Real Value
We took a look at how cash and gold can be used to achieve some degree of financial freedom, but not exactly in the most convenient way.
Carrying heaps of cash to pay for things isn’t exactly ideal, while gold suffers from limited utility – since you first have to convert it into cash to actually spend it. In the end it’s just not good enough.
Cryptocurrencies, on the other hand, represent a more comprehensive offering. Being digital, there’s nothing to carry around, while their underlying blockchain technology makes them incredibly fast and cheap to ship while benefiting from security beyond banking quality.
They also have value in themselves, which means you don’t have to turn them into cash to extract real or value from them, making them extremely useful.
But to truly benefit from their advantages, it is important to understand how to ensure that you own your cryptocurrencies, because unfortunately it is not always a given.
Why cryptocurrencies are the solution
As mentioned earlier, banks, shares, hedge funds, as well as most other financial institutions and services are considered centralized. In other words, they are a central point with which people must interact in order to access important financial services.
Cryptocurrencies, on the other hand, are completely decentralized. There is no figure behind the scenes who makes all the decisions, no company at the helm and no one to control who can access them or when.
Instead, the rules on which a cryptocurrency is based are imposed by a decentralized network of specialized computers. These work together to keep everything safe. They were created with one main goal: to empower you, the user.
By owning cryptocurrencies, you can join the huge, ever-growing crypto economy and access decentralized versions of almost every major financial service you’re used to using, all without having to ask permission, create accounts, or separate your private data for privilege.
They are truly global financial assets that promise to power non-bank customers, eliminate financial borders, and ensure that users have real ownership of their assets. But making money from them is not entirely simple.
There is one more thing
Now, you’ll probably be thinking “Where do I start?” after all, who doesn’t want total financial freedom and all the perks that come with it?
However, while we understand your willingness, it is important that you first take a step back to understand a thing or two first before taking part in all of this. The first thing you need to understand is the role of crypto exchanges in the cryptocurrency ecosystem.
As their name suggests, these are platforms that allow you to exchange or trade one cryptocurrency for another, such as converting Bitcoin (BTC) to Ethereum (ETH). These are similar to the exchange of a local currency, but with one key difference they are considered custodians.
What does this mean for you? As we mentioned before, this means that they need to hold your money (or your cryptocurrencies) to offer you these exchange services. Similar to the way a bank would do if you had an account with one.
After all, one of the basic principles of financial freedom is to have full control over your own money something you simply don’t have when using a cryptocurrency exchange.
While many cryptocurrency exchanges are completely safe, some have proven unsafe, resulting in potentially significant financial losses for users. Between 2011 and 2019 alone, cryptocurrencies worth over a billion dollars have been stolen from various exchanges.
The only way to deal with this is to manage your own private keys securely.
Know about your private keys
“But what exactly are private keys?” we’ll hear someone ask.
Well, to put it simply, they are primarily keys (but more of a code than a simple key) that you use to access and unlock your money in the same way that your PIN can be used to unlock your bank card at the ATM to withdraw money. Although it is a bit more complicated.
Managing your own private keys is one of the basic principles of true financial freedom. However, there are a huge number of exchanges and other crypto wallet services that actually don’t give you access to these private keys.
And many of them often do not make it clear that this is the case. They simply manage your keys in the background, never allowing you to access them.
These are known as ‘custodial’ platforms—most of which are cryptocurrency exchange platforms. These offer you a wallet for your cryptocurrencies, but that comes with compromising loss of control (among other things).
Neither the keys, nor your cryptos are yours. Here’s why.
Using these platforms requires trust, as if they are compromised or subject to a data breach of any kind, you will likely find it difficult to recover your money without your private keys. Like a bank, there are also more than a couple of fees associated with using them.
With cryptocurrencies, the goal is always to eliminate the need to trust or rely on third parties, the only way to do this is simply by keeping your own private keys.