Not your keys, not your coins
“Not your keys, not your coins” means is that if you don’t control the private keys to your crypto, then you don’t actually own your crypto.
"Not your keys, not your coins" is probably the most important crypto concept you should know about. What it means is that if you don’t control the private keys to your crypto, then you don't actually own your crypto.
To understand this, let’s first understand how cryptos differ from most other assets. When you buy gold, you actually get coins (or bricks) of the shiny metal. You can keep these coins safe in… a safe!
When you buy a house, you actually get physical possession of it.
Crypto is very different. You don’t really get anything physical. Your Crypto journey starts with a ‘wallet’.
This is what a typical Bitcoin wallet looks like:
[private] => fa9af8856397ab2fcd0546cd248791ad9a3046aa3d49fddbdc380ccbce4a5527
[public] => 03c3948b65fc5c86e74af384cd5ef965dc5bf0e940d7ecafd98dc75517a9d45efc
[address] => 1Mk13r5uu51F5jQ6yGuBPxkuZw91nM4MeY
[wif] => L5crYHJ3wP1KF88guJChXPDaqNJ6dS3WBv56JN1o491K7FdMtXdd
The address is similar to your bank account or UPI ID. Anyone can send crypto to your address. If you send crypto to the “wrong” address, it’s gone forever!
Also, remember that the same address doesn’t work for all cryptos e.g. a Bitcoin address won’t work for Ether.
The private key is what you would need to “sign” transactions i.e. to send crypto to someone else. If someone gets hold of your private key, they can transfer all your crypto to another address. This is what happens in most crypto ‘hacks’.
Anything signed with your private key can be verified using your public key. The Wallet Import Format (WIF) is a shorter version of the private key.
Ideally speaking, you should directly hold your crypto in your own wallet.
Many people find it easier to hold crypto with a centralized exchange like Binance or Coinbase. In this case, your crypto is held in the Exchange’s wallet and you do not have any control over it.
So if the exchange operators decide to vanish with your money, there’s nothing you can do! And that’s why we say “Not your keys, not your coins”.