How important is it to hold your own coins?

When I was halfway through writing this article, I received the following news:

Troubled digital currency exchange Cryptsy has claimed that the platform is insolvent. The exchange said in a new blog post that the platform was hacked in July 2014, resulting in the loss of approximately 13,000 BTC and 300,000 LTC.

Therefore, I had to speed up the writing of this article and take this opportunity to let everyone understand how important it is to hold Bitcoin.

How did Bitcoin become $100,000?

If I say this today, the probability that it will be regarded as a joke is greater than 99%!
But it’s actually very simple:
Suppose there are 15 million people on the earth holding Bitcoin, and each person holds one Bitcoin. If no one is willing to sell even 1 million Bitcoins at a price lower than $100,000, then the price of Bitcoin is truly $100,000.
Logically speaking, your behavior of holding coins is an effort to achieve this goal!
But even if you pay for it, you may not actually exercise your control.

Because you have lent the coins to others, all you have in your hand is an IOU.

What? You didn't lend it?

Are your coins on the exchange?
It's an invisible and interest-free loan, don't you understand?

Do you have your coins in some kind of Bitcoin financial management?
That is a loan with clear interest, don't you understand?

What does lending mean?

A promissory note means that you only have nominal ownership, and the right to use it no longer belongs to you.
All the rich people got rich by borrowing other people's money! Why?
You never know anyone who becomes wealthy by lending money at high interest rates. Why?
The basic logic is: for any act of lending money, your income is locked in the moment you lend it out, and it will definitely be locked below the social average profit, because, in theory, it is impossible for someone to lend you money just to lose money!
If you want to obtain so-called huge profits that exceed the social average profit, you must bear the risk of losing your principal with a high probability.

What are the risks of Bitcoin on exchanges or financial management platforms?

Stolen by hackers

From Mentougou to Bither, to Piggy Bank and even C Network, huge amounts of Bitcoin have been stolen many times. What is the reason behind this?

1. Technical capabilities: Not all exchanges are as solid as they claim. For teams with insufficient technical capabilities, the wallets they set up on the server may not be as secure as the wallets you manage yourself.

2. Responsibility: If one monk carries water to eat, three monks will have no water to eat. If there is no team with a strong sense of responsibility and working together, more people managing Bitcoin will only make the risk greater!

3. Attack target: All hackers know that exchanges store a large amount of Bitcoin, so the benefits of a successful attack are obviously much higher than those of ordinary users. Therefore, Bitcoin in exchanges is more likely to become a target of attack.

Unauthorized borrowing

In a model where reliable custody of Bitcoin and fiat currency cannot be achieved, both fiat currency and Bitcoin are stored in exchanges. If the 100% margin proof method is not used, the exchange will arbitrarily lend customers' coins to speculators, or keep the recharged fiat currency in loan sharks. These are all unsupervised behaviors. The only thing that can be relied on is the character of the operator, but how fragile is character in the face of huge interests?

Improper transactions

Did the exchange use the client's coins to participate in the transaction? Did it use the user's money and coins to manipulate the market? Did it "create" virtual Bitcoin for trading? If you make improper transactions on a leveraged trading platform, once the direction is wrong, the chance of loss is greater.

Run away with a loss

Don't just think that Ezhubao will run away. Once any company is insolvent and unable to recover, running away is an inevitable option. If they fail to bet against the market, if they misappropriate funds to lend to others and cannot recover them, or if they burn a lot of money and suffer huge losses, they will have to run away "normally".
Since running away may be the "new normal" in Internet finance, what reason do you have not to manage your own Bitcoin?

What kind of platform is reliable?

Under the current policy background, there is no absolutely reliable platform in China, so my suggestion is that if you are a long-term investor, it is best to manage your own private keys.
But if you are a frequent trader and need to choose a platform to trade frequently, then the following ranking is a reference ranking method for reliable platforms:

1. 100% transparent platform for margin assets

2. A platform that does not participate in any unilateral transactions

3. A platform that does not participate in any futures trading

4. Platforms that do not lend Bitcoin to users

5. A platform that does not lend money to users

6. In the future there may be a completely transparent on-chain transaction method that will be very secure, but there is obviously no mature platform yet.

How to hold coins correctly

1. Install an on-chain wallet, such as Bitcoin Wallet.

2. Manage with someone reliable, like the only person you can trust in the world.

Don’t tell me you’re afraid of trouble. Bitcoin has a threshold. Before you spend $100,000, you may have to take the trouble to manage your Bitcoin yourself.

Friendly reminder before the Spring Festival

Before the Spring Festival last year, I still had a lot of coins in my piggy bank. Two days before the holiday, considering that I wanted to spend the Spring Festival peacefully, I transferred the coins to BiFuBao, which was the same investment entity as us. As a result, I avoided the loss caused by losing coins from the piggy bank.

The Spring Festival is coming soon. During the Spring Festival, if there are any problems with the exchange or financial management, you will be helpless. Just keep your Bitcoins somewhere you think is safer.