Do You Own Bitcoin or a Bitcoin Derivative?

Do you own Bitcoin or a Bitcoin derivative? What do I mean? Well, if you have a Bitcoin in storage with the private key off line than you own a real Bitcoin. If you have a Bitcoin and it is on an exchange than you own a Bitcoin derivative. A BTC derivative is not a bitcoin. It is a paper transaction pretending to be a BTC but it is not. Unless you have the private key in your possession you do not have a BTC.

The crypto exchanges sell mostly derivatives. What do most traders do? They buy tokens, hold them on the exchanges and sell at higher prices for a profit into Fiat currency. Traders never downloaded their purchases onto a private wallet so they never received the private keys. What they bought and sold was a time/date stamp piece of paper of a token derivative. When push comes to shove they would not be able to prove ownership of the token. Traders are putting full faith in a corporation that owns the exchange. That means you are putting faith in humans that potentially are subject to greed and dishonesty.

What do wealthy people do? They trust no one. They own the real deal. They own title to assets. They own physical gold, silver, real estate, rare paintings. They own clear title to classic automobiles and own the private keys to their BTC. The 1% are not stupid. In fact, they are ruthless. I know, I have dealt with them in business. They have gotten to where they are by not trusting anyone and usually by cut throat practices.

Just remember this. While most people are trading crypto's and leaving them on exchanges the real wealthy are daily downloading the private keys off line onto private wallets. What do they know that you do not know. Well, they know the difference between having clear title to real assets in their possession than a fake paper promise of asset ownership.

image from: flickr.com