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docs/topics/bitcoin-hardware-wallet/00-beginners-hardware-wallet/lesson.md

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@@ -42,9 +42,11 @@ Bitcoin was created to remove the need for trusted third parties, like banks and
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The way this works is that bitcoin exists on a global digital ledger called the blockchain aka the bitcoin timechain, which is a public and transparent ledger run by computers, instead of a centralized ledger like a bank account.
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The important thing to understand is that in order to move bitcoin from one place to another, you have to sign that transaction with what's called a private key. Think of it like unlocking a vault with a password, and moving the bitcoin to someone else's vault. In this way, the keys to the vault are the money itself. Bitcoin gives you the power to hold the keys to that vault yourself, instead of relying on a bank to move your money for you. This is where the phrase "not your keys, not your coins" comes from.
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The important thing to understand is that in order to move bitcoin from one place to another, you have to sign that transaction with what's called a private key. Think of it like unlocking a vault with a password, and moving the bitcoin to someone else's vault. Bitcoin gives you the power to hold the keys to that vault yourself, instead of relying on a bank to move your money for you.
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Self-custody means holding your own private keys, and controlling your own bitcoin. If you don’t hold that key, you’re trusting someone else to hold it for you. If your bitcoin is in an ETF or on an exchange (Mt. Gox, FTX, Coinbase, Binance, etc.), you don’t own bitcoin, you own a claim to bitcoin. This introduces all kinds of risks, like exchanges getting hacked and losing your bitcoin or companies lending out your money and giving you only a fraction in reserve. Additionally trusted third parties would have full control of your money and could limit or freeze withdrawals.
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With great power comes great responsibility, lose your keys and your funds are gone forever. In this way, you can think of the keys to the vault as the money itself. While keys are not the same thing as bitcoin, they are the mechanism to move your funds and are therefore extremely important to protect. This is why we say "not your keys, not your coins".
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The term self-custody might sound confusing, but all it means is holding your own private keys, and controlling your own bitcoin. If you don’t hold that key, you’re trusting someone else to hold it for you. If your bitcoin is in an ETF or on an exchange (Mt. Gox, FTX, Coinbase, Binance, etc.), you don’t own bitcoin, you own a claim to bitcoin. This introduces all kinds of risks, like exchanges getting hacked and losing your bitcoin or companies lending out your money and giving you only a fraction in reserve. Additionally trusted third parties would have full control of your money and could limit or freeze withdrawals.
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<img width="450" height="600" alt="image" src="https://github.com/user-attachments/assets/3c52f49e-0c49-4937-bac7-b6c91238e822" />
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