221 lines
7.1 KiB
Markdown
221 lines
7.1 KiB
Markdown
---
|
|
background: ukulele-1 0.3 fade-in fade-out
|
|
voice: brian
|
|
size: 720p
|
|
transition: crossfade 0.1
|
|
theme: theme.css
|
|
subtitles: embed
|
|
---
|
|
|
|
```md
|
|
# Part 2
|
|
The five principles of Bitcoin
|
|
```
|
|
|
|
# Part 2, The five principles of Bitcoin.
|
|
|
|
What to do and what not to do.
|
|
|
|
(pause: 1)
|
|
|
|
I collected five principles for everyone using Bitcoin, for beginners as well
|
|
as experts. You may recognise them as memes you've heard before. I chose memes
|
|
as they are easy to remember. There are more principles that are helpful,
|
|
however these five are the most important ones.
|
|
|
|
---
|
|
|
|
|
|
```md
|
|
## 1. Bitcoin, not crypto
|
|
|
|
Bitcoin is a hard asset, "crypto" isn't.
|
|
```
|
|
|
|
(pause: 2)
|
|
|
|
## 1. Bitcoin, not crypto.
|
|
|
|
The vision of Bitcoin is to be the best money there can be. This is achieved
|
|
through focus on decentralisation. Without decentralization, someone could
|
|
change the rules, make more Bitcoins out of nothing, redistribute other
|
|
people's Bitcoins. All the other "cryptos" have a centralized team of people
|
|
who determine the rules. There have been attempts in the past to change the
|
|
rules of Bitcoin, and they failed. Changes in Bitcoin take many years to
|
|
succeed and are more like optimizations than rule changes.
|
|
|
|
Several years after the Bitcoin started, other project types came in waves.
|
|
There was an altcoin phase, after that an ICO phase, and now NFTs are
|
|
everywhere. Many of these are just scams. Some may have interesting
|
|
technological properties or have a narrow specialised uses. However, if you
|
|
want to spend money on them, you're just gambling.
|
|
|
|
---
|
|
|
|
```md
|
|
## 2. Not your keys, not your coins
|
|
|
|
Don't let others near your Bitcoins, keep them yourself.
|
|
```
|
|
|
|
(pause: 2)
|
|
|
|
## 2. Not your keys, not your coins.
|
|
|
|
The Bitcoin balances are controlled by cryptographic signatures. This is what
|
|
Bitcoin, is, a collection of crypographic signatures. In order to transfer
|
|
Bitcoin, you need to perform this cryptographic signature and for that you need
|
|
to have piece of data called "private key". In other words, having the private
|
|
key, means, having Bitcoin. If you use a custodial service for handling your
|
|
Bitcoin, like a bank or another service provider, it's, they, that have
|
|
Bitcoins, not you. You're degrading your relationship 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 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 Bitcoins on your behalf. Even worse, they may run
|
|
away with them, or lose them.
|
|
|
|
With Bitcoin, you can self-custody. This requires some learning and some
|
|
practice, but you can't get the full benefits without self-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. 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 Bitcoins are gone. Many people have suffered losses by
|
|
not taking proper care of their private keys, and probably many still will.
|
|
|
|
In a later video, I will teach you how to properly self-custody.
|
|
|
|
---
|
|
|
|
```md
|
|
## 3. Stacking sats
|
|
|
|
Buy Bitcoins repeatedly in small steps
|
|
```
|
|
|
|
(pause: 2)
|
|
|
|
## 3. Stacking sats.
|
|
|
|
An easy way to get accustomed to Bitcoin is to accumulate Bitcoin
|
|
periodically for the long run, commonly known as "Dollar Cost Averaging". Pick
|
|
an amount that you feel comfortable with putting aside, such as a hundred
|
|
dollars a month. Then, every month, preferably on the same day, buy one hundred
|
|
dollars' worth of Bitcoin, or Satoshis (sats). Satoshi is the base unit of
|
|
Bitcoin. there are one hundred million Satoshis in one Bitcoin. People often
|
|
DCA once a month or once a week.
|
|
|
|
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 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 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 happen for beginners), your losses will be small.
|
|
|
|
Don't daytrade, or suddenly put huge mounts of money into Bitcoin. You don't
|
|
understand how trading works, you'll lose money.
|
|
|
|
---
|
|
|
|
```md
|
|
## 4. HODL
|
|
|
|
Don't sell your coins, unless it's an emergency
|
|
```
|
|
|
|
(pause: 2)
|
|
|
|
## 4. HODL.
|
|
|
|
Selling your Bitcoins has a broad range of disadvantages.
|
|
|
|
The price of Bitcoin often moves very quickly. Inexperienced people may panic
|
|
sell and make a loss.
|
|
|
|
In many countries, selling can incur taxes. You may need to record your exact
|
|
trading history for accurate reporting. In extreme cases, you may still owe
|
|
taxes even if you make a financial loss!
|
|
|
|
---
|
|
|
|
(canvas: white)
|
|
|
|
|
|
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 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 court. In the meantime, she
|
|
has 900000 virtual shekels she can't use, i.e., nothing.
|
|
|
|
---
|
|
|
|
```md
|
|
## 4. HODL
|
|
|
|
Don't sell your coins, unless it's an emergency
|
|
```
|
|
|
|
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 take out a
|
|
loan, using Bitcoin as a collateral. There are specialised lending services, but
|
|
traditional banks are starting to provide such services as well. However, doing
|
|
this requires some level of financial experience, so I can't automatically
|
|
recommend it to everyone.
|
|
|
|
Another option is just to do nothing. This is very easy.
|
|
|
|
Supposing you really do have some emergency expenses, you could also try to pay
|
|
directly in Bitcoin, avoiding dealing with exchanges and banks. You could also
|
|
try to sell only the minimum necessary amount. Smaller amounts are less likely
|
|
to cause problems and losses are less painful.
|
|
|
|
---
|
|
|
|
```md
|
|
## 5. Don't trust, verify
|
|
|
|
Don't rely on other people's computers
|
|
```
|
|
|
|
(pause: 2)
|
|
|
|
## 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 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 can be a victim of fraud.
|
|
|
|
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 information. It probably
|
|
isn't necessary that every single person runs one, but maybe you have a couple
|
|
of friends or family members that do.
|
|
|
|
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 computer, about 300
|
|
dollars is probably enough, but it should be energy efficient and have a
|
|
reliable internet connection.
|
|
|
|
---
|
|
|
|
```md
|
|
# Summary
|
|
1. Bitcoin, not crypto.
|
|
2. Not your keys, not your coins.
|
|
3. Stacking sats.
|
|
4. HODL.
|
|
5. Don't trust, verify.
|
|
```
|
|
|
|
(pause: 2)
|
|
|
|
Summary.
|
|
|
|
One, Bitcoin, not crypto.
|
|
Two, Not your keys, not your coins.
|
|
Three, Stacking sats.
|
|
Four, HODL.
|
|
Five, Don't trust, verify.
|
|
|
|
(pause: 2)
|