This is an opinion op-ed by Mark Maraia, an entrepreneur, author of “Rainmaking Made Simple” and Bitcoiner, and Casey Carrillo, associate editor of Bitcoin Magazine.
One of the many things that makes bitcoin such an incredible asset is our ability to take ownership of our private keys. This capability is so new and revolutionary that the Law Commission of England and Wales has produced a 500-page report proposing to create a new form of property law for digital assets.
As I reflected on how long it took me to take possession of my private keys, I realized that this might be somewhat informative for others. Given that I’m a baby boomer and not the least bit tech savvy or inclined, it took me months to feel comfortable enough to take ownership of my private keys. My thought process – which I think is similar to many others – was that I trusted a third party exchange – which is nothing more than an IOU for bitcoin – After that I trusted myself. So my journey started when I bought a small amount of four types of digital assets – including a bitcoin – in March 2020. I bought this bitcoin on a centralized exchange and didn’t know enough about it at the time. era to learn more about 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 bank account. American. So I decided to buy more bitcoin in November 2020. It was only then when I went down the proverbial rabbit hole and started learning exclusively about bitcoin , that I learned the importance of taking ownership of your private keys.
I found it all confusing and intimidating so I took my time because there were too many choices and too many ways to mess up. 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 what was best. Also, backing up the wallet or restoring the wallet required me to know the derivation paths and seed words. None of this was familiar and I might as well have read Greek. I had concluded that I wouldn’t rush into holding private keys until I felt comfortable. So I kept the bitcoin I bought on two different exchanges until 2021.
It took me until March 2021 to get there. Even 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 master’s thesis on the risks of bitcoin. listing bitcoin on a company’s balance sheet. I ordered a hardware wallet directly from one of the major vendors rather than through an intermediary. And then this friend helped me transfer some of my bitcoins in March. He showed me and one of my adult children how it works. What nobody talks about in detail (for opsec reasons) is the best way to back up the device. It is an article in its own right.
Well, so far so good. I never felt comfortable having custody of all my bitcoins in one device as it represented a single point of failure, so I continued to do my research on multisig. Further research and reading led me to find two bitcoin only companies that provide multisig or vault services. Casa and Unchained Capital. It wasn’t until September 2021 that I finally felt ready to pull the trigger and selected one to hold the rest of my bitcoin in a multisig setup. It was 18 months after buying my first bitcoin.
What I think is that some of the most savvy and tech-savvy people in this space forget how daunting it can be to achieve that level of ownership. Many long-time bitcoiners take for granted the steepness of the learning curve to owning their keys. The more tech-savvy see it as a small hill; those with less time or desire to learn see it as Mount Everest. Plus, it requires taking responsibility for your own finances like never before. And some will never be prepared for this level of responsibility.
My journey in taking ownership 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 youngster, Bitcoin being a natively digital construct was completely normal for me. I think my custody story isn’t super unique – much like Mark Maraia, I had a friend who held my entry into Bitcoin but unlike Maraia, he was there from the moment I was “orange-pill “, and therefore immediately made sure that I took possession of my private keys.
It was, of course, at the time, in the form of a hot wallet on my phone. I remember thinking how my wealth would be stored – basically in 24 words – was risky. My friend explained that I would ruin the security of the seed phrase if I were to record it on a digital device, because I (naive at the time of the proper security of any password, not to mention my seed phrase) was used to dealing with important information. So knowing that it would only exist in the physical realm, and therefore subject to all the physical dangers in the world like a forgetful spirit or fire, I felt 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 custody exchange and taking possession of my private keys, likening it to the acquiring cash and keeping it in my physical condition. wallet. As I understood at the time, I was sending my bitcoin to a different destination, a destination that could not be touched by the entity I purchased the bitcoin from. I now understand the nuances of my hot wallet not necessarily being a “destination” as much as a signer, but back then the metaphor served its purpose. I still believe that the wallet metaphor is effective in describing who has access to money in your wallet as opposed to money in your bank account: it’s hard to describe that difference as effectively as the analogy, even if it distorts the real nature. of what we currently call bitcoin wallets.
That aside, it took me several more months to switch from a hot wallet to a cold storage wallet. During that time, I had learned the differences between the two and why the seed generation process would need to happen from an internet-connected device. All of these accomplishments only came with a better understanding of the Bitcoin protocol in general. Custody is a parallel journey to understanding Bitcoin.
I’d like to believe that, with the exception of wealthy individuals who generally do increased research into storing their wealth anyway, the amount of funds invested (and therefore forfeitable if a seed phrase is forgotten etc.) is strongly correlated with knowledge of Bitcoin. But anecdote, I found little correlation: some people go to great lengths to protect meager amounts of bitcoin, and some people have millions of dollars on a single exchange. Most likely this is just an early adoption product and will change as the value of bitcoin is understood by more people.
Overall, I think a lot would relate to some form of help when initially learning about the different 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 find ways to better communicate why self-custody is important.
Final Thought: We hope you have found our journeys informative and invite you to submit your own pitch for articles on your particular journey of achieving financial sovereignty and taking ownership of your private keys to Austin@btcmedia.org. How long did it take you? Please share your story with us and we will seek to work with submissions that our editors deem the most educational and informative, and that meet our editorial requirements.
This is a guest post by Mark Maraia and Casey Carrillo. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or bitcoin magazine.