Bitcoin for the Absolute Beginner

I think bitcoin is best understood by contrasting bitcoin with fiat money.

Fiat Money — Fiat money is government money, ex. Dollars, Euros, and Pounds. To use fiat money you have to follow rules. The rules are made by governments and central banks. The rules can change at any moment and favor the rich at the expense of the poor. The rules you must follow are imposed upon you at birth and enforced by government agents with guns.

Bitcoin — Bitcoin is peoples’s money. Satoshi Nakamoto and other cypherpunks didn’t like the rules governments imposed upon money. So, they created a new money with fair and voluntary rules. To use bitcoin you choose to follow the rules in the bitcoin protocol. When you run a bitcoin node, you verify the rules have been followed. No need for government enforcement.

There is a natural progression to becoming a bitcoiner. I call it the Bitcoin Ownership Continuum or BOC for short. Often people two levels beyond you on the Continuum seem crazy.

If you listen to BOC level 10 bitcoiners discuss advance topics in Clubhouse, don’t feel dumb, they simply started the journey before you did. Start at BOC level 0 and progress at your own pace. Take baby steps, move slowly and test your wallets with small amounts before moving to larger amounts.

The Bitcoin Ownership Continuum:

BOC Level 0

At level zero you are not a bitcoiner. You buy “buy” bitcoin on Robin Hood or PayPal. You do not own bitcoin. You have a promise from the company to peg your fiat money to bitcoin at the “buy” price. You are at the mercy of the company’s terms and conditions which you didn’t read.

BOC Level 0.5

At level 0.5 you are becoming a bitcoiner. Now you are buying bitcoin from a company that allows you to withdraw bitcoin to a wallet where you own the keys, but you have not withdrawn the bitcoin. The bitcoin is sitting in your account on the company’s server. Companies that allow you to withdraw bitcoin are Cash App, Swan Bitcoin, River Financial

BOC level 2

Congratulations, at this level, you are a bitcoiner. You downloaded a bitcoin wallet to your phone, like Blue Wallet or Blockstream Green. You wrote your seed words on a piece of paper and put it in a safe place. You have withdrawn small amounts of bitcoin you have in online accounts to your phone wallet. You own your keys, you own your bitcoin. You start thinking about hardware wallets and running a bitcoin node.

BOC Level 5

At level 5 you are starting to think about security and anonymity. You set up a bitcoin node on a dedicated computer and link it to a desktop wallet like Electrum or Wasabi Wallet or Specter. You use a hardware wallet like Trezor, Blockstream Jade or ColdCard. Your seed is written down and stored in a safe place protected from water and fire. The fiat price of bitcoin is not as important. It is easier and easier to hold on to bitcoin during price fluctuations.

BOC Level 8

At level 8 security and anonymity are increasingly important. You may purchase bitcoin on anonymous exchanges like Bisq. Your Hardware wallet, probably a ColdCard, is air-gapped — meaning the keys never touch the internet. You have significant wealth in bitcoin.

BOC Level 10

At level 10 You understand and use multi-signature wallets.

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