People who join the Bitcoin Club are delighted to regain control over what they own by buying Bitcoins. However, they should keep in mind that they only own their Bitcoins as long as they are in possession of the associated private keys.
So rule number 6 of the Bitcoin Club is easy to remember:
“No Your Keys, Not Your Bitcoins”
In the traditional banking system, the bank guarantees the amount you have in fiat money in your account. Your bank is responsible for what you have in fiat money.
If your bank gets hacked and loses millions of dollars, you will get your funds back because the bank is insured against this type of risk.
With Bitcoin, things are totally different from traditional banking system.
First of all, you need to understand that the expression “own Bitcoins” is a shortcut. No one actually owns Bitcoins.
In reality, you own the cryptographic keys to part of the Bitcoin Blockchain. This subtlety is essential to understand what is to come.
If you buy Bitcoins via a trading platform, and then leave your Bitcoins on that trading platform, then the trading platform will have the private keys to your Bitcoins.
The trading platform will then own your Bitcoins.
You will have the same risk of censorship as with the current monetary and financial system.
To really take care of your Bitcoins, you must transfer them immediately to a hardware wallet where you will be able to control the private keys of your Bitcoins.
Therefore, rule number 6 was created primarily to protect the wealth of Bitcoin Club members.