Bitcoin SELF-CUSTODY IS DIFFICULT only if you pay too much attention to the advice given by so-called Bitcoin experts.
If you understand how to keep passwords safe you are eligible to own Bitcoin and BE YOUR OWN BANK.
🔸 For a normal person that’s used to email and chat apps owning Bitcoin may look like rocket science, especially considering that most of such advice comes from early adopters.
🔸 Typically, new users are forced to master:
- non/custodial wallets
- private keys
- custodial/hot/cold/air-gapped wallets
- buying and setting up hardware wallets
- running nodes …
The reality is SELF-CUSTODY is easy and much simpler than most think.
🔸 This short thread has all there is to know for those discovering Bitcoin and crypto for the first time. Below are simple steps that tell beginners everything there is to know as a starter.
🔸 One key element to understand is that anyone owning Bitcoin is essentially an owner of a unique let’s call it “account+password” combo that gives that person the ability to receive/spend Bitcoins from that account.
🔸 Now, what we called the “account+password” combo is actually called a PRIVATE KEY. The terminology comes from cryptography that powers many aspects of the software behind Bitcoin.
🔸 The next key element is Bitcoin Wallets. These are mainly tools to keep a PRIVATE KEY safe. Good wallets are designed to do just that. That’s the type of wallet that makes you YOUR OWN BANK. There are bad wallets as well.
🔸 The point here to understand is that there are mainly two types of wallets around:
- GOOD: gives users unconditional control and ownership over Bitcoin.
- BAD: doesn’t give the user control over Bitcoin and can potentially restrict the user’s access to the wallet at any time.
🔸 The GOOD wallets are usually referred to as “non-custodial” wallets. There are many types but all of that is extra and will be covered in some future posts.
🔸 When a person installs a non-custodial wallet s/he is prompted with setup/backup steps for the above-mentioned PRIVATE KEY. The key is randomly created during setup. To make things human friendly these keys are presented in a form of 12 English words.
🔸 Why backup? Well, there is no other copy of that key anywhere else, and if it’s lost and the wallet app gets deleted that Bitcoin “account” that the key controls is gone forever. There is no way to recover it. There is no party that has a copy of it.
🔸 So, backup is critical for wallets that have Bitcoin on it. The backup will be needed in order to re-access the Bitcoin balance if the wallet app gets deleted somehow or if the phone or the wallet device gets stolen.
🔸 Now the question is how to keep a. backup copy of that private key. Obviously, it should be stored somewhere safe, ideally in two places.
🔸 Should that backup copy ever get lost or leaked the first thing to do is to access the wallet and move the funds to a new wallet (essentially, a new account with a new PRIVATE KEY). Most wallet apps allow multi-wallet functionality.
🔸 If you want to go expert mode and beef up your security use a wallet app/device that has:
- unlock PIN/pass to prevent unauthorized access
- allows having a PASSWORD next to 12 WORDS when setting up.
🔸 When using a wallet that allows a password+words combo in order to re-access its respective Bitcoin wallet you may store password and 12 words backups in separate locations. That would keep you safe even when someone finds your 12 words list.
That’s all there is!
That said there are many other aspects of crypto that we’ll explore in the coming days and weeks.
If you are keen to learn about Bitcoin & crypto in a simple manner and actually become an expert follow us Unstoppable Wallet
