Roughly 20% of all mined bitcoin is estimated lost forever, and a meaningful share vanished with failed custodians, not forgotten passwords.
→ Mt. Gox held about 850,000 BTC when it collapsed in 2014. Creditors waited a decade for partial repayment.
→ FTX customer withdrawals were frozen overnight in November 2022. Roughly $8 billion in customer funds was tied up in the bankruptcy.
→ Exchange balances are IOUs. You hold a database entry, not UTXOs, until you withdraw.
→ A hardware wallet keeps keys offline and signs transactions locally. A $60 to $80 device protects against exchange failure and remote hacks. It does not protect against losing your seed phrase.
→ Seed backups on metal, stored in two separate locations, beat any single point of failure. Test your recovery before you need it.
Self custody moves risk from a company's balance sheet to your own discipline. That trade is worth making, but only if you treat key management as seriously as position sizing. Exchanges are fine for trading. They are not a vault. Verify your withdrawal addresses, keep most holdings in cold storage, and assume every platform carries some counterparty risk you cannot see. Not your keys, not your coins remains the most practical rule in this market.
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→ Mt. Gox held about 850,000 BTC when it collapsed in 2014. Creditors waited a decade for partial repayment.
→ FTX customer withdrawals were frozen overnight in November 2022. Roughly $8 billion in customer funds was tied up in the bankruptcy.
→ Exchange balances are IOUs. You hold a database entry, not UTXOs, until you withdraw.
→ A hardware wallet keeps keys offline and signs transactions locally. A $60 to $80 device protects against exchange failure and remote hacks. It does not protect against losing your seed phrase.
→ Seed backups on metal, stored in two separate locations, beat any single point of failure. Test your recovery before you need it.
Self custody moves risk from a company's balance sheet to your own discipline. That trade is worth making, but only if you treat key management as seriously as position sizing. Exchanges are fine for trading. They are not a vault. Verify your withdrawal addresses, keep most holdings in cold storage, and assume every platform carries some counterparty risk you cannot see. Not your keys, not your coins remains the most practical rule in this market.
Share with your crypto friends
#LearnCrypto #CryptoEducation #Investing #Bitcoin #CryptoMarket
📱 Follow @PoorCryptoMan