Do This To Avoid Massive Crypto Heartbreak

By johnwege | johnwege | 20 Aug 2021


We have reached the part of the cycle where it is time for us to sit down and have the talk. For those of you who have been in the cryptocurrency market for a few years, or got in during dips; it is likely that your portfolio has seen significant gains.  It is possible that your portfolio has grown to a point where the numbers just don't feel real anymore.  It can be easy to become complacent and put your guard down.   After-all, you are on the path to making life-changing gains and your future has become much brighter with much less stress.

But this is the trap and this is exactly when you need to be the most careful.  Today I want to talk to you about one of the most essential tips while investing into crypto.  Incredibly essential, but also one of the most basic pieces of advice out there as well.  But like I mentioned, in my opinion it is the most important thing you need to know while investing into cryptocurrency.  It can save you from heartbreak, literally saving you thousands of dollars, if not more.  Let alone the peace of mind that it will give you as well.

This advice is to simply always take great care in how you store your crypto.  Meaning, to take self-custody of your coins.  Perhaps you have heard the famous phrase; "Not your key, not your bitcoin."  Have you ever really sat down and thought about this? Unlike many financial banks, most cryptocurrency exchanges offer no insurance on funds being held on their site.  Meaning that if they went bankrupt or were hacked, they have no obligation to repay your funds.  They also have the ability to freeze your account.  What good is having a million dollars of bitcoin, if it locked on Coinbase and cannot be accessed?  This has happened countless times in the past, and will continue to happen in the future.  There have also be numerous examples of founders performing exit scams.  Keeping all the users funds for themselves and retreating to an unknown location.  People who held funds on Mt. Gox are still waiting and hoping to receive their bitcoin that they lost during the famous hack.  They will be lucky if they receive anything at all.

e806ac2ff432d4da0bad3f5d571c290b819c7bd16667244c57b3b93ab6146dbc.jpg

Let's continue to talk about the hacks.  It seems every other week there is a new hack.  Just this week there was an exchange in Japan that was hacked; with over 70 million dollars in coins being siphoned off.  Perhaps the exchange will repay its users, but there is no guarantee.  Always remember this key point and let me bold it for emphasis.

Exchanges are not banks, they are marketplaces.  And they should be treated as such.

It always boggles my mind that people work extremely hard to earn their money, but will not put in the same amount of effort to either research the investing projects that they're putting their money into, or into protecting their assets.  Yes, there is a bit of knowledge that is required in order to self-custody your coins.  But it is quite easy, and everything you need to learn can be learned within a half-hour.  Not too demanding for the amount of money that some people are investing.

Losing your entire portfolio due to your own lack of due-diligence can cause a trauma that you may never recover from mentally and financially.  I have seen it first hand, with an acquaintance of mine losing hundreds of thousands of dollars due to his own actions of not taking self-custody.  Sending his coins to a 3rd-party that shouldn't have been trusted, especially with that amount of money.

Some people will not take action until they have experienced the pain themselves, and naturally by then it is too late.  Perhaps putting the following thought in your head and pondering about it for awhile will motivate you to take the action required.

Imagine you worked extremely hard for several years and put that money into bitcoin, ethereum or some other cryptocurrency.  You got lucky, and your assets appreciated to a level you never thought possible.  You begin to have dreams of buying your dream house, having much less stress, and potentially retiring.  And then POOF! You lose it all in an instant. All of those dreams evaporate immediately.  Perhaps you will never be able to retire now.  The regret of what could have been will haunt you for years.

Prevent this and take custody of your own coins.

If you follow me you will know that I'm a big proponent of using your own crypto to make a passive income.  My favorite method is to lend out my coins to a 3rd party for interest.  When doing this you are giving up the keys to your coins and this opens you up to the above risk.  There is a chance you could lose everything.  So if you do insist on lending out your coins, this is the advice that I offer you.  Heavily research each service before you decide which one to use.  Choosing a reputable source can save you from heartbreak.  Also, never put more in than you are willing to lose.  While I would still be very sad if I lost everything that I was lending; I have made peace that everything I do lend could be lost.  Always keep a healthy amount in cold storage.  While the market is appreciating and and your portfolio is increasing, take some coins off of those services.

When you do decide to take self-custody you need to be just as diligent.  Writing your keys down, keeping it in an extremely safe place.  If you use a ledger, also storing that in a safe place.  Taking preventative action can save you from significant heartbreak.  Don't wait, do it now.

How about you? Do you keep your coins on an exchange or take self-custody?  How do you take self-custody?  I prefer and Ledger X.

FOLLOW ME ON TWITTER!

FOLLOW MY SUBSTACK!

As always, thank you for reading!

How do you rate this article?


177

5

johnwege
johnwege

Hello I'm John Follow me on Twitter! https://twitter.com/johnwege


johnwege
johnwege

Living day by day, stacking sats and trying to retire early. Follow me on Twitter twitter.com/johnwege

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.