SNBC - Intro to Bitcoin - Day 6
Not your keys, not your coin.
Lost coins only make everyone else’s coins worth slightly more. Think of it as a donation to everyone. --Satoshi Nakamoto
Today's lesson touches on one important aspect of bitcoin ownership: private keys. In fact, 'ownership' may be a misnomer, since you only own bitcoin in the capacity that you are the one holding the keys to spend it. It is not physically in your possession, as are most things that you are able to own.
It is digital scarcity, which can be quite the mind-bender, since we are used to digital things being easy to copy; but not bitcoin. Bitcoin is a programmatically scarce digital asset, whose rules are constantly being enforced by tens of thousands of nodes across the planet. Not a bank, government nor private lender creates the terms of this money, but code. Knowing the private (spending) keys to bitcoin symbolizes your possession of it. Therefore, the distinction between knowing and owning starts to get blurred:
With the introduction of Bitcoin, information itself became valuable. Information now has a literal value. This is an abstract concept and it's challenging to discern its implications. Holding the private keys to a specific Bitcoin address is owning Bitcoin. In Bitcoin there is no difference between knowing and owning [...] In Bitcoin, the information representing the asset is the asset there's no clear distinction between information about Bitcoin and Bitcoin itself. When information is ownership money becomes a language in the true sense of the word. It will put all the free speech laws of the world to the test. You can now claim ownership by communicating a string of numbers, or by memorizing 24 words. The lines between knowing and owning are now forever blurred1
Bitcoin, therefore, is a bearer asset that, when sent to a new address, and has been confirmed2 on the block chain, represents an immutable monetary settlement, that physically cannot be reversed by any bank, government or earthly power3.
The following readings have been selected to give you a sense for the importance of the responsibility that comes with holding your own keys. You will see that even experienced bitcoiners have lost their keys and you will read another blog post from Jameson Lopp about some key management best practices.
Let's go after it!
Learning Objectives
🎯 To read and appreciate first hand accounts of lost bitcoin
🎯 To become aware of the importance of key and password management
🎯 To realize the importance of good cyber hygiene and to start practicing now
🎯 To become aware of the phrase, 'not your keys, not your bitcoin,' and to understand its relevance.
Stacker News Readings
⚡️ Lost $1000+ worth of BTC - not your key, not your wallet, true as hell, by @NeuroNinja
⚡️ If you can't transfer those sats, you haven't earned anything, by @StillStackinAfterAllTheseYears
⚡️ The Dos and Don'ts of Bitcoin Key Management, shared by @utxo
Reflection questions:
👉 What does it mean to say that in bitcoin, "there is no difference between owning and knowing"?
👉 Check out the post "The Mysterious Bitcoin Eater address" (linked below). How/why can it be that bitcoin sent to this address are considered 'burned.'
👉 How would you evaluate your current 'cyber hygiene,' according to the principles discussed in Lopp's article? What are some tangible ways this can be improved, today?
For further study
⚡️ Element Zero, written by Knut Svenholm, narrated by Guy Swann and presented by Ioni Appleberg
⚡️ Devin O'Dreary gives the worst Bitcoin advice ever
⚡️ Have you ever lost a (sic) access to a private key?, by @Science_Genial
⚡️ Be Your Own Bank - Think like a Bank, by @DarthCoin
⚡️ Security Guide for Beginners, by Jolly Rogers
⚡️ The Mysterious 1BitcoinEaterAddress: A Symbol of Bitcoin's Immutability, by @ilk
Never stop learning
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⚡️On to Day 7⚡️A transaction is generally considered confirmed after six blocks, although this has recently been put into question because of mining centralization risks. See this thread for details.↩
It should be noted here that it is practically impossible, as any such attacker that would try this faces an enormous cost.↩