Keeping Your Keys Safe
This week on Go Full Crypto, we’re talking about key safety. This is an important topic because if you fail to follow the rules of key safety, you can lose all of your funds with zero chance of recovery. This is an aspect of cryptocurrencies that actually turns a lot of people off. However, it is important to understand the tradeoffs that are made by taking full and complete responsibility for the security of your funds. If you’re in a developed nation, you’re used to being able to call your bank to recovery a lost password, or reverse a transaction. However, in underdeveloped nations, you’re lucky if you have a bank, and even luckier if that bank has money to begin with. The paradigm introduced by cryptocurrency keys is a fundamental shift for some of us, and an absolute solution to the security of funds for others.
Security and Storage Like Never Before
In order to understand how exactly crypto keys are the apex of keeping your money safe, we must take a look into our past. Banks were used primarily as a storage place for our wealth, typically denominated in gold or other precious metals. People were given bank notes when they made a deposit of gold. This bank note is an IOU (I owe you) for the gold held in the vaults. Banks realized that they could then loan out the wealth because it was rare that everyone wanted their wealth at once. This system is known as fractional reserve banking and is one pillar of our modern financial system. In a nut shell, it means that financial institutions are able to loan out your deposits to other people. Needless to say, this doesn’t exactly sound very secure.
With cryptocurrencies, you get to buy digital gold, and hold it in your own vault. Whether that is written down on a piece of paper and stored in your fireproof safe, or memorized and stored in your brain. The point is, that with cryptocurrencies, you have the option to directly own your wealth.
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