Be Your Own Bank

Be Your Own Bank (BYOB)

Learning Tech review


Most of us can’t avoid the fact that banks are our sole gateway to financial services. Whether you are a regular saver, an avid investor or a home buyer, interaction with a bank is unavoidable.

Asymmetrically, this provides banks with immense power over your financial standing. In other words, we have silently given up our rights to exercise our financial choice to a third party. Should the entity fail, there is an immediate risk to your capital or investment holdings. Insurance schemes that protect against failure of the financial institution can only provide marginal protection in most instances. Therefore it is only wise to distribute such risks as a fail safe measure.

Broken Cog-Wheel

Presently, the probability of failure in the financial system is increasing ever so rapidly as evidenced by the following:

  1. Fractional reserve banking (ability for a bank to lend more that what’s on it’s balance sheet) has created credit bubbles and led to the escalation of prices of real-estate, stocks and all other assets.
  2. Liquidity issues especially in the banking system where the monetary supply issued from the central bank does not flow into the economy (to activities that create real economic value and growth). Instead, wealthy individuals and institutions that are closer to the faucet utilize the newly minted money on asset speculations. This phenomenon is referred to as the Cantillion effect.
  3. Inflation of asset prices along with everything else leads to greater proportion of salary being spent on servicing debts. This leaves little for savings or spending on products or services that stimulates the economy.
  4. Vanishing spending power among the lower and middle income leads them to more debt cycles forcing further tightening of liquidity in the ‘real’ economy. Business that services this socio-economic class begin to feel the pinch with the cascade extending to the upper classes eventually.
  5. In response, interest rate lowering and printing of new monetary supply erodes the buying power of the fiat-currencies and robs savers of their future spending power.

Disturbingly, this inherent failure of central banking is ubiquitous in all nation states and is hurtling ever so quickly to the cliffs of financial collapse. Up until now, switching to an alternate system that can withstand these shock was not possible. Not anymore.

Mitigating Risks

Calls for reforms to the financial system cannot be directed to the very entities responsible for problem. Stepping out of the system to a form of money that captures and preserves value over time is the only solution. Ideally, a significant proportion of your assets should be allocated to Bitcoin, currently the strongest asset as a store of value.

The Bitcoin network currently has enough computing power to thwart any attacks performed by governments and other institutions even if they somehow managed to harness all the computing power in existence today. A quantum computer powered attack is also decades away and presents minimal concern as the Bitcoin technology stack could upgrade in due time while diminishing vulnerability to these attacks. Given the status quo, the Bitcoin network is the most secure place in the world as a store of value.

Current risk to the BYOB concept arise mainly from individuals relying on a third-party to store their digital assets. Security incidents reported by exchanges and custodial services are all too common and should propel the individual to seek better options. To Be Your Own Bank, you should have the means to store and manage your own assets.

The Perfect Setup

Non-custodial online or software based wallets are a good option as long as your internet connectivity, passwords and private keys are secure. Read our feature here to learn about private key management.

A hardware wallet would be the best choice if you are looking for a setup with the lowest potential attack surface area. Coupled with a VPN supported Internet connection, a reliable anti-virus software and secure private key management, the risks can be minimized even further.

Hardware wallet

So, what is a hardware wallet? A hardware wallet is a cryptocurrency wallet that is programmed into a physical device. As in the case with other, within the hardware wallet resides your private keys. A combination of the private keys and your public key pairs is the reason that you will be able to access funds and perform transactions.

Your ultimate aim should always be focused on safeguarding the private keys from theft by malicious software or hackers. Hardware wallets does this the best. Compared to a software based wallet, the the time that a hardware wallet is exposed online is very much limited. In addition, most hardware wallets do not allow installation of scripts or programs on the device which would completely account for risks associated with malware intrusion.

Popular hardware wallets such as Ledger Nano also employ the Secure Element which is a specialized chip that differs from traditional chips. These chips provides the highest level of security against side-channel, fault and software attacks. Secure Element ensures that the pin-codes and private keys never leave the device in any circumstances.

SecuX W10
The SecuX W10 hardware wallet

Comparable to the Ledger Nano, the SecuX W10 hardware wallet also features the Secure Element and has gained CC EAL5+ certification against international standards. Security grade on offer here is higher than those employed by even the government and banks. The SecuX wallet is easy to setup and use and would meet the needs of all users.

The End-Game

Understanding of the costs involved in securing funds in the traditional sense (via banks) is becoming more evident over time. Decentralized finance with it’s unbridled efficiency is knocking on the doors of the incumbents.

Finally, it is upon us to finally take reign of our assets and eliminate third-party risks. In the not too distant future, we might settle on a reality that is very much different from today (with all assets having digital representations) but one that provides greater autonomy to the individual.

Activate BYOB!

Get your first hardware wallet from our store. We only accept payment in cryptocurrency as a way of ensuring that our buyers are experienced enough to use the hardware wallet properly. However, if you are a novice taking security very seriously, you may also obtain the hardware wallet from our Shopee store here.

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With an early exposure to computers and the Internet, Nathan has always had a keen interest in technology. His educational background is in the medical field but that does not stop him from dabbling with computers. Upon learning about blockchain and its potential role for humanity, Nathan got deeply involved into this field as both an investor and as an advocate.

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