This is part 2 of the Purist´s Guide to Crypto, if you haven´t read part 1 yet you can do that on this page. Ok, with that being said, let´s get into the second part of this guide!

Crypto – the dream of autonomy

In my inaugural post in this series on crypto, I talked about how anonymity wasn’t just the trivial obsession of the terminally paranoid, but was key to protecting ordinary folk from the predations of the powerful. In this post, we need to consider another major motivation for the early pioneers; the desire to have true autonomy. In crypto terms, this translates as real ownership and control of one’s assets.

When is ownership not ownership?

Few people understand that when they put their money in the bank, that money is technically no longer theirs. It has become the bank’s money, to use as it wishes, and can only be retrieved under certain conditions. Just try withdrawing all your money as cash, without notice, and you will understand what I mean. Even if you are the perfect customer, with a respectable job and an impeccable credit record, you will be interrogated about your intentions as if you were a common criminal. Some of you might also remember the bank ‘bail-ins’ of 2013, when uninsured depositors at two major Cypriot banks had as much as half of their money seized.

Banks are fond of advertising slogans that stress autonomy, empowerment and independence, but someone should stick them under trades’ description legislation. If your money is in a bank account, it is only ‘yours’ on sufferance. Banks will even speak honied words about empowerment when they are taking extra steps to limit your access to your money!

Have you ever written a haiku – those three-line Japanese poems with the syllable pattern of 5-7-5? Here is my effort, inspired by those compassionate folk at commercial banks:

“Bank with us to get

more control over your cash.”

Look! A flying pig.

The road to true control

The crypto pioneers wanted to create money that would allow someone to have complete autonomy and independence. Increasingly, however, people are interacting with crypto through platforms that trample on this original intention. The distinction to be aware of is between custodial and non-custodial entities, which determine the amount of information that you alone hold. As per the old saw that knowledge is power, the ideal is for you, the owner of crypto currency, to be the sole holder of the most pertinent information about your asset – and how this can happen is what we will now explore.

Public and private keys

You may have heard about the cryptographic element of crypto trading being provided through ‘private’ and ‘public’ keys. Simply put, this mechanism is used to encrypt and decrypt transactions on the blockchain – hence putting the ‘crypto’ into ‘cryptocurrency’. They are what is known as ‘trapdoor functions’ – mathematical functions which work in one direction, but are nearly impossible to reverse engineer.

When you hold cryptocurrencies, you are allotted what is called a ‘public key’ – a set of letters and numbers in a set sequence. This is what you give to people so they can send you money, and it is perfectly safe to share freely. The public key acts as a form of escrow – any money sent to you is held in limbo, until you use your private key to access it. The private key is paired with the public key, but as the operative word is private, it should never be shared with anyone (unless you are absolutely sure they won’t run off with your money).

Private keys can take different forms. They can be sequences of letters and numbers like public keys, or they can be QR codes, or even a sequence of random words jumbled together like a lexiconic soup. It is possible to generate a public key from a private key, but not the other way around. This is a very superficial introduction to the encryption process – we will revisit this subject at a later point.

In loco parentis

The location of the private keys is where things get interesting. When people talk about owning cryptos, they are really referring to owning the private keys that prove ownership. If you don’t hold and control the private keys, could you really be said to be in control?

Lots of people, however, buy and store their crypto on entities that hold their private keys in trust for them. At face value, this may seem like a lot less hassle as it usually involves few steps, and removes the responsibility of familiarising yourself with the principles of basic crypto security, but it means your private keys are no longer private. Remember the problem of the grabby, duplicitous banks pretending that you have more autonomy than you actually have?

This is what it is to have a ‘custodian’ of your currency. It’s a bit like having mummy lock away your toys overnight; they are thereby protected from the family dog, but you, the supposed owner and beneficiary, don’t get to access them unless mummy is in a good mood.

Moreover, if you wish to trade your coins on a custodial exchange, you must run the risk of not being able to get your coins back once the trade is completed. Custodial exchanges will always be centralised – that is, they exist as one site with all their data in one place – making them vulnerable to hackers. Such hacking has occurred on numerous occasions, when the exchange has been compromised by security breaches. Many of the most well-known centralized exchanges have been hacked, including Poloniex, Binance, BitFloor, Bitstamp, Coincheck and BitGrail.

Yet more worrying is the ever-present possibility that control-greedy governments will find it far easier to seize any crypto held on centralised custodial entities. The custodial entity may be forced to do this against their will, or may happily roll over, but either way the supposed ‘owner’ will be left to rail against their cruel mummy like an impotent child.

Custodial exchanges – heavily promoted for a reason

Given that heavy-handed governments are now the norm, however, it’s no surprise that it is the custodial exchanges who get all the publicity. They are strongly promoted as being user-friendly, secure and respectable, and hence more suitable for beginners and small investors. The grandaddy of them all is Coinbase, but there are many more, including GDAX, Binance, Kraken, Bitfinex and Poloniex.

We would strongly suggest that you avoid them. Even more importantly, do not be seduced into buying and storing crypto on PayPal. These ‘big name’ organisations are bandwagon-jumping in a way to entice the unwary into accepting an inferior, and ultimately self-defeating, experience of crypto currencies – one that destroys the possibility of true independence. In true flying pig style, they are implicitly flogging the idea that it is possible to be both tame and free, but this is a dangerous illusion.

Be your own bank

The truth is that if we want to reap the benefits of having real freedom and autonomy – real control over our assets – we have to be prepared to take more responsibility than we have become used to with the old-fashioned banking system. The promise of crypto is to become our own banker, but this does mean working a little harder to use a more complicated interface, to understand our choices, and to research and choose our own secure storage systems.

Here at NoHypeInvest, we position ourselves as opponents of a culture that simultaneously flatters and infantilises the public. We know that our investors are intelligent, determined people who also want to invest in their own intellectual development, and we are here to help you do that. In our next post, we will be taking a closer look at the various alternatives to the custodial exchanges, and their relative merits.

P.S.

I strongly believe that time is running out for people to even be able to purchase cryptocurrencies with fiat, as fiat money is getting worth less and less and crypto becomes more expensive… Inflation is around the corner so it will simply be to expensive to even get a little bit of crypto soon, at least that is what I think… So please, if you haven´t already got started with crypto, you might not want to wait much longer. The best way (in our opinion) is to join the NoHype crypto team of like-minded investors helping each outher out!

==> Join the NoHype Crypto Service <==

Thank you for reading,

Anna, investor and team member of NoHypeInvest.com

For any child growing up in the 70s, it was hard to avoid Westerns. Maybe half of the films on TV featured cigarillo-chewing dudes sweating in deserts. Most families only had one TV, so if your dad liked Westerns, the whole family had to bloody learn to like them too (equal opportunity families were still a rarity).

What has crypto got to do with cowboys and Indians? Only that the Western gave us the metaphor of the Wild West – a place where pioneers battle the dangerous unknown so law and civility could triumph for all. In crypto terms, we aren’t quite at the beginning of that process – we now have a Main Street, a saloon and a bordello – but we are still some way off opening up crypto to everyone.

Pioneer spirit

My aim in this blog post is to help the absolute beginner get started, so the crypto Wild West can become a bit more hospitable and familiar. As this is an endlessly complex subject, this blog is the first part of a series. I will start with some basics – understanding the point of crypto, and some key distinctions that help us honour that point. I will not be discussing the mechanics of buying crypto as yet (that will be dealt with in a future post) as the why of crypto should rightly come before the how.

This is important because all too often, when I speak to novices, they talk as if the only point in investing in crypto is to make a killing in a rapidly rising market. There’s nothing wrong with wanting to make money, but crypto is far, far more than merely a profit opportunity, and focusing only on short-term profit is to miss most of its most important facets.

The early adopters of crypto had far better motivations. They wanted to create money which wouldn’t just replace one set of wealthy insiders with another set, but would facilitate a superior economy, by undermining the power of corrupt, centralised authorities in order to liberate people from their predations. They understood that those with monopoly power over money have strangled innovation, destroyed community cohesion, undermined entrepreneurship, speculated in assets at the expense of ordinary people, and created chronic inflation.

Price ‘stability’, with love from the Fed

It is unfortunate, but probably inevitable, that these original motivations for creating crypto are being increasingly subverted – particularly by mainstream commentators and participants coming belatedly to the crypto party after scoffing on the sidelines for years. I will here discuss a crucial distinction within the crypto world to illustrate how the original purpose of crypto is being undermined, and what we can do to stop this happening.

This distinction relates to how much information you divulge when you buy and sell cryptos. As everyone knows, one of the most problematic aspects of the modern world is escalating surveillance, which is being used to reduce freedom in every aspect of life. Every normie financial institution insists that you declare important and sensitive information, through the Know Your Customer (KYC) process, which collects information, government-sanctioned identity instruments, and, increasingly, biometrics, to verify identities. The early crypto pioneers wanted to fight this intrusiveness by creating truly anonymous and secure payment systems, but this original intention has been steadily undermined, as KYC has been transplanted into the crypto space from the normie world.

Why Privacy?

Why did the crypto early adopters focus so strongly on the importance of anonymity? It wasn’t just an idle affectation, or a sign of intended criminality, but a key part of their reforming instincts. They appreciated the danger of the increasingly asymmetric power relations in society, and how big governments are using tactics like KYC to wield power over the little people. Striving for anonymity is the best method of warding off totalitarian strategies such as social credit systems. The fight for anonymity should therefore be at the forefront of our minds when we engage with cryptocurrencies.

This isn’t to say that KYC is quite as stringent in the crypto space as it is in Normieland. Cryptocurrency exchanges have less regulatory attention (so far) so can afford to be more relaxed when enforcing KYC requirements. A good example of a KYC-using exchange is Binance. Binance justifies its use of KYC with the following paragraphs:

Some humor

This kind of normie-speak sounds oh-so-reasonable, until one remembers that most illicit financial practices couldn’t happen without the complicity of the banks that impose KYC regulations. And as for the notion that crypto should worry about its reputation with those fundamentally corrupt institutions…

Generally speaking, KYC-enforcing sites will be centralised, and those that don’t use it will be decentralised. With a centralised site, the site is stored on a single server in the old-fashioned way, and all trades flow through this site. With a decentralised site, the users download an app that allows them to act as a secure hub and trade with other users with their own separate hubs. This is what is known as a peer-to-peer network, and they allow for the complete anonymity and security that was desired by the original pioneers. Thus, we should ideally look for decentralised sites that allow us to preserve the purity of this original motivation:

A good example of a decentralised site is Bisq.com:

There are no prizes for guessing which category is true to the principles of the crypto pioneers, but it is amazing how few people go to the effort of finding non-KYC sites. In fact, the vast majority of people buying crypto are using exchanges which require KYC verification. This isn’t because alternatives don’t exist, but because most of the ‘how-to’ guides that people see downplay the importance of anonymity, and send readers to the KYC sites like unwitting lambs to slaughter.

Generally speaking, KYC-using interfaces are judged to be more ‘user-friendly’, and this is how they are promoted to newbies. However, for the sake of the original promise of crypto, it is worth making a little bit of effort to use non-KYC sites.
A good resource when it comes to finding non-KYC options is the site KYC Not Me (kycnot.me/about). It’s a simple site run by an anonymous altruist (in the true crypto spirit), that provides a few suggestions about good exchanges and services, using an easy-to-understand rating system:

In a future blog, we will go through the process of buying crypto on a non-KYC site. However, the next post will deal with another important principle – autonomy – and how it can be ensured in the crypto space.

Thank you for reading,

Anna, investor and team member of NoHypeInvest.

P.S.

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Please share your own experience in this subject below! Also, if you got any questions I would be more than happy to answer them below as well!

I wish you the best!