Bitcoin, Crypto currency, Blockchain

Private Keys: Who are Your Bitcoins?

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Bitcoin is the money of the Internet. In addition, there are Bitcoin users self-determination over their finances. Even if the Bitcoin-technology enables this, not everyone enjoys users of these financial sovereignty. Bitcoin have means to keep his own Private key.

In the Bitcoin world there are two kinds of people: Those Bitcoin have, and those that believe Bitcoin to have.

What do you mean “owned”?

Possession means the complete, exclusive control over a Good.

Complete in the sense that the owner can make Good, what he wants. He may keep it, sell it, give it away or destroy it. Notwithstanding the foregoing, for which action he decides, he acts with authority and commits no crime against other people in the society.

Exclusive in the sense that other people are excluded from the same control.

In terms of Bitcoin, the possession takes a special Form, as in Bitcoin, the Private Keys are in control of the Bitcoin on the Blockchain.

What the same Private Keys were?

Bitcoins are not in the Wallet application, the digital wallet, stored. Instead, Bitcoins are always on the Blockchain.

In the Wallet application, the Private Keys are stored. The Private Keys are not the same Bitcoins. Rather, a Private Key is linked mathematically with a Public Key. The Public Key is a simplified receiving spoken address, comparable with an E-Mail address or phone number. Someone has sent you to a past time of Bitcoins to this address, you can create the corresponding Private Key, a digital signature, which can move the Bitcoins. This signature is also associated mathematically with the Public Key of the receiving address, and can be verified by other network participants, without knowing the actual Private Key.

In short: Who has the Private Key to a Public Key with Bitcoin, send Bitcoin.

Who owns the Bitcoins?

The actual owner of the Bitcoin is only the one who controls his Private Keys.

This requires in most cases a Wallet application and a piece of paper on the 12-25 random words. These words are in simple words and easy to read representation of the Private Keys and also Seed Phrase . Anyone who enters the Seed Phrase in its Wallet application, has full access to the account. That is why it is also called Private Key – this key is always top secret (or private)!

An example of a Seed Phrase:

melt unusual enhance amount harsh nose cattle hint approve drift tell friend

You give this Seed Phrase in a Bitcoin Wallet, you can on the Bitcoin access. In this example, the account is empty.

Keep Your Private key secret!

People who think that you have Bitcoins

However, the people who have their Bitcoins to a Public Key, the corresponding Private Keys do not have, or not exclusively, have – technically speaking – no Bitcoins.

This is always the case, if the Bitcoins are held by a third party of the stock exchanges and Exchanges such as Bitcoin.de and Binance.com for example. In this case, you are not in control of the Private Keys, but holds only an IOU against the third party to transfer the Bitcoin to prompt.

If the third party fails to comply with such request, is another matter. Platforms such as Bitcoin.de and Binance have now gained a lot of confidence, but the point still stands. In the case of a Hack of the Exchange of the crypto Coins could be a simple way – think of Mt.Gox. In the case of a Hard Fork, the Exchange might refuse to support. In such cases the actual owner is powerless.

Be Your Own Bank

To come so in the true enjoyment of the financial sovereignty of Bitcoins, you have to be his own Bank. This means, to have sole control over the Private Keys, and to secure these accordingly.

Crypto-currencies should not be maintained in the long term on stock exchanges, but only for immediate exchange, there has to be parked.

If You to the group who entrusted their Private Keys to a third party: It is worth investing an afternoon to make, regardless.

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