How to properly protect your Bitcoin
What is Bitcoin?
Bitcoin is what I would call the people’s money. I call it the people’s money because it is a digital cryptocurrency that allows for peer-to-peer transactions without the need for intermediaries like banks or governments. It was created in 2009 by an unknown person or group using the pseudonym Satoshi Nakamoto. In my personal opinion, Mr. Satoshi Nakamoto wanted to create a fair money system that does not judge people based on their background or identity.
Bitcoin operates on a decentralized network called the blockchain, which is a public ledger that records all Bitcoin transactions. The blockchain is maintained by a network of nodes, which are computers around the world that validate transactions and ensure the security and integrity of the network.
Bitcoin is created through a process called mining, which involves using specialized software and hardware to solve complex mathematical equations that validate transactions on the blockchain. Miners receive new bitcoins as a reward, as well as transaction fees paid by users. The process of mining incentivizes real people to help run the network in a secure and decentralized way.
Unlike traditional currencies, Bitcoin has a finite supply of 21 million coins that will ever exist, making it a scarce asset. This scarcity, combined with the decentralized nature of the network, has led some people to view Bitcoin as a digital form of gold or a hedge against inflation.
(*Note. This is NOT financial advice as i am not a financial advisor. Please do your own research.)
Simple Way To Buy Bitcoin
The discussion about how to buy Bitcoin and where to buy it can be a long and drawn-out process. After years of trying dozens of platforms, I have come to the conclusion that this is the simplest process for protecting yourself and your assets. I call it the 1-2-3 jump.
Step 1 is getting your fiat currency from your legitimate and verified bank account to a cryptocurrency exchange such as Coinbase or Binance. Step 2 is sending your Bitcoin from the cryptocurrency exchange to a secure offline cold self-custodial wallet. Step 3 is properly configuring and securing your offline cold self-custodial wallet to ensure your Bitcoin is safe in the event you lose your wallet or recovery passphrase.
The process of getting money from your bank account to a cryptocurrency exchange is easy when using a major exchange such as Coinbase or Binance, and a major bank such as Wells Fargo, Chase, or Bank of America. Coinbase and Binance support many banks, so if you’re in the US, your bank is likely supported. When you sign up for Coinbase or Binance, you’ll have to go through a process called KYC (Know Your Customer), which is a way of identifying and confirming that a customer is who they say they are. It’s a multi-step process that helps to prevent the creation and use of fraudulent accounts. Once your KYC has been completed and verified, you can link your bank account to Coinbase or Binance with your checking account. (*Note: this process of legitimizing yourself and using a major cryptocurrency exchange helps with the tracking process of your digital assets and for US tax purposes.)
Once your Bitcoin has been purchased on your Crypto Currency Exchange and it sits in the exchange wallet, you will need to send the Bitcoin to your offline cold self-custodial wallet. My wallet of choice is the Nano Ledger X, which you can purchase directly from Ledger or on Amazon. (*Make sure on Amazon it says “sold by Ledger.” Never purchase a used wallet and never purchase a wallet from an unverified source.) Once you have your Ledger Nano X Wallet, you will need to install the Bitcoin App and copy the Bitcoin wallet address for later use. (*It is critical that you have a secure password manager to store this information.) I prefer to use a PC-based computer to manage the Ledger Wallet as it simplifies the process and honestly just seems to work the best. (*You can also manage the Ledger wallet via your phone, which is my second option of choice.) Now that you have the Bitcoin wallet address from the Ledger Nano X wallet, go into Coinbase or Binance and send your Bitcoin to the Nano Ledger X. Always start off by sending a small amount of Bitcoin first to confirm the address is correct and also because the passphrase needs to be secured.
When Bitcoin is stored on a wallet like the Ledger Nano X, it is CRITICAL that the passphrase be backed up in TWO PLACES. Yes, I am writing in CAPS because it’s that important! During the setup of the Nano X wallet, it will create a unique 24-word passphrase, which is what secures your wallet and is used to recover your Bitcoin if you ever lose the Nano X wallet or if it gets damaged. I cannot express how important it is to record your passphrase in at LEAST TWO LOCATIONS. Location one is somewhere digital, such as a secure password manager that is encrypted. Location two needs to be somewhere physical, such as printing the passphrase on a piece of paper and storing it somewhere very safe. Once you have your passphrase copied down, you will need to confirm that it has been copied correctly. The Ledger Nano X Wallet has an app dedicated to testing your passphrase that you have recorded and confirming it will work in the event of a disaster. You can read about the entire recovery process HERE . Once the recovery passphrase has been confirmed and recorded properly you can now send over the remainder of your Bitcoin to the Nano X wallet for safe keeping!
Some might be wondering why storing Bitcoin on the Ledger Nano X wallet is the secure way to store Bitcoin and my answer to that is this; When a company like Coinbase or Binance holds your Bitcoin, that company is the holder and owner of your Bitcoin. You read that correctly, THEY OWN YOUR BITCOIN. Coinbase and Binance are companies owned by humans, so you must put trust in these humans to keep your Bitcoin or other cryptocurrencies safe. In my opinion, Coinbase and Binance are the best crypto exchanges in the world at the moment, but I still do NOT fully trust them to hold the bulk of my assets. In my personal crypto journey, I was part of multiple collapses and scams that were all based on trusting humans to hold and secure my crypto. Here is my opinion; If you do decide to give your money to a human-based crypto project that owns your crypto, you better be ready to lose that entire investment and not cry about it, only put in what you can afford to lose.
Here is the thing about Bitcoin. Bitcoin is no longer a startup. Bitcoin is now a time-tested and proven method of a peer-to-peer decentralized digital asset! I am very excited for the future of finance and being part of the digital currencies era. With all the talk about CBDC (Central Bank Digital Currencies) and entire countries going digital, it is only a matter of time before it happens. As long as the government continues to exist, I will continue to HODL my Bitcoin.
(*I am not a financial advisor and am not giving financial advice.)
Are you wondering when to buy Bitcoin and how much to put in? This can be a long and open-ended topic, but I am going to keep it simple. Ask yourself, are you a Long-Term Investor or Short-Term Trader? I personally traded stocks and crypto for two years, and it took me two years to learn that I am NOT a Short-Term Trader, and I am personally a Long-Term Investor. I personally chose the long-term game. I have my Coinbase account autopurchase Bitcoin twice per month, so I no longer have to worry about timing the market and getting stressed about when to buy, and it is a set amount per month that fits into my personal monthly investment strategy.
At the time of writing this article i currently own over 80+ Cryptocurrencies. I am most bullish on Proof-of-work cryotocurrencies which require the process of Crypto Mining. My top digital assets are bitcoin, Litecoin, Dogecoin, Dashcoin, and Kadena.
Interested in Crypto? Shoot me an email: [email protected]