The Crypto Clinic – The News from Portugal

Question: I’ve heard the terms AML/KYC/CFT being used – what do they mean?

To answer: Know Your Customer (KYC), Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) are processes that a company (e.g. bank or currency exchange) must comply with to help prevent, detect and report suspicious financial activity. † For example, all US banks (under the Bank Secrecy Act of 1970) are required to report cash deposits in excess of $10,000, and banks in the European Union have also taken similar measures.

These are essentially mechanisms to help fight money laundering and terrorist financing.

If you were to sign up for a cryptocurrency exchange today, you would quickly know what KYC means when you are asked for your name, address, date of birth, passport, driver’s license, utility bills, etc. Recent utilities and a blood sample – I’m just kidding about the blood sample, but sometimes he feels like that’s the one thing he doesn’t ask for. (yet!)

In recent years, a number of decentralized cryptocurrency exchanges have emerged that are not Do not KYC needed! for example Bisq, CoinEx, Kucoin & HODL HODL.

Question: What is Blockchain?

To answer: Blockchain is the distributed database technology used by almost all cryptocurrencies. It distributes identical copies of a database over a network and as such makes the blockchain very difficult to hack, in fact it is considered immutable (a fancy word meaning you cannot change what is written in the blockchain). So, in a nutshell, a blockchain is a growing list of records, called blocks, linked together using cryptography. The blockchain is growing over time and I just checked the size of the bitcoin blockchain, which is currently over 420 gigabytes!

The purpose of any blockchain is to record and disseminate information, but not modify it in any way. The blockchains behind cryptocurrencies are records of transactions that cannot be changed, deleted or destroyed. This is why blockchains are also known as Distributed Ledger Technology (DLT) and are used in a wide variety of fields, not just finance. It is also worth noting that most of the existing blockchains are private blockchains that you must be invited to join – they are known as allowed blockchains.

Question: Are exchanges a safe place to store my cryptocurrency?

To answer: There have been a myriad of successful cryptocurrency exchange hacks in the past 11 years – see for a list of over 60 hacks and the amount stolen, including the famous Mt Gox hack in 2014 .

Exchanges (e.g. Coinbase, Binance, Kraken, etc.) are certainly the easiest on the ramps to buy and sell cryptocurrencies – but they are juicy targets for hackers as they hold huge sums of money on behalf of their customers. If you decide to leave money on any of the exchanges, check to see if they offer cold storage, two-factor authentication, or even insurance, all of which will make you feel much safer and reduce the risk of your cryptocurrencies disappearing into thin air.

The best advice most cryptocurrency investors give is not to leave large amounts of money on exchanges and instead transfer them to your local cold store, say a Trezor or Ledger wallet. However, you should educate yourself and realize that you are now 100% responsible for your money, so you should probably choose a wallet that offers a 12/24 word recovery phrase, a password feature and backups.

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By Stephen Whitelaw (

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