WEBVTT 00:00.100 --> 00:06.017 Part 2, The five principles of Bitcoin. What to do and what not to do. 00:07.217 --> 00:13.468 I collected five principles for everyone using Bitcoin, for beginners as well as experts. You may recognise them as memes you've heard 00:13.668 --> 00:19.920 before. I chose memes as they are easy to remember. There are more principles that are helpful, however these five are the most important 00:20.120 --> 00:26.372 ones. 00:29.100 --> 00:38.711 1. Bitcoin, not crypto. The vision of Bitcoin is to be the best money there can be. This is achieved through focus on decentralisation. 00:38.912 --> 00:48.523 Without decentralization, someone could change the rules, make more Bitcoins out of nothing, redistribute other people's Bitcoins. All the 00:48.724 --> 00:58.336 other "cryptos" have a centralized team of people who determine the rules. There have been attempts in the past to change the rules of 00:58.536 --> 01:08.148 Bitcoin, and they failed. Changes in Bitcoin take many years to succeed and are more like optimizations than rule changes. 01:08.347 --> 01:16.640 Several years after the Bitcoin started, other project types came in waves. There was an altcoin phase, after that a DAOs phase, and now 01:16.840 --> 01:25.132 NFTs are everywhere. Many of these are just scams. Some may have interesting technological properties or have a narrow specialised uses. 01:25.332 --> 01:33.625 However, if you want to spend money on them, you're just gambling. 01:36.380 --> 01:45.597 2. Not your keys, not your coins. The Bitcoin balances are controlled by cryptographic signatures. This is what Bitcoin, is, a collection 01:45.797 --> 01:55.015 of crypographic signatures. In order to transfer Bitcoin, you need to perform this cryptographic signature and for that you need to have 01:55.215 --> 02:04.433 piece of data called "private key". In other words, having the private key, means, having Bitcoin. If you use a custodial service for 02:04.633 --> 02:13.851 handling your Bitcoin, like a bank or another service provider, it's, they, that have Bitcoins, not you. You're degrading your relationship 02:14.051 --> 02:23.269 with Bitcoin by relying on others to take care of your Bitcoins for you. This is exactly the problem that Bitcoin allows you to avoid. The 02:23.469 --> 02:32.687 custodian can make up all kinds of excuses to deny you control of Bitcoins they hold for you. Many don't even allow you to withdraw or send 02:32.887 --> 02:42.105 Bitcoins on your behalf. Even worse, they may run away with them, or lose them. 02:42.304 --> 02:51.623 With Bitcoin, you can self-custody. This requires some learning and some practice, but you can't get the full benefits without self- 02:51.823 --> 03:01.142 custody. You need to keep your private key, private. Anyone who sees it can take your Bitcoins. If you show it to somebody, they are gone. 03:01.342 --> 03:10.661 The private key needs to be protected against thieves, but also against damage. If the private key is damaged and it's the only copy, the 03:10.861 --> 03:20.180 Bitcoins are gone. Many people have suffered losses by not taking proper care of their private keys, and probably many still will. 03:20.380 --> 03:24.548 In a later video, I will teach you how to properly self-custody. 03:27.340 --> 03:36.594 3. Stacking sats. An easy way to get accustomed to Bitcoin is to accumulate Bitcoin periodically for the long run, commonly known as 03:36.794 --> 03:46.049 "Dollar Cost Averaging". Pick an amount that you feel comfortable with putting aside, such as a hundred dollars a month. Then, every month, 03:46.249 --> 03:55.504 preferably on the same day, buy one hundred dollars' worth of Bitcoin, or Satoshis (sats). Satoshi is the base unit of Bitcoin. there are 03:55.704 --> 04:04.959 one hundred million Satoshis in one Bitcoin. People often DCA once a month or once a week. 04:05.159 --> 04:12.573 The advantages of this approach are that it's repetitive, so you'll learn it by practice. It's simple, so you don't need to perform a lot 04:12.773 --> 04:20.188 of mental work. It doesn't depend on the market conditions, so you don't need to worry about understanding them. It doesn't depend on 04:20.388 --> 04:27.803 having trading experience, so you won't be influenced by psychology. It is working in small steps, so if you make a mistake (and this can 04:28.003 --> 04:35.418 happen for beginners), your losses will be small. 04:35.618 --> 04:44.789 Don't daytrade, or suddenly put huge mounts of money into Bitcoin. You don't understand how trading works, you'll lose money. 04:47.540 --> 04:54.320 4. HODL. Selling your Bitcoins has a broad range of disadvantages. 04:54.521 --> 05:01.558 The price of Bitcoin often moves very quickly. Inexperienced people may panic sell and make a loss. 05:01.758 --> 05:08.616 In many countries, selling can incur taxes. You may need to record your exact trading history for accurate reporting. In extreme cases, you 05:08.816 --> 05:15.674 may still owe taxes even if you make a financial loss! 05:16.420 --> 05:25.484 According to a recent news report, 69 year old Esther Freeman decided to sell some of her Bitcoins. Her bank, however, refused to allow her 05:25.684 --> 05:34.748 to deposit the 900000 shekels from the sale, citing risks of money laundering and terror financing. Mrs. Freeman had to sue the bank in the 05:34.948 --> 05:44.011 court. In the meantime, she has 900000 virtual shekels she can't use, i.e., nothing. 05:44.700 --> 05:54.052 Don't end up like Mrs. Freeman. Try to avoid selling your Bitcoins, unless there is an emergency. The most advanced way to avoid this is to 05:54.252 --> 06:03.604 take out a loan, using Bitcoin as a collateral. There are specialised lending services, but traditional banks are starting to provide such 06:03.804 --> 06:13.156 services as well. However, doing this requires some level of financial experience, so I can't automatically recommend it to everyone. 06:13.356 --> 06:18.025 Another option is just to do nothing. This is very easy. 06:18.225 --> 06:24.249 Supposing you really do have some emergency expenses, you could also try to pay directly in Bitcoin, avoiding dealing with exchanges and 06:24.449 --> 06:30.473 banks. You could also try to sell only the minimum necessary amount. Smaller amounts are less likely to cause problems and losses are less 06:30.673 --> 06:36.697 painful. 06:39.460 --> 06:46.582 5. Don't trust, verify. Even if you have a private key, that alone doesn't tell you how many Bitcoins you have. For this you need to 06:46.782 --> 06:53.905 connect to a node and request information. But the node could lie to you. If you don't know how many Bitcoins you have at each moment, you 06:54.105 --> 07:01.228 can be a victim of fraud. 07:01.428 --> 07:07.224 Luckily, operating a node can be done cheaply. If you run a node, you have your own auditor to make sure you're getting the correct 07:07.424 --> 07:13.220 information. It probably isn't necessary that every single person runs one, but maybe you have a couple of friends or family members that 07:13.420 --> 07:19.217 do. 07:19.417 --> 07:27.832 If you want to run your own node, you should have a dedicated computer for this that can operate 24 7. It doesn't need to be an expensive 07:28.033 --> 07:36.449 computer, about 300 dollars is probably enough, but it should be energy efficient and have a reliable internet connection. 07:39.180 --> 07:40.031 Summary. 07:40.231 --> 07:55.866 One, Bitcoin, not crypto. Two, Not your keys, not your coins. Three, Stacking sats. Four, HODL. Five, Don't trust, verify.