Keep Your Wallet Unhosted!

The EU will not ban normal wallets or sneak into their transactions – another reason why you should ONLY use your own wallet

An “unhosted wallet” is a funny expression no Bitcoiner would ever use. It is the nature of electronic peer-to-peer cash that its users own and control it themselves. For that you simply download a piece of software called a wallet that does’nt need to be “hosted” anywhere. Bureaucrats of the European Union invented this term and even discussed banning or at least monitoring every transaction to and from “unhosted wallets”.

For a while it looked as if the European Union was about to scare away Bitcoin entrepreneurs from its territory, which would have led to a loss of innovation and jobs. Fortunately some more reasonable politicians stepped in and avoided the worst. EU citizens can thank Germany’s finance minister Christian Lindner and his Bitcoin-savvy party colleague Frank Schäffler (an author of this blog) that Bitcoin regulations in the EU are turning out not as bad as they could have been.

Image: CC by European Union 2017 – European Parliament

As we know, Bitcoin is already regulated by its own protocol and consensus mechanism. It is designed in such a way that it makes more sense to play by the rules than to cheat. There is no need for any government regulation of Bitcoin – but bureaucrats hate to admit that they are obsolete. That’s why they come up with all kinds of excuses to justify their control over our money like “customer protection” or “terrorist activities”.

It remains to be seen how harmful the upcoming regulations will be for Bitcoin users in the EU. At least, Bitcoin wallets will not become “illegal”. However, it seems that Bitcoin exchanges and other providers of “hosted wallets” will have to disclose even more of their users’ data to the authorities than now, which is bad enough.

Image: Teepublic

Some Bitcoin newbies still make the mistake of leaving their coins with a Bitcoin exchange, although it should be common knowledge not to do that. “Not your keys, not your coins” is a popular Bitcoin mantra. It means: if you don’t control the private keys to your Bitcoins, you don’t really own them.

Unfortunately, many people have become so used to entrusting their money to banks that they think it is normal not to own it. But that is not a good idea. Many exchanges were hacked and their customers’ coins stolen. In the current crisis we see companies like Celsius or Coinbase on the brink of bankruptcy. If you still have your money parked there, better transfer it to your own wallet as long as you can!

You have to learn to be responsible for your own money. Do not to entrust it to anyone, especially not to any company that is controlled by the government. It is not that difficult to manage a hardware wallet and to keep your “seed phrase” in a safe place – or better, in several safe places. Even I have learned it, and I am quite lazy with everything techy.

A Trezor hardware wallet is easy to use (image: Satoshi Labs)

When it comes to money, it is super important not to depend on any government, bank or other third party, but to keep full control over it yourself. This is what the Bitcoin revolution is all about!

So: keep your coins in your own wallet and leave those bureaucrats alone with their futile regulations.

By Aaron Koenig