I heard “Not your Keys, not your Coin” on this sub hundreds of times. Never really understood the real meaning though!
I admittedly trusted Coinbase with my coins up until last week.
The reason was, my interpretation to “Not your Keys, not your Coins” meant to me that Coinbase could block my account and deny me from reaching my coins. And personally the risk of having my coins on me was higher than on Coinbase. So I left them there.
What I recently learned that this term was not explained well enough to me to understand what exchanges were doing, and if I did, I would have weighed the risk much differently.
Apparently, exchanges were playing the old banks game of selling IOUs, when they don’t even HAVE the coins. Not that my coins are with them and I might be blocked. No, there was no coins to begin with. They were basically “printing” Bitcoins. That was a sudden realization to me. I didn’t know I was buying IOUs. I thought I was buying Bitcoin.
Me not pulling my coins after buying them only helped them play this game even more. And I was part of the problem just as they.
Now I’m thinking, how did selling IOUs effect the real price/value of Bitcoin. If they were/still are “printing” Bitcoin. They must have affected the price greatly.
I now also understand the need for regulation. It’s more about regulating this aspect, more than anything else. Unfortunately, most of the regulation we have now is on the buyers side. With ID verification and taxes. We need regulation on exchanges to ensure they are selling something they actually own.
I want to add one small detail, Coinbase might technically be in a better position than other privately owned exchanges. But still. I wouldn’t make the same mistake even with them.
Very disappointed of my self that it took me this much time to understand. Hope this helps someone better understand this current situation.