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How to Maintain Ownership of Your Cryptocurrency

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Every day, new people are discovering the benefits of bitcoin and cryptocurrency. Many have purchased their very first digital asset from exchanges such as Circle Invest or Coinbase.

However, only a few will have learned how to keep their private keys secure so that they can really call themselves the owner of those precious coins. Veteran bitcoiners have repeatedly said that if someone buys bitcoins, but aren’t in possession of their private key, they don’t truly own their digital coins.

ownership of your cryptocurrency

This is a fact that will become an increasingly important one to know as bitcoin grows in popularity. The digital currency is being used more and more widely in a number of industries.

One industry where it’s proving to be a force is the music industry, with artists encouraging its use among music buyers as a way to cut out the middleman, such as producers and record labels. Bitcoin is also being accepted by a growing number of online casinos, with sites like Gamble.io offering a directory of those that accept the digital currency, including BitStarz.

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They enable bitcoin owners in everywhere from Australia and Europe to Canada and the U.S. to use their digital coins when playing casino games. The only way that those who use bitcoins in these industries can really own them in the first place, however, is through private keys.

Private keys and how to acquire them

A private key is a secret alphanumeric code mathematically paired with your public key- the alphanumeric address where you receive payments. Private keys enable you to spend your digital currency and ensure that ownership remains under you, as long as you keep the alphanumeric code a secret.

Private keys can be stored in a number of ways.

Mnemonic phrase

If a wallet was given to you, you may need to find out the cryptocurrency’s mnemonic phrase or associated mnemonic seed. An example phrase would be 12 random words that the software client gave you, which you need to back up, noting it down in the exact order that it was given to you. You can use the phrase to recover your cryptocurrency, using either the same wallet or a different one.

A backup JSON file

A JSON (JavaScript Object Notation) file is a lightweight data format file that enables it to be read and written easily by both machines and humans. Browser wallets will sometimes give you a JSON file with your coins’ private keys. The files should be imported into a compatible wallet to provide access to the coins associated with the keys. The files should be safely secured. You can hide and encrypt them in folders to prevent access from intruders.

Importing and sweeping

These are two ways of securing ownership of keys, which both occur during the cryptocurrency-import process. When you import a private key, you’re tethering the funds belonging to the private key to an existing set of keys on your wallet. So the coins remain linked to the private key that may be linked to a paper wallet, for example. Each wallet can now access the funds tethered to the private key until those funds have been spent. Sweeping is essentially importing, but the private keys go to a different address entirely, and the original imported key set is emptied and rendered invalid.

ownership of your cryptocurrency

To summarize, keys can be stored in Mnemonic phrases, JSON files, and via importing or sweeping, and every cryptocurrency owner must know how to access them. If your money is being held in an exchange, you are telling the third party that it’s okay for them to own your coins and, if that exchange is ever hacked, you could potentially lose your coins.

Being able to access your coin’s keys means that you have full ownership. After all, the main benefit of owning bitcoin is that you can essentially act as your own bank.

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