Part 3 video
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02-principles.md
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02-principles.md
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@ -17,7 +17,10 @@ What to do and what not to do.
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(pause: 1)
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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.
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I collected five principles for everyone using Bitcoin, for beginners as well
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as experts. You may recognise them as memes you've heard before. I chose memes
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as they are easy to remember. There are more principles that are helpful,
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however these five are the most important ones.
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---
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@ -40,17 +43,18 @@ 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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After Bitcoin came out, there was an altcoin bubble, after that DAOs, and now
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NFTs. Many of these are just scams. Some may have interesting technological
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properties or have a narrow specialised uses. If you want to spend money on
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them, you're just gambling.
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Several years after the Bitcoin started, other project types came in waves.
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There was an altcoin phase, after that a DAOs phase, and now NFTs are
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everywhere. Many of these are just scams. Some may have interesting
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technological properties or have a narrow specialised uses. However, if you
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want to spend money on them, you're just gambling.
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---
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```md
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## 2. Not your keys, not your coins
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Keep your keys yourself, private and secure
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Don't let others near your Bitcoins, keep them yourself.
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```
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(pause: 2)
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@ -58,49 +62,47 @@ Keep your keys yourself, private and secure
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## 2. Not your keys, not your coins.
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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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Bitcoin, is, a collection of crypographic signatures. In order to transfer
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Bitcoin, you need to perform this cryptographic signature and for that you need
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to have piece of data called "private key". In other words, having the private
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key, means, having Bitcoin. If you use a custodial service for handling your
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Bitcoin, like a bank or another service provider, it's, they, that have
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Bitcoins, not you. You're degrading your relationship with Bitcoin by relying
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on others to take care of your Bitcoins for you. This is exactly the problem
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that Bitcoin allows you to avoid. The custodian can make up all kinds of
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excuses to deny you control of Bitcoins they hold for you. Many don't even
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allow you to withdraw or send Bitcoins on your behalf. Even worse, they may run
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away with them, or lose them.
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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 self-custody. 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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practice, but you can't get the full benefits without self-custody. You need to
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keep your private key, private. Anyone who sees it can take your Bitcoins. If
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you 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 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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it's the only copy, the Bitcoins are gone. Many people have suffered losses by
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not taking proper care of their private keys, and probably many still 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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In a later video, I will teach you how to properly self-custody.
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---
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```md
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## 3. Stacking sats
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Buy Bitcoin over long time in small chunks
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Buy Bitcoins repeatedly in small steps
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```
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(pause: 2)
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## 3. Stacking sats.
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An easy way to get accustomed with Bitcoin is to accumulate Bitcoin
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An easy way to get accustomed to 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 the base unit of Bitcoin, there are
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one hundred million Satoshis in one Bitcoin. Most commonlly people DCA every
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month or every week, but some do more frequently.
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an amount that you feel comfortable with putting aside, such as a hundred
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dollars a month. Then, every month, preferably on the same day, buy one hundred
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dollars' worth of Bitcoin, or Satoshis (sats). Satoshi is the base unit of
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Bitcoin. there are one hundred million Satoshis in one Bitcoin. People often
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DCA once a month or once a week.
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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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@ -109,36 +111,62 @@ 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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Don't daytrade, or suddenly put huge mounts of money into Bitcoin. You don't
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understand how trading works, you'll lose money.
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---
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```md
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## 4. HODL
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Keep your Bitcoins and don't sell them in panic or to speculate
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Don't sell your coins, unless it's an emergency
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```
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(pause: 2)
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## 4. HODL.
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Selling your Bitcoins has a broad range of
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Selling your Bitcoins has a broad range of disadvantages.
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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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The price of Bitcoin often moves very quickly. Inexperienced people may panic
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sell and make a loss.
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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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In many countries, selling can incur taxes. You may need to record your exact
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trading history for accurate reporting. In extreme cases, you may still owe
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taxes even if you make a financial loss!
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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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---
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(canvas: white)
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![contain](bank_screws_pensioner.png)
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According to a recent news report, 69 year old Esther Freeman decided to sell
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some of her Bitcoins. Her bank, however, refused to allow her to deposit the
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900000 shekels from the sale, citing risks of money laundering and terror
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financing. Mrs. Freeman had to sue the bank in the court. In the meantime, she
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has 900000 virtual shekels she can't use, i.e. nothing.
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---
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```md
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## 4. HODL
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Don't sell your coins, unless it's an emergency
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```
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Don't end up like Mrs. Freeman. Try to avoid selling your Bitcoins, unless
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there is an emergency. The most advanced way to avoid this is to take out a
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loan, using Bitcoin as a collateral. There are specialised lending services, but
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traditional banks are starting to provide such services as well. However, doing
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this requires some level of financial experience, so I can't automatically
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recommend it to everyone.
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Another option is just to do nothing. This is very easy.
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Supposing you really do have some emergency expenses, you could also try to pay
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directly in Bitcoin, avoiding dealing with exchanges and banks. You could also
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try to sell only the minimum necessary amount. Smaller amounts are less likely
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to cause problems and losses are less painful.
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---
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@ -152,13 +180,20 @@ Don't rely on other people's computers
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## 5. Don't trust, verify.
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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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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 request information. But
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the node could lie to you. If you don't know how many Bitcoins you have at each
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moment, you can be a victim of fraud.
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Luckily, operating a node can be done cheaply. If you run a node, you have your
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own auditor to make sure you're getting the correct information. It probably
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isn't necessary that every single person runs one, but maybe you have a couple
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of friends or family members that do.
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If you want to run your own node, you should have a dedicated computer for this
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that can operate 24 7. It doesn't need to be an expensive computer, about 300
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dollars is probably enough, but it should be energy efficient and have a
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reliable internet connection.
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---
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Summary.
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1. Bitcoin, not crypto.
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2. Not your keys, not your coins.
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3. Stacking sats.
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4. HODL.
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5. Don't trust, verify.
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One, Bitcoin, not crypto.
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Two, Not your keys, not your coins.
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Three, Stacking sats.
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Four, HODL.
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Five, Don't trust, verify.
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(pause: 2)
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