As part of the cryptocurrency community, you may have heard the adage “not your keys, not your coins.” Most users know this phrase, but there are still many who do not hold their own keys. When you first buy Monero, you are issued two keys—a public key and a private key. Your public key works like an email address. You can share it with others so you can send or receive XMR. The private key, on the other hand, works like a password and you should never share it with anyone. You are the only one with access to your XMR if you hold and keep your private key secret.
Holding your own keys is important because:
It preserves the privacy Monero offers.
When you leave your Monero on exchanges or custodians, you don’t actually own your private key. They do. This doesn’t mean that you lose the privacy Monero promises when you leave your XMR on exchanges. After you send funds, Monero provides “forward-secrecy.” The exchange or custodian will see where you sent the funds and how much you sent, but they won’t see how you spend your XMR.
It facilitates Monero’s resistance to censorship.
Regulatory agencies can force and exchange or custodian to blacklist your XMR, seize them, or prevent transactions to certain addresses if you don’t hold your own keys. This is already happening as governments realize exchanges are the easiest way to control the use of privacy coins, such as Monero. In certain countries, centralized exchanges have delisted privacy coins. Some exchanges work around such policies by offering XMR via pairs with other crypto tokens instead of using fiat. It’s also possible that a government will ban privacy coins outright. If your XMR coins are not in your own custody and left in exchanges, you may never be able to withdraw it.
It hinders theft of your Monero.
Cyber criminals stole almost $500 million worth of crypto from centralized exchanges in 2021, according to a Chainalysis report. This represents how much risk there is in leaving the bulk of your XMR on an exchange. When you hold your own keys, it’s less likely that you will be a victim. You still need to be careful of online scams and malware, though. It’s also worth repeating that you should not share your private key with anyone unless you completely trust that person.
Secure your keys in crypto wallets. Crypto security experts recommend putting the bulk of your tokens in hot or cold wallets that are non-custodial, which means you own it. Cold wallets are devices where you can store your keys offline. It’s usually compact and you can easily be carry it around. Hot wallets can only be used online. A hot wallet makes sending or receiving funds more convenient for users, especially if they need to make a lot of transactions. These can be web, mobile or desktop wallets.
Holding your own keys simply means knowing the seed phrase linked to the wallet. Seed phrases consist 12, 18, or 24 words that can generate the keys to your XMR. Keep your seed phrase safe by saving them on a device that is not connected to the internet. If you store it physically, consider about where you’ll keep it. Some people use a safety deposit box in a secure location or in a bank.
XMRWallet is a hot, web-based Monero wallet. It assists you to have faster, easier, and uninterrupted Monero transactions. It will not require you to give your e-mail address, username, contact number, or anything else that can identify you. No registration is required and no user logs are kept. It is open-source and free. Create an XMRWallet account by going to xmrwallet.com and clicking on “Create XMR Wallet”. You’ll land on a page where you choose from among 10 languages and where your 25-word seed phrase is. Type in your seed to confirm. Don’t forget to write it down and keep it some place safe. You can have several copies of your seed in different places as backup in case you lose the original. Once you’ve typed in your seed for confirmation, you’re logged in your account and you can immediately start Monero transactions.