How To Safeguard Your Money: Bitcoin, Litecoin, Ethereum and other Cryptocurrency
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Hey gang, this is Mike with my RealEstateDOJO and you guys know that I’ve been talking about Bitcoins, cyber currency for the past few weeks because the market crashed. Bitcoin was almost 20 grand, crashed down to like 6 or 7 grand, right around there and we’re back up now in 11 and some change as I’m making this video. So the point is many of us that are coming to crypto currency is we don’t understand it, it’s hard for us to know what it is so when we buy we think that when we leave it somewhere at the exchanges that, that’s all we have to do, and after doing my research for a while and after buying significant amount of crypto currency and after having the different levels and doing my research I realized that it’s really complex so I wanted to narrow it down to just 3 ideas for people that are just getting to crypto currencies so they can understand that.
The first level is what I call “you’re not the bank’ so again, you’re not the bank. Many of us heard, Mr. Obama the president on the news that when you buy Bitcoin, you have the bank on your phone but at level one, you’re not the bank yet. So what that means is you lined up on an exchange with your fiat money, and if you don’t know what exchange is, it’s the place where you take your fiat money and you turn it to digital access like Bitcoins or Lite coins, Ethereum, etc.; and if you don’t know what fiat is, fiat is something that’s printed by the government that’s not backed by gold etc. it’s just a made up idea, some guy at the printing shop printing it up. It’s not like they’re digging gold and it’s backed by gold. So the level one is you’re not the bank. Many people think that when you buy Bitcoins, we easily become our own bank and that’s actually not true because what happens is people are lining up to the exchanges and they’re parking their money there, their fiat money; they bring their fiat money in and they get Bitcoin so they parked there. They get exchange for example coin banks; now there’s a lot of different ones out there and what have you, so we leave our money in there but again, in this level one is the most riskiest level where you’re not the bank because coin base can get hacked, all the hackers know there’s a lot of money out there, it’s going to be like missed managed, employees, they can seize your money, they can seize your account if you deal with PayPal or something like that. So simply put it’s your money and you don’t have complete control of it. It’s the same thing as putting your money at the Bank of America or change or whatever, not that there’s something wrong with that but you don’t have control of your money, if the economy crashes you have to line up in front of the banks “can I please get my money” and sometimes they don’t have the money to give you, you just look into history and you can see that recently it happened in Greece, just in recent times in other parts of the world and people couldn’t get their money out of the bank, if you don’t believe me just get in YouTube. So it you come back to Bitcoin in cyber currency if you leave your money at an exchange, you’re not the bank they’re holding your keys or in this case to simplify, they own your money in a sense. No one is holding your money because your money is in the block chain and your private key is what allows you to have access to that vault or access for bank ship. To simply put it, they are the one “holding your money” if you want to say that. You are not in control, so the worst place to put your money is here because you’re kind of trying to get the freedom of cyber currencies bring you but you’re not really capitalizing in everything.
Now the great new with this is it’s convenient, when you use one of these exchanges, it’s convenient and if you forget your password, you can ask them for it and these in that nature, but with convenience you lose your privacy, you lose people getting hacked into you, you lose from miss management and that nature. Also when you say that the more convenient it is, the more risk it is. The next place where the most people, people with experience and know what’s going on will keep their money. Let’s say you invested a hundred bucks or a thousand bucks on coin base or any of these exchanges and some people now want to put their money somewhere safe.
Level one is you convert your fiat to Bitcoins or Ethereum or Lite coin, level two is where you become the bank and this is very important, this is what the benefit of this currency is you actually become the bank, in number one you are not the bank you are just letting the bank or the exchange hold your money just like you would at Bank of America; it’s your money but someone else is holding it for you. In level two, you become the bank which means that you take your money out of these exchanges and you put them on this wallet, there’s different kind of wallets like hot wallets, I’m not going to technical stuffs just know that there are multiple types of wallet out there and I’m going to go ahead and break some of those down for you. So instead of the exchange holding your money, you’re holding your money; there’s 3 different types of wallet you can setup.
One of the wallets is right through the web, you can have a web wallet and you can keep your own private keys in them. Another type is you can have apps on your cell, you can keep your private keys and you’re the bank. The third type which is really the most powerful one, this one is more secure, the convenience maybe high but if you forget your password or if you forget how to log in then you could lose all your money, one of the most important thing about Bitcoin is it empowers the people, with freedom comes responsibility, you don’t have a third party like the bank of Bitcoins to go to and say “hey what’s my password?” so if you lose your money or your key to get in, then there’s no one or anyone to help you can get your money back. We don’t want this third party that charges $10 a month, all these fees all that stuff just to save card of money and get hacked like Echo fox did and things by that nature. So you guys may want a baby, so you guys need a baby sitter some of you guys are adults and you don’t need a baby sitters but I think that we have choices that’s what I’m saying, I don’t want to go to the teller and slide my card and put my security number just to get access to my money, I don’t want to go to the bank teller and say “hey I want 20 grand now” and they don’t have the money, they got to get the manager, they got to look at me for 20 minutes and say I can’t because that’s such a great amount out and that happened before, so it’s my money who the hell are these people to tell me what I should do with my money, they didn’t earned it, they supposed to be the keepers of it, not my custodian, it’s not my parents.
These one, you’re the bank, it gives you a lot of freedom but also it gives you a lot of responsibilities, and if you f*cked up with your responsibilities, if you’re not an adult then you got to pay the consequences which is losing your money, it’s just as simple as that; it’s like you got cash on your wallet and you’re walking around and you dropped your wallet, what bank can you go to? There are benefits for having a bank but there are downsizes for having a banks like all these fiat inflation, they are in control, they tell you that you can’t do etc. like that.
Before I go into the third part let’s do a recap; number one is you’re not the bank and you’re getting the money from the exchanges, coin base and you’re just leaving your money there, very risky for hackers etc. Number two, you become the bank and you’re able to do that through web wallets, phone wallets and also PC wallets like if you have a laptop or you have a computer, desktop, mac you can do that or you can do that to mobile, this can be I don’t have anything, I don’t have a computer, I go to the library, I live in Africa or I live in Irving or in Dallas, it doesn’t matter, I’m a minimalist I don’t have a laptop I just go to my mom’s house and just pull it up, go to the universities and pull it up, I don’t even have that kind of stuff. It doesn’t matter, that’s the cool thing with Bitcoin because it’s for everyone, it doesn’t matter where you are, what level of finances you have, and this is very powerful guys. The second one, you get more security versus the first one but you have to be responsible and you get more privacy.
The third one, the third level, which is the coolest thing I like is what I called “out of the matrix” you’re out of the matrix and it’s pretty cool because there’s basically three ways to do that, to get out of the matrix; some of the Bitcoin communities called this cold storage and three ways to do that is; one, it’s called paper wallet and what that means is you put your information, you put your money, your private keys into this and then you’re not in any of those level one and level two; it’s here, you may put this in a safe which I do, you may put it in the bank, you may put it underneath your bed, you may keep it on you, whatever. And it’s not connected to the internet that’s why you’re out of the matrix and one of the major things with crypto currency is hackers, even though Bitcoin hasn’t been hacked, people’s wallets has been hacked so that’s why I talked about how to safeguard your money with Bitcoin, Lite coin, Ethereum and etc. so paper wallets are awesome because you’re out of the matrix. Now level three is the most security but the most inconvenient and you got to be a good custodian, you got to be an adult you can’t just put your money in a piece of paper and put it somewhere and forget where you put your money, it’s going to be like those coins people find today from a hundred years ago from Spaniards in an abandoned ship or something like that, you don’t want that to happen to you.
The next thing is called the brain wallet, I really like this one because what happen is kind of like you write down the phrases or password to have access to your keys and you just put it in your brain, you don’t have it in a paper, that’s it you’re just walking around and say you have a thousand dollars on your bank account, you’re walking around and everything is in your brain. It is so awesome because it allows you to transfer money without getting robbed, everything is in your brain, without losing it, there is nothing to lose it’s all in your brain. Is there a risk? Yes, is crypto currency more risky than money? I don’t think so, I think money is risky and crypto currency is risky, they both have risk, you have to be an adult about it but I think every time I have to call someone to give them my social security number to get access to my money, I think that’s more risky because every time I give my information, my social security, my zip code, my birthday, my momma’s name, all that stuff, so every time I have point of contact with this service providers, banks, I have to give all these private information’s up, I don’t know who these people are, some of these people are committing bad crimes. For example, you buy something or at dinner you give them your credit card and he come back, to me that’s more dangerous, than me taking care of my things. They’re both dangerous but I think this is way far more dangerous than me taking care of my stuff, I don’t have to give everybody my information, I don’t have to go to a banker and say “can I take my money out of my own banking account?” and they’re going to ask like three or more managers and tell me another day because it’s a large amount of money or whatever, or they’re looking at me and verify. Who wants to do that? Drive there, wait, this and that, it’s not cool.
So the third way to safe guard your money out of the matrix is one paper, two is brain and the last one is let’s call cold storage, all of these are called storage but this is a cold storage device and basically it looks like a USB at the time that I’m making it. And there are two different companies that make it; what that does is you take your private keys or you take your money and you put it into this device in your safe, in your car, whatever it is and again it’s out of the matrix, the powerful thing about this is out of the internet, out of the matrix so hackers cannot get into them; for example, in the USB if you have a spy or malware or hack on your computer when you’re trying to take your money from the USB, they’re not going to be able to tell it because those information never gets to the computer, all the transactions are done in here, so this is the most safest way to hold your money; but it’s the most least convenient way.
Now, the way that I am holding my money would be in this stage, for large amounts of money, I’m going to go with level three. For everyday money, I’m going to go with level two. So level three is kind of like you’re savings and level two is like your checking that you use to pay for your gas and level one is your exchanges, and level one is for me to turn my fiat money into this currency, that is what it is. I will keep the least amount of money in level one, in level two I will have two and the rest I will probably put in level three. That way it’s safe, if in my every day I got hacked a couple of bucks and in one I’m just converting and decide if it’s going to go to level two or three.
So simply put if you just get your money from let’s say you buy some Bitcoin and Lite coin and just keep it on exchange, know that you’re in the most risk of losing your money, it already happened before, just Google it, YouTube it, so you don’t want to keep your money there, it’s the most risky. Sure there’s lost and this and that you don’t want to do that, it’s like if you want to do that you get your money on the bank, in your local bank, if you’re trying to get out of the banking system then choice number one is the worst choice, two if you want more security then you want to master your master keys, you want to hold on to them and the way to do that is to a web wallet or phone wallet or a computer wallet and if you want the most security then you want to go to what I called out of the matrix and you can do a paper wallet or you can do a USB device. Bitcoin or being an adult takes responsibilities, if you’re not responsible and you can’t tie your shoes and you forget stuff all the time you may be safer off at the exchanges because if you forgot your password, they will give it to you. But if you think you can manage your money and you’re willing to put the responsibilities, you can have the freedom that requires for you, then you go with one of the other options that I gave you.