Why Holding Your Own Bitcoin Matters
Holding Bitcoin means having full control over your private keys. As Andreas Antonopoulos famously said, “Not your keys, not your Bitcoin.”
A useful analogy is a safe with gold inside—if you don’t have the key, you can’t access it. Your private key is what allows you to send Bitcoin from your wallet (your "safe") to someone else’s. Every transaction is recorded on the Bitcoin blockchain, a public ledger that keeps track of all movements.
Risks of Third-Party Custody
When you store Bitcoin on an exchange, you don’t actually control the private keys—the exchange does. This means:
- You rely on the exchange to manage your Bitcoin securely.
- If the exchange gets hacked, goes bankrupt, or freezes withdrawals, you could lose access to your funds.
- You essentially hold an IOU from the exchange rather than owning Bitcoin outright.
This approach contradicts Bitcoin’s original vision. In the Bitcoin whitepaper, Satoshi Nakamoto described it as:
“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”
Leaving Bitcoin on an exchange reintroduces the very intermediaries Bitcoin was designed to eliminate. While some may choose convenience over security, true ownership requires holding your own keys.