Notice: This article is for informational and educational purposes only, and you should not take it as financial advice.
“They are not your keys, they are not your coins” is a term that every crypto trader/investor should know. Like most expressions that remain just expressions, this one goes beyond that. This is literally the security of your digital property.
This text will explain what this phrase means, the difference between public/private keys and why it is important to own keys.
Let’s explain what the phrase “They’re not your keys, they’re not your coins” means. When you own a crypto wallet, you want to make sure that only you have access to private keys. When you use a software browser, the keys are stored in the browser, which makes them insecure. This is the basic meaning of this phrase. If you can’t ensure that you’re the only one who owns the keys because the centralized party actually has control, that means you don’t have complete control over your account. Private keys are actually access to your account. If someone accesses your account, that person actually knows or has your key.
Public and private keys
Just as a bank has an account number, so a cryptocurrency has an address. This address takes the technical name as the public key. For example, if someone wants to send you a crypto coin, that someone will send it to the currency address from your crypto wallet (public key). Why is it called public? Well, because you can receive currency without compromising funds. It’s the same when someone needs to send you money to a bank account and they just need your account number.
Private keys, in simple terms, are the same as passwords. This means that you are the only real owner of the crypt in your wallet. The phrase we mentioned earlier speaks to your private key. Your private key is also tied to the public key. If anyone can access your private key, they can also access your funds, because the two are connected.
Why are keys important?
They are the gateway to your wallet. Your wallet is controlled by you, not a third party. Sure, you don’t want to entrust your private funds to a stranger? It’s like giving someone money and never seeing it again.
Having the key to your wallet that gives you the freedom to have no restrictions in terms of spending or exchanging. You are also not burdened with technical restrictions if a larger company has control over your account (bank).
Private key forms
The keys vary depending on the type of wallet you own, cold or hot. Your private keys can be in the following form:
- 256 binary code characters
- 64 characters of hexadecimal code
- QR code
- Mnemonic phrase
Anyway, you have your keys, they are all long and for a reason. Security!
Wallet rescue phrases
This is very important if you need to save your wallet. If it is a hardware wallet it can be lost, reset, stolen or damaged. The wallet rescue phrase is the only one that can help you get all your money back.
A rescue phrase, known as a recovery phrase or recovery seed, contains a series of words that are given to you when making your wallet. These phrases consist of 12, 18 or 24 words. You need to write down the rescue phrase and keep it in a safe place.
Why is this necessary? You have to keep in mind that your crypto property, technically, is not stored on the wallet itself. It has been preserved in the collective decentralized network, which we often mention in our texts. This network is called a blockchain.
You can also view the rescue phrase as a blockchain option “I forgot my password”. Instead of changing the password via email, you are actually saving the entire account using a rescue phrase. It is of the utmost importance that you write down this phrase and keep it in a safe place. If you lose this phrase, you also lose the ability to return your crypto wallet, in case you are no longer able to access the wallet (for example, if the device on which you installed the wallet is destroyed).
To sum up, the importance of your keys says that if you don’t own your keys, you don’t have the freedom to do what you want with your cryptocurrencies. Also, remember to keep your keys in a safe place. Keys always come with a rescue phrase and NEVER SHARE your private keys with anyone!