October 15, 20212 min read

What Do Storage Lockers & Crypto Have In Common?

Ship 30

When you buy a cryptocurrency you don't have ownership of the coin.

A little backwards, isn't it?

You spend your hard earned money to buy an asset yet it technically does not belong to you. Crypto is different from cash where you hold a physical asset.

How does a storage locker come into play?

Venue such as gyms, amusement parks, schools allow you to rent a locker as long as you bring a lock.

They provide the storage space, and you provide the mechanism to access this resource. This way you can store your belongings inside the locker knowing that you're the only one that is able to access it.

On your way out remove your lock, pack your bag, and the locker becomes available for the next person to use.

Crypto uses a key & lock mechanism

You bring the key to lock up a value on the public ledger.

Your key is used to cryptographically sign a value validating that you can interact with the coin you purchased. You have the option to sell or swap the coin, so long as the signing key from the original purchase is used.

Here are some other key details you'll want to make note of.

Tip #1: All transactions and holdings are public. The ledger is publicly available on the internet. Even those who don't hold crypto are able to see how the ledger is being used.

Tip #2: Exchanges are in charge of your coins. Exchanges use their signing keys at the time of your purchase. Move your coins onto a cold wallet to ensure it's signed with your personal key.

Tip #3: Backup. Backup. Backup. A random passphrase can be used to recreate your key in case you lose it. Be sure to keep multiple copies of this, especially a physical version on a piece of paper.