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How to Get Started in Bitcoin

Konrad Fitzpatrick
Coinmonks

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It’s the start of 2021, and bitcoin has smashed its 2018 all-time high. This will bring a lot of attention and newcomers to Bitcoin. Acquiring bitcoin ten years ago was extremely challenging. Safely holding bitcoin for the past ten years would be even more challenging. However, the Bitcoin space has developed a lot since its inception. A user’s ability to safely acquire and store bitcoin with the highest level of security imaginable is easier now than it ever has been. I have limited technical computer skills; however, I can (do my best to) aggregate and share all the tools that helped me learn. Despite the American meme, most of my content will be Canadian centred. In the future, I will try and update this content for global options. None of my articles are financial advice. I merely share data and my opinions.

The first thing you need to do to get started is to start continuously learning about bitcoin. Do not skip this step. There is a lot to understanding bitcoin, and a holistic understanding is very valuable and obtainable with patience. I hope my articles and suggested content prove useful.

To begin purchasing bitcoin, you actually have a few options in what you purchase. As I mentioned, the Bitcoin space has developed a lot, even in the last couple of years. Below I will discuss the different options you have, however, I will conclude that holding actual bitcoin is the best way to go.

You can buy bitcoin related stocks:

  • Microstrategy: a software company that holds lots of bitcoin relative to the size of their company — making it a good asset to mirror bitcoin’s price movement.
  • Square: a payments company that is supposed to ‘help the little guy’ in the world of payments — a useful bitcoin on-ramp, and the company directly holds some bitcoin on their balance sheet
  • There are other stocks you can get, but you don’t own actual bitcoin. You own stock held for you at a bank or some investment firm. You can track many public and private companies that have publicly disclosed owning bitcoin here

There are also bitcoin related products. These very closely mimic bitcoin price movements and are comparable to owning parts of a bitcoin held at a bank or some investment firm. Here are some of the ones I find to be the most trustworthy (reputation, custody and asset capitalization) in the space.

  • The Bitcoin Fund — QBTC: The fund acquires bitcoin and safely stores it for a fee, available on the Toronto stock exchange (TSX)
  • Grayscale Bitcoin Trust — GBTC: The fund acquires bitcoin and safely stores it for a fee
  • The advantage to these products is that they can typically be held in a tax advantage account, like an RSP or a 401k. A tax advantage account may be useful depending on your situation. However, I believe there is a tremendous value to owning your bitcoin by yourself. To better understand why I highly encourage continuous bitcoin education (links below).

Buy Actual bitcoin. I believe that bitcoin is the best long investment in history and is the best conceivable money — only bitcoin. I think it is best to own bitcoin compared to a bitcoin related stock because bitcoin is the only asset with no liabilities attached. Dollars are liabilities of one’s central bank. Savings accounts are IOUs to a bank; and if everyone tried to withdraw at once, the banking system would crumble. Bitcoin is superior because you can hold the asset yourself without any counterparty risk. No one holds it or has access to it other than you. There are some steps to do this, however, the process is continuously increasing in ease. First you go to a bitcoin exchange, or an on-ramp (cash leaving the traditional financial system and entering the Bitcoin network). Bitcoin refers to the network, and bitcoin refers to the network’s native asset BTC. When it comes to bitcoin exchanges and on-ramps, there are many options. Pick a domestic exchange that is safe, regulated and reputable. The Canadian exchange that I use is VirgoCX (sign up using the link to get $10 CAD). Another good Canadian option I used to use is Coinsquare, however, I find them to be more expensive. I cannot use American options, however, the Cash App is what I would use. Coinbase is arguably the most famous exchange, Gemini is another reputable exchange run by the Winklevoss twins. Kraken and Bitstamp are good for people outside Canada and the USA. Bitstamp is one of the oldest bitcoin exchanges.

Buy a Bitcoin Hardware Wallet. There are a lot of options here as well. Most people seem to agree that a ColdCard is the most secure. People use these to store thousands of bitcoin. I recently pre-ordered Blockstream’s new Jade wallet. I am optimistic about this wallet, but it has not yet stood the test of time like the ColdCard.

Upgrade Your Bitcoin Security. Take all of the security precautions, don’t regret losing a life changing amount of bitcoin due to user error or trusting third parties. Also, a small amount of bitcoin may not seem like a life changing amount of bitcoin at the time, but anyone with a 5+ year old bitcoin transaction (selling bitcoin for something else) ends up regretting it. The best security guide, which is the guide I follow is the bitcoin security guide. Matt O’dell also has some really good video walkthroughs for bitcoin security as well.

Continuously Learn About Bitcoin. I try to write a lot about bitcoin. I also discuss and sometimes share bitcoin chart analysis on Twitter. Definitely read the Bitcoin Standard, it’s the best and fastest way to understand the why of Bitcoin. Youtube and tik tok are not the best resources; the quality of financial education content is terrible — avoid it IMO. There are some most follow Twitter accounts that tweet out great bitcoin educational content. I recommend Dan Held and Anthony Pompliano to start. I highly recommend reading and listening to podcasts as well. Generally, anything Michael Saylor has recorded since the summer of 2020 to be extremely educational. Saylor knew very little about Bitcoin in march of 2020 and has since been buying tens of thousands of bitcoin personally and for his company Microstrategy (mentioned above). Saylor understands that bitcoin has both large upside financial and will change the structure of finance. He understands how early it still is. A good intro podcast is this episode with Saylor on the What Bitcoin Did podcast. Saylor also has a higher level (recommended) podcast with Bloomberg’s Odd Lots justifying his massive bitcoin purchases. Saylor made massive purchases because he realized bitcoin’s value proposition before the rest of wall street. To help understand bitcoin’s long-term value proposition, listen to this episode of Anthony Pompliano’s Podcast, where guest Murad Mahmudov helps explain that bitcoin is extremely undervalued.

Don’t Sell Your bitcoin. Bitcoin is scarce. There is only 21,000,000 bitcoin. You CAN own a fraction of a bitcoin. Each bitcoin is divisible into 100,000,000 subunits called satoshis, and some people refer to 100 satoshis as a bit, where 1,000,000 bits make up one bitcoin. I like the bit terminology. Bitcoin is decentralized, and no single party controls it. This means there is no one in charge of bitcoin to dictate its growing terminology. Decentralization also makes Bitcoin a practically unkillable network, one that is protected through both a highly energy intensive and globally distributed computer system. The amount of energy, physical resources and coordination needed to overrun bitcoin is impractical, if not impossible, to achieve. Thus, bitcoin is unkillable. Through a similar logic, it is also impossible to change bitcoin’s predetermined supply. Bitcoin’s strict supply rules directly affect its value, as Saylor and Mahmudov and many others explain. Given this fact, one often regrets selling bitcoin. This person sold 1.5 bitcoin for some strawberries in 2011. As Sayor said, you don’t sell the most valuable asset in the universe, you hold it forever. It is similar to retaining Manhattan or London real estate for generations, taking loans against the property, and owning the property for generations to come. Don’t be the person who bought at $10, sold at $30 and waited forever for a dip to get back in. Bitcoin is a game of accumulation. If you are hearing on the news that many big wealth managers are accumulating bitcoin, it is because they are starting to understand bitcoin’s scarcity and its value proposition. Keep learning and keep accumulating.

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Konrad Fitzpatrick
Coinmonks

Written by Konrad Fitzpatrick

10 Followers
Writer for

UofT Econ | #Bitcoin is the best money ever | Follow me on twitter for bitcoin charts and commentary @bitkoinrad