January 27, 2023
🔐 It's time to get serious about self custody
It's only a matter of time before some people learn the hard way that holding your own keys is essential. Don't put it off – it's easier than you think.

January 27, 2023
It's only a matter of time before some people learn the hard way that holding your own keys is essential. Don't put it off – it's easier than you think.
Bitcoin lets you be your own bank. It's a money technology breakthrough that lets any regular person hold and control a scarce asset that is also digital.
Now that this breakthrough has occurred, there is simply no reason to let "crypto exchanges" have access to your bitcoin. Especially when the third biggest exchange publicly threatens to confiscate your money if they run into problems.
Reflecting on why people continue to keep their bitcoin on exchanges, even when they don't intend to trade it, we are reminded of the idea of learned helplessness. We are so used to money being this thing that big companies get to manipulate at our expense, we just expect to access our money by logging in to a company website.
It's time to get serious about self custody. Being a bitcoiner means holding your own private keys.
Setting up self custody might feel daunting, but it's easier than it might first seem. Do your research about how much bitcoin to keep in a "hot wallet" on a phone, and how much to keep in "cold storage" with a separate, ultra-secure hardware wallet. Then, choose a hardware wallet and move your bitcoin onto it.
If you need help, reach out! The more bitcoiners who hold their own keys, the stronger bitcoin becomes.
The meeting, hosted by Salvadorian President Nayib Bukele, was focused on sharing the benefits of El Salvador's adoption of bitcoin as legal tender with other nations who have struggled with the drawbacks of fiat money.
Meanwhile, the Argentinian Central Bank prevented the launch of a program to allow banks to sell bitcoin. Nonetheless, crypto exchanges in the country are still operating, and adoption is growing at an incredible pace.
Despite the crash in the price of bitcoin, mining difficulty increased over 10%, showing that miners still think acquiring bitcoin is the best use of their resources.
A mysterious contributor is China. The Chinese government banned bitcoin mining last September, and by July, data showed there was zero hashpower in the country.
Since then, China hash rate has rebounded to 21%. Some believe miners are using proxy servers to hide their IP addresses and off-grid electricity to avoid alerting authorities.
Fallout from the Terra Luna saga continues.
The Luna Foundation Guard backed their stablecoin with 80,000 bitcoin. When it crashed, the fund was forced to sell off their bitcoin in a desperate attempt to save the network.
Amazingly, bitcoin's price was resilient in the face of $3 billion in bitcoin flooding the market. The price dropped near $25k before recovering significantly.
Join us for a fun weekly Q&A where you can hang out with other bitcoiners and talk about current events. It takes place every Thursday from 8pm to 9pm Eastern Time.
Learn one key idea about bitcoin each week. This week: Anyone can self-custody their bitcoin, even you!
One of the first questions on people's bitcoin journey is, where can I buy it?
Usually people start with an account on an exchange, or with a premium solution like Coinbits. 😄
But there's a step after buying your first bitcoin that's almost as important.
Self custody.
Exchanges are more than willing to custody your bitcoin. They're thrilled, actually. It allows them to engage in fractional reserve banking.
This means the exchange is able to lend out your bitcoin and profit from it.
When you hold your bitcoin on an exchange, the number displayed on your account balance is just an IOU.
This is especially alarming because crypto assets held by exchanges may be considered property of the company in the event of bankruptcy. Coinbase made headlines when they released this disclosure for the first time last week. It says that your bitcoin would become theirs if they happen to run out of money.
At Coinbits, we offer custody as a convenience to our users (and we never lend out your bitcoin), but we strongly encourage you to withdraw it to your own wallet.
If you need help getting started with self custody, please reach out to us. We would be happy to help!
What is rehypothecation?
Check your answer at the end of the page.
➡️ Want bitcoin? Sign up for Coinbits.
➡️ Was this newsletter forwarded to you? Sign up here.
➡️ Follow us on Twitter
➡️ Need coffee? Shop Queen City Coffee Roasters and get 15% OFF your order with promo code BITCOINROUNDUP
➡️ Want to work with us? Explore careers at Coinbits.
Answer: 4. When banks and brokers lend out assets they hold on behalf of their clients for their own purposes.
May 19, 2022
It's only a matter of time before some people learn the hard way that holding your own keys is essential. Don't put it off – it's easier than you think.
Bitcoin lets you be your own bank. It's a money technology breakthrough that lets any regular person hold and control a scarce asset that is also digital.
Now that this breakthrough has occurred, there is simply no reason to let "crypto exchanges" have access to your bitcoin. Especially when the third biggest exchange publicly threatens to confiscate your money if they run into problems.
Reflecting on why people continue to keep their bitcoin on exchanges, even when they don't intend to trade it, we are reminded of the idea of learned helplessness. We are so used to money being this thing that big companies get to manipulate at our expense, we just expect to access our money by logging in to a company website.
It's time to get serious about self custody. Being a bitcoiner means holding your own private keys.
Setting up self custody might feel daunting, but it's easier than it might first seem. Do your research about how much bitcoin to keep in a "hot wallet" on a phone, and how much to keep in "cold storage" with a separate, ultra-secure hardware wallet. Then, choose a hardware wallet and move your bitcoin onto it.
If you need help, reach out! The more bitcoiners who hold their own keys, the stronger bitcoin becomes.
The meeting, hosted by Salvadorian President Nayib Bukele, was focused on sharing the benefits of El Salvador's adoption of bitcoin as legal tender with other nations who have struggled with the drawbacks of fiat money.
Meanwhile, the Argentinian Central Bank prevented the launch of a program to allow banks to sell bitcoin. Nonetheless, crypto exchanges in the country are still operating, and adoption is growing at an incredible pace.
Despite the crash in the price of bitcoin, mining difficulty increased over 10%, showing that miners still think acquiring bitcoin is the best use of their resources.
A mysterious contributor is China. The Chinese government banned bitcoin mining last September, and by July, data showed there was zero hashpower in the country.
Since then, China hash rate has rebounded to 21%. Some believe miners are using proxy servers to hide their IP addresses and off-grid electricity to avoid alerting authorities.
Fallout from the Terra Luna saga continues.
The Luna Foundation Guard backed their stablecoin with 80,000 bitcoin. When it crashed, the fund was forced to sell off their bitcoin in a desperate attempt to save the network.
Amazingly, bitcoin's price was resilient in the face of $3 billion in bitcoin flooding the market. The price dropped near $25k before recovering significantly.
Join us for a fun weekly Q&A where you can hang out with other bitcoiners and talk about current events. It takes place every Thursday from 8pm to 9pm Eastern Time.
Learn one key idea about bitcoin each week. This week: Anyone can self-custody their bitcoin, even you!
One of the first questions on people's bitcoin journey is, where can I buy it?
Usually people start with an account on an exchange, or with a premium solution like Coinbits. 😄
But there's a step after buying your first bitcoin that's almost as important.
Self custody.
Exchanges are more than willing to custody your bitcoin. They're thrilled, actually. It allows them to engage in fractional reserve banking.
This means the exchange is able to lend out your bitcoin and profit from it.
When you hold your bitcoin on an exchange, the number displayed on your account balance is just an IOU.
This is especially alarming because crypto assets held by exchanges may be considered property of the company in the event of bankruptcy. Coinbase made headlines when they released this disclosure for the first time last week. It says that your bitcoin would become theirs if they happen to run out of money.
At Coinbits, we offer custody as a convenience to our users (and we never lend out your bitcoin), but we strongly encourage you to withdraw it to your own wallet.
If you need help getting started with self custody, please reach out to us. We would be happy to help!
What is rehypothecation?
Check your answer at the end of the page.
➡️ Want bitcoin? Sign up for Coinbits.
➡️ Was this newsletter forwarded to you? Sign up here.
➡️ Follow us on Twitter
➡️ Need coffee? Shop Queen City Coffee Roasters and get 15% OFF your order with promo code BITCOINROUNDUP
➡️ Want to work with us? Explore careers at Coinbits.
Answer: 4. When banks and brokers lend out assets they hold on behalf of their clients for their own purposes.