transactions you have made.
And once people have been able to associate your real identity with one or more of your addresses used in transactions, it will become possible for them to deduce what you own in Bitcoin. You will, therefore, be violating rule 2, which is never to reveal your Bitcoin holdings to anyone. To fully secure what you own in Bitcoin, you must avoid at all costs that your Bitcoin addresses can be associated with your real identity.
This also means using unique addresses for every transaction you make.
Bitcoin gives you back control of what you own, but it comes at a price. The price is that you become fully responsible for securing your Bitcoin.
It is a small price to pay, in my opinion, to avoid censorship and surveillance.
So in order to best secure your Bitcoin, you should not only put them on a hardware wallet as soon as possible, but also keep the following three things secret: the private keys associated with your Bitcoin, what you own in Bitcoin, and the unique addresses you use for your Bitcoin transactions.
By taking these precautions, you will really take care of what you own, and you will have full control over your future.