Many of my friends know that I am a proponent of Bitcoin and ask me how to get started.
For most people who are new to Bitcoin or crypto assets I recommend the following four steps.
- Read The Bitcoin Standard. The book is a bit angry and hard to swallow. That's by design. Bitcoin succeeds because it is a completely different way of looking at the world. You may also like the book The Internet of Money or the learning material on Hope.com, especially the Bitcoin for Everybody course.
- Buy some Bitcoin. For most people I think 5-10% of your net worth is a reasonable target. Many intelligent investors I have met, including one billionaire, have massive allocations of Bitcoin. So it's totally fine for you to buy $10,000 or even $1M. I have no affiliation but recommend buying on River since it comes highly recommended by people I respect.
- Store the Bitcoin safely. I recommend storing your bitcoin with the "gold" plan from Casa. Again, I have no affiliation. Casa provides a "2 of 3" key service where you keep two keys and they keep one. This costs about $10/month and gives you dramatically more security than storing Bitcoin on your own personal wallet or on an exchange. If you lose a key Casa can get you back in, but they can never prevent you from accessing your own money.
- Wait. Honestly, wait for decades. I am heavily invested and intend to never sell the vast majority of my Bitcoin. In the future if you need you can borrow against your Bitcoin using a service like BlockFi or Celcius.
Should you buy anything else? Overall I recommend against buying any other crypto assets or NFTs unless you are confident you know what you are doing. The risk/reward of investing in Bitcoin is far better than almost any of the other crypto assets. I own a very limited amount of Solana ($SOL) and Chia ($XCH) – and literally no other tokens.
Why do I like Bitcoin? Bitcoin is the highest security crypto asset, it has the widest adoption, it has a clear monetary policy of only 21 million coins ever, and it is becoming the currency of choice for many countries around the world. The Lightning network on top of Bitcoin lowers transaction fees to around 1 penny per transaction – making spending with Bitcoin cheaper and faster than using a credit card. I expect the total market cap of Bitcoin to approach 50-100 trillion dollars over the next 10-20 years (by 2040ish). This is a 50-100x increase over it's current value. Here is a good article covering the general thesis.
Does Bitcoin Waste Electricity? This is a complicated topic. Bitcoin does use a lot of energy, but much of that energy was destined to be wasted anyway and it's very clear that Bitcoin uses less electricity than the banking sector or global militaries. As of 2021 the best estimates I've seen is that about 30% of global electricity is wasted and Bitcoin use about 0.5% of global electricity. One good take comes from Square Crypto, showing that Bitcoin encourages green energy adoption.
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