Year: 2022

The most fundamental step before a person can starts to buy/sell any cryptos is to understand wallets.

The definitions and relationships among these terms are often very confusing to everyone.

• Crypto wallet
• Hot wallet
• Cold wallet
• Hardware wallet
• Non-custodial wallet
• custodial wallet
• Public Key
• Private Key
• Recovery seed phrase
• Password/Pin

Let’s demystify these terms!

Firstly, how do you keep, send and receive your Cryptocurrencies? In Crypto Wallets! To put it simply, Hot Wallet is a crypto wallet that is connected to the internet whereas a Cold Wallet doesn’t connect to the internet. Cold wallet are usually considered to be safer as it is not connected to the internet.

Cold wallet example include Hardware wallet such as Ledger, Trezor etc. Hot wallet example include browser extension wallet such as Metamask, XDefi etc (if one didn’t connect ledger to it as the interactive interface).

Non-Custodial Wallets means you are holding on to the Recovery Seed Phrase (you owned the crypto) whereas Custodial Wallets means you are not holding on the Recovery Seed Phrase (example when your Cryptocurrency are in an exchange). If an exchange hacked or closed down suddenly, please say goodbye to your coins.

What are Recovery Seed Phrase/Password/Pin?

Whenever you create a crypto wallet, a Recovery Seed Phrase of either 12 or 24 words are automatically generated out of 2048 word from the BIP-39 Word List. There are so many combinations of Seed phrases that can be generated such that it is basically non-hackable and this makes them very secure. This is like the master password of your Crypto. Ledger hardware wallet, Metamask hot wallet interface is like the password manager software.

During wallet generation, you will also need to create a Password or Pin for faster access to the wallet when doing any transaction. If you lose this Password or Pin, you can still recover your wallet using the Recovery Seed Phrase. However, if you lose both the Password or Pin together with your Ledger at the same time to the same person, you have to say goodbye to your cryptos.

What are Private/Public Keys?

Public key are the public address that one use to receive the cryptocurrencies and is in the blockchain. It is paired to a Private key where it is needed to authorized any transaction for the public address. In short, if you owned the Private Key, you are the owner of the Cryptocurrency. Hence, for every address created, there will be Public and Private key.

Hence, do not share your Private Key. Anyone with this key can access your cryptocurrency. However, do note that the private key are stored in a crypto wallet (such as Ledger, browser extension wallet like Metamask etc).  Always remember that storing your coins in a hardware wallet is the most secure method because unlike browser extension wallet, the private keys never leave the device and thus stay offline.

What are the differences between Private Key and Seed Phrase?

For every Recovery Seed Phrase generated from your wallets, it will always create the same set of public addresses and private keys. Seed Phrases are the mnemonic version of all your private keys. Thus even if you forgot your password/pin, lose your hardware wallet, you still can get back your coin as long as you know your Recovery Seed Phrase.

One key point to note is that Private key is usually an access key to just one address (account), while Recovery Seed Phrase is an access key to the whole wallet, which can hold multiple addresses. Thus, Recovery Seed phrases can recover all private keys but not vice versa.

A picture is worth a thousand words. Refer to the diagram below for a better understanding.

In summary, after explaining the terms above but if one still have difficulties understanding the terms, just remember these points:

• If you keep your coins in an exchange, generally it should be safe for those reputable and big exchanges but do bear in mind the potential risks.
• Always get a Hardware Wallet such as Ledger and generate your own Recovery Seed Phrase.
• Secure your Recovery Seed Phrase and Private Keys, don’t let anyone know or lose it.
• Don’t lose both password/pin together with your hardware wallet (e.g Ledger) at the same time.

How to find out the Private Seed Phrase of my Ledger? (For advance users only)

For those interested to find out what Private and Public keys will be generated from a particular Seed phrase, advance users can manually generate all private keys using software such as Ian Coleman’s BIP39 tool. Let me show you an example using randomly generated 24 words seed phrase.

Go to https://iancoleman.io/bip39/ and select “24” to generate random mnemonic.

You can see the random 24 seed phrases that are generated. Choose the Coin as “ETH – Ethereum” (I choose a common coin that everyone know. Of course, you can choose other coin).

Scroll to the bottom. You can see the full list of Private keys and their corresponding Public Keys.

If you refer to my past post, we have indeed hit 18k BTC last night. See how accurate this is?

A picture speaks a thousand words, below is the updated regression chart of BTC half a month later.

We have indeed reach -1 SD (-18K) since my last post.

Will we reach the darker green line -2SD?

Let’s look at the price of BTC from another point of view.

HISTORY! We have been learning history since we are young. Regarding of trader, investor, many people like to look at past trend to learn more about price history in order to predict the future (of course assuming the fundamental remains the same for the future). Let’s look at the history of Bitcoin.

If we look at https://www.investopedia.com/terms/b/bitcoin.asp

• Launched in 2009, Bitcoin is the world’s largest cryptocurrency by market capitalization.
• Unlike fiat currency, Bitcoin is created, distributed, traded, and stored using a decentralized ledger system known as a blockchain.
• Bitcoin’s history as a store of value has been turbulent; it has gone through several boom and bust cycles over its relatively short lifespan.
• As the earliest virtual currency to meet widespread popularity and success, Bitcoin has inspired a host of other cryptocurrencies in its wake.

Bitcoin is a very volatile. There are many ups and downs every few years. Going All Time High, then drawn down 80-90% to All Time Low. Many people argue that Bitcoin is worthless and useless. However, crypto enthusiastic would say Bitcoin is digital gold. But aren’t real gold useless and is ponzi too? Similar to real gold, value of Bitcoin is the perceived value by everyone. The question is in future, how will people perceived it? Personally I think Crypto will be the future – Bitcoin will likely be a the main coin with dominance dropping, all other alternate coins will die, maybe left ETH 2.0 and some other L1s L2s.

Let’s Look at the table below from history point of view.

We are currently at the 73% mark. Will we reach the 80%, 85%, 90% mark soon? Did you notice that 80% coincide with the -2SD from my regression analysis?

Adding on to the very bad macro condition, Fed tightening, hyperinflation, wars, food issue, energy issue etc, I believe that we will reach it soon.

Looking at the price pattern for this 3rd cycle of BTC, quite likely we may have a 90% drop until around 6800 BTC! By then, it would be capitulation and many would have given up, believing that Crypto is scam which will reach zero. That’s the time where big shark will come in.

Let me give a bold price prediction, I believe we will reach -2SD (or 80% drop from ATH) soon at least, with the very worst case where we will reach 6800 (90% drop from ATH). From Metaphysics/Astrology point of view, we will reach this point at the 4th quarter after Eclipse!