As we go through life, each and every one us of us has experiences that teach us very important life lessons. Sometimes the most lessons are learned from the biggest mistakes that we make. Often times financially. If we are wise, we can watch other people's experiences and methods, and learn from their mistakes. All in order to prevent ourselves from doing the same thing. I would argue that this is even more important in the bitcoin and cryptocurrency markets. While regulations are beginning to come to these markets, they are still widely unregulated. The wild, wild west. There are so many possible ways that you can lose your money in these markets. If you have just one wrong character in a sending address, your funds will be sent to the wrong address and lost forever. You cannot get a refund, or have the transactions cancelled like you can on credit cards. And then there are the scam tokens. Tokens designed to have the rug pulled out from underneath them and take your money. By being greedy and trying to find the next up and coming hidden gem, it's very possible you could lose all of your money.
But there is another way that you could lose your money, and it is actually an experience that I had personally this week. It is something that people often think will never actually happen to them, but have huge regrets once it finally does. Of course, this is by keeping your coins on crypto exchanges or other 3rd party custodial services. While most people would possibly feel uneasy about depositing your coin on to, and keeping them on a brand new wallet or an exchange with not great reputation. With that said, many people would probably feel pretty safe keeping their coins on a exchange that has a great security reputation. Exchanges like Coinbase, Kraken or Gemini. Even if those services have a great history of not having hacks, or have great revenue models so that you don't need to worry about them going out of business. There are still things that can happen that could devastate you.
That is exactly what happened to me this week. Every thing was going normal, and I was logging into my Coinbase account like I usually do. I like to check the interest rewards on my stacked coins and also check for new Coinbase Earn opportunities. But, on this day I kept getting the prompt that I was blocked from Coinbase while I was trying to login. I initially thought this was quite odd, as I hadn't been doing any transactions recently on the exchange, and hadn't done anything that would warrant myself being blocked or banned from Coinbase.
But, that is exactly the point of this article. You can be an upstanding member of the crypto community and this can still happen to you. Imagine being a person who works extremely hard at your full-time job and just barely has any extra cash at the end of the money. To finally try to get ahead in life, you try investing that money into bitcoin, ethereum and other coins on Coinbase. Only for your funds to be lost. It would be devastating. It would also be equally devastating if you were someone really well off and had a fortune invested on Coinbase or some other exchange. Only to be locked out from it and never able to access it again. Remember that famous crypto phrase, "Not your keys, Not your coins." That is potentially the most important thing that you need to know in the crypto markets.
So let's go back to my story. When this first happened to me, my first reaction was more of it being inconvenient more than devastation or anything else. The reason for that is that I actually don't keep much of anything on Coinbase. Just a little ethereum that I decided to stake into the ETH2.0 protocol to test it out. Because of that, I wasn't very worried. I still wanted this situation resolved and decided to contact Coinbase support. Which I will give them props, that their customer service has improved a lot recently. But when contacting them, they had no idea what the issue was, and would be looking into it. Something happening in the background. Folks, it is something as simple as that, that can keep you from accessing your funds. A glitch in the system.
This is why taking self-custody of your coins is so important. I personally prefer Ledgers to hold a majority of my savings. Funds that I don't plan on touching for a long time. And then software self-custody wallets, for funds that I do plan on using relatively soon. Although I was able to get my situation resolved with Coinbase. The fact is that I might not be so lucky next time. So please learn from my experience, and it could save you from heartbreak or devastation in the future. This philosophy goes for both keeping funds on exchanges and also lending out coins. The funds there could all be lost, so invest accordingly.
How about you? Have you ever lost access to your coins? Do you take self-custody of your coins?
As always, thank you for reading!