One of the many things that makes bitcoin such an amazing asset is our ability to steal our private keys. This capability is so new and revolutionary that the Law Commission of England and Wales wrote a 500-page report proposing to carve out a new form of property law for digital assets.
As I pondered how long it would take me to take possession of my private keys, I realized that it could be somewhat instructive for others. Since I am a boomer and not at all tech savvy or inclined, it took me months before I felt comfortable enough to take possession of my private keys. My thought process – which I suspect is similar to that of many others – was that I trusted a third party exchange – which is nothing more than an IOU for bitcoin – Moreover how much I trusted myself. So my journey began when I bought a small amount of four types of digital assets, one of them bitcoin, in March 2020. I bought that bitcoin on a centralized exchange and didn’t know enough at the time to know the private keys.
As COVID-19 progressed and central bank money printing continued at insane levels in 2020, I began to wonder and worry about the purchasing power of dollars in my US bank account. So I decided to buy more bitcoins in November 2020. It was only at that point, when I went down the proverbial rabbit hole and started to exclusively learn about bitcoin, that I learned the importance of getting hold of your own private keys.
I found the whole thing confusing and intimidating, so I took it slowly as there were too many choices and too many ways to go wrong. There was then, as there is now, a dizzying array of hardware wallets and software wallets to choose from; everyone had their own opinion on which was best. Also, backing up the wallet or restoring the wallet required me to know the derivation paths and starting words. None of this was familiar to me and I might as well have read Greek. I had concluded that I will not rush the switch to keeping the keys private until I am comfortable with it. So I held the bitcoin I had bought on two different exchanges until 2021.
It took me until March 2021 to get there. Already then I had the help of a young intern, Kevin, who worked with me for three months and who was also interested in bitcoin: he was actually writing his thesis on the risk aspects of putting bitcoin in the balance sheet of a company. ‘agency. I ordered a hardware wallet directly from a major supplier rather than through an intermediary. And then that friend helped me transfer some of my bitcoins in March. He showed me and one of my grown children how it works. What no one discusses in detail (for opsec reasons) is the best way to back up your device. This is a completely separate article.
Ok, so far, so good. I have never felt so comfortable having custody of all my bitcoins in one device as it represented a single point of failure, so I kept doing my research on multisig. Further research and reading led me to find two bitcoin-only companies providing multisig or vault services. Home and free capital. It wasn’t until September 2021 when I finally felt ready to pull the trigger and selected one to hold the rest of my bitcoin in a multisig setup. It’s been 18 months since I bought my first bitcoin.
What I think some of the most knowledgeable and tech-inclined people in this space forget is how intimidating it can be to reach that level of ownership. Many longtime bitcoiners take for granted how steep the learning curve is to get hold of their keys. Most tech-savvy people see it as a small hill; those who have less time or desire to educate themselves see it as Mount Everest. Plus, it requires taking responsibility for your finances unlike anything else in history. And some will never be ready for this level of responsibility.
My journey in taking possession of my private keys led to an interesting conversation with Casey Carrillo on this topic and he has his own journey to share.
As a tech-savvy young man, the fact that Bitcoin was a natively digital construct was completely normal to me. I think my custody story isn’t really unique: just like Mark Maraia, I had a friend who held my hand in Bitcoin entry but, unlike Maraia, it has been there since I was “pilly” orange “and then I immediately made sure that I took possession of my private keys.
This of course was, at the time, in the form of a hot wallet on my phone. I remember thinking how my wealth would be stored, essentially in 24 words, was risky. My friend explained that I would ruin the safety of the seed sentence if I were to record it on a digital device, as I (naive at the time of correct safety of whatever password, not to mention my seed phrase) was used to dealing with important information. So knowing that this would only exist in the physical realm, and thus be subject to all the physical dangers of the world like a forgetful mind or a fire, left me uneasy.
At the time I was completely immersed in the “wallet” metaphor, so it was relatively easy for me to grasp the difference between a custodial exchange and take possession of my private keys, comparing it to acquiring cash and then keeping it in my physical wallet. . As I understood at the time, I was sending my bitcoin to a different destination, which could not be touched by the entity I bought the bitcoin from. Now I understand the nuances of my hot wallet by not necessarily being a “destination” as much as a signer, but at the time the metaphor served its purpose. I still believe the wallet metaphor is effective in describing who has access to the cash in your wallet rather than the money in your bank account – it’s a tricky thing to describe that difference as effectively as the analogy, even if it misrepresents the real nature of what we currently call bitcoin wallets.
Aside from that, it took a few more months to go from a hot wallet to a cold storage wallet. By that time I had learned the differences between the two and why it would be necessary for the seed generation process to take place from an internet-connected device. All of these accomplishments only came with a greater understanding of the Bitcoin protocol in general. Custody is a parallel journey to understanding Bitcoin.
I would like to believe that, except for people with high net worth who generally conduct more research into their wealth storage anyway, the amount of funds invested (and therefore lost if an opening phrase is forgotten etc.) is highly correlated to the knowledge of Bitcoin. But anecdotally, I’ve found few correlations: some people take large measures to protect small amounts of bitcoin, and some people are worth millions of dollars in a single exchange. Most likely, this is just a product of early adoption and will change as the value of bitcoin is understood by more people.
Overall, I think many would refer to having some form of help when originally learning the various types of bitcoin custody. In my opinion, this reveals how important it is for Bitcoiners who understand this to educate others and keep trying to discover ways to communicate better why self-preservation is important.
Closing thought: We hope you have found our travels informative and invite you to submit your submission for articles on your particular journey towards achieving financial sovereignty and taking possession of your private keys to Austin@btcmedia.org. How long did it take you? Please share your story with us and we will try to work with the contributions that our editors believe are the most educational and informative and meet our editorial requirements.
This is a guest post by Mark Maraia and Casey Carrillo. The views expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin magazine.