132 lines
4.9 KiB
Markdown
132 lines
4.9 KiB
Markdown
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# The five meme principles of Bitcoin
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What to do and what not to do
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I picked these memes because they are easy to remember. There are a couple of
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others, but these are the most important for beginngers.
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## 1. Bitcoin, not crypto
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```md
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Bitcoin, not crypto
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Bitcoin is a hard asset, "crypto" isn't.
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```
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The vision of Bitcoin is to be the best money there can be. This is achieved
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through focus on decentralisation. Without decentralization, someone could
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change the rules, make more Bitcoins out of nothing, redistribute other
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people's Bitcoins. All the other "shitcoins" have a centralized team of people
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who determine the rules. There have been attempts in the past to change the
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rules of Bitcoin, and they failed. Changes in Bitcoin take many years to
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succeed and are more like optimizations than rule changes.
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Altcoins, DeFi, NFTs
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Some of these "shitcoins" are interesting from techological point of view, but
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they aren't suitable as money. Don't buy them, don't trade them. The best thing
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you can do is to educate yourself more about Bitcoin.
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## 2. Not your keys, not your coins
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```md
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Not your keys, not your coins
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Keep your keys yourself, private and secure
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```
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The Bitcoin balances are controlled by cryptographic signatures. This is what
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Bitcoin **is**, a collection of crypographic signatures (and some other
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things). In order to transfer Bitcoin, you need to perform this cryptographic
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signature and for that you need to have piece of data called "private key". In
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other words, having the private key **means** having Bitcoin. If you use a
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custodial service (third party) for handling your Bitcoin, like a bank or an
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exchange, it's **they** that have Bitcoins, not you. You're introducing the
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trust in this third party into your relationship with Bitcoin. You're
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re-introducing one of the main problems that Bitcoin is solving. For a wide
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number of reasons, the custodian can refuse to do what you tell them. In fact,
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many don't even allow you to withdraw or send Bitcoins on your behalf. They may
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even lose them, as has often happened in the past.
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With Bitcoin, you can self-custody. This requires some learning and some
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practice, but you can't get the full benefits without this. You need to keep
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your private key private. Anyone who sees it can take your Bitcoins. If you
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show it to somebody, they are gone. The private key needs to be protected
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against thieves, but also against damage. If the private key is damaged and
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it's the only copy, the Bitcoins are gone. Many people have been suffered
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losses by not taking proper care of their private keys, and probably many still
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will.
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There is a variety of solutions that help, I'll demonstrate a couple in later
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videos.
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## 3. Stacking sats
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```md
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Stacking sats
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Buy Bitcoin over long time in small chunks
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```
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An easy way to get accustomed with Bitcoin is to accumulate Bitcoin
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periodically for the long run, commonly known as "Dollar Cost Averaging". Pick
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an amount that you feel comfortable with putting aside, such as hundred dollars
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a month. Then, every month, preferably on the same day, buy 100 dollars' worth
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of Bitcoin, or Satoshis (sats). Satoshi is 1/10.000.000 of Bitcoin, the base
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unit.
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The advantages of this approach are that it's repetitive, so you'll learn it by
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practice. It's simple, so you don't need to perform a lot of mental work. It
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doesn't depend on the market conditions, so you don't need to worry about
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understanding them. It doesn't depend on having trading experience, so you
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won't be influenced by psychology. It is working in small steps, so if you make
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a mistake (and this can happen for beginners), your losses will be small.
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Don't daytrade, you don't understand how trading works, you'll lose money.
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## 4. HODL
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```md
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HODL
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Keep your Bitcoins and don't sell them in panic or to speculate
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```
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- selling has a number of disadvantages, so you should avoid it
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- during downturn, you may lose money
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- selling may incur taxes
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- selling may create problems with banks
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https://www.calcalistech.com/ctech/articles/0,7340,L-3923405,00.html - Esther
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Freeman has no coins.
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- what to do instead?
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- do nothing
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- sell a small amount, whatever you urgently need
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- if you need to pay for something or send a gift, maybe sending Bitcoin
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directly without sell would work
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- try to get a loan using Bitcoin as a collateral
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## 5. Don't trust, verify
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```md
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Don't trust, verify
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Don't rely on other people's computers
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```
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- even if you have a private key, that alone doesn't tell you how many Bitcoins
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you have. For this you need to connect to a node and query it. But the node
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could lie to you and trick you.
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- you can run your own node, then you can verify the balances yourself
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- this is a bit more complicated and takes more effort than the other steps,
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and isn't as big a danger, so perhaps it isn't necessary that every person
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runs their own node, but maybe there can be one in a family or something like that
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