This is a short guide to show why and how you could easily and safely invest in Bitcoin. If you don't know absolutely anything about it, you can start here, do your research and I also recommend Blockchain 2035 — The Digital DNA of Internet 3.0 book about Blockchain.
Why to invest in Bitcoin?
We first have to understand that the existing, fiat, monetary system is one of the biggest scams in human history:
Now it becomes clear that we need decentralization of money that is backed by the real value. Check this article with some good reasons to invest in Bitcoin. It could also be seen as one part of financial portfolio diversification strategy or simply — don't put all your eggs in one basket. We live in extremely unstable times and the better we prepare, the safer we are.
In 2013, when I started playing with Bitcoin, one Bitcoin was $45. Seven years later, one Bitcoin is 200 times more, almost $9k. So, for example, if one invested $10k in 2013, he would have 2 million dollars now. I think that in 10 years, one Bitcoin will be more than $100k, so at least ten times more than now.
My Bitcoin investment strategy is simple — I am not interested in trading, mining or any other way bothering and spending time and energy with Bitcoin, but instead, simply buying bitcoins monthly with a dedicated amount of money. So, every month when I pay my bills, I also buy bitcoins and store them long term, patiently waiting. I am also ready to lose all that money because we don't know what will happen. Buy, safely store and forget. That's all.
I later learned that this strategy is called Dollar Cost Averaging (DCA). DCA Bitcoin is a good site to run past scenarios.
To be completely honest, at one point I also did lump sum investment, and it was one of the best decisions I've made.
Now, let's talk about the wallet. This is the place where you store your Bitcoins. There are many types of wallets. One is, so called, exchange, where you can buy, trade and store them. I discourage this approach because it completely misses the point — you again don't own your money. We also know what happened with Mt Gox.
You can have your wallet in the paper or steel form, special hardware, special software or combination of those. Although many people recommend hardware wallets and paper as the most secure, I don't agree because if you simply lose them in some way, your Bitcoins are gone forever.
I prefer a software wallet with strong encryption and multiple, secure backup options. There are also many types of software wallets and I prefer SPV instead of a full-blown node. My weapon of choice is Electrum wallet. It's secure, fast and has many good options. If you decide to use it, I highly recommend reading everything on their site and educating yourself how to properly and safely use it (how to properly verify it, wallet usage, different options, etc).
This is what I did:
- Make sure that your operating system is secure, free from malware and hardened, privacy-wise. I suggest you to use Tails OS for Bitcoin operations.
- Make sure to download the latest version and verify it with PGP.
- Disconnect from the Internet.
- Create Electrum wallet (standard SegWit), write the seed on the steel, put the steel in the waterproof & fireproof bag and then in the security safe. Seed is the most important part of your wallet, with it, you can recreate your private keys and your wallet (bitcoins) on any computer, any time. Also make sure to write down one of your bitcoin addresses, you will need it to buy Bitcoins.
- You can also encrypt your wallet with a password if you plan to use Electrum on your machine, for some reason. Your wallet will be encrypted on your disk and decrypted briefly only if you want to send some Bitcoins.
- Since I don't plan to spend Bitcoins, I didn't do encryption, but simply deleted my wallet from the disk, I don't need it, I have it in the form of a seed, written on the steel and safely stored.
- Create 1 MB encrypted drive using VeraCrypt and store your seed there also. Unmount the encrypted drive and connect to Internet again. Now copy this encrypted drive to external storage and upload it to, already E2E encrypted, Tresorit cloud storage. Now you have your wallet in the form of a seed at three different places — steel, encrypted external storage and encrypted cloud storage.
- Your wallet is, almost, a cold storage wallet because it's not connected to the Internet (in decrypted form) and it's not on your machine, which is very safe. You can still create an additional wallet and keep it on your machine if you need that for some reason.
- Since my wallet is offline, I simply use online Blockstream to track transaction confirmation for my address after buying.
- Teach your SO how to operate everything in case of your death!
Where and how to buy?
You can find many options for buying here — international, local, P2P. International exchanges didn't work well for me because they either don't support my country, have complicated and slow KYC process, are pricey and/or payment options don't work well. P2P are too fishy for me.
I tested multiple exchanges with small amounts (CoinSwitch and Changelly) and finally found one that works for me — Buda. They operate in South America (where I live), have quick and easy KYC, good prices, support and fast bank and BTC transfers. So, I transfer money from my bank account to their bank account, buy Bitcoins and then transfer them to my offline wallet. It works like a charm.
Definitely play with multiple exchanges, test them with small amounts and find one that works well for you.
BTCPayServer is an open-source, self-hosted payment processor for Bitcoin.
You can also set up the Lightning Network, but I don't see Bitcoin for micro payments or, actually, any integration with payment processing, I see it more like the gold to store the value. So, having a BTCPay server doesn't make too much sense to me, but it can be convenient for making a payment request manually and sending the link to your customer.
It can be a pain to set up everything in the beginning, but after that, you don't have to think too much about it and just follow the strategy you put in place. Finally, make sure to check this wonderful crypto ticker!