Congratulations on taking the first step on the road to financial self-sovereignty! Before deciding whether to save or spend your bitcoins, take some time to familiarize yourself with bitcoin security concepts. Bitcoin is very different from traditional payment systems and carries a different set of security risks. This article introduces some important security considerations, explains why bitcoin is so popular as a way to store value, and touches on how to spend your bitcoins.
Table of Contents:
Safety
If you haven’t already learned how to use and store bitcoins securely, you’ll want to make it your priority. To get an idea of your current level of bitcoin security, consider the following questions:
- Does anyone else, including cryptocurrency exchanges and wallet providers, have access to your bitcoin private keys? If your answer is yes, then you’ll want to consider moving your bitcoin to a wallet that only you control. To understand why this is important, read “Why do I need a Bitcoin wallet?”, and if you need help choosing a wallet, check out our guide. We recommend using a hardware wallet such as a Ledger Nano X if you plan to store other cryptocurrencies or a ColdCard if you plan to store only bitcoin.
- If your house burned down tomorrow, would you still be able to access your bitcoin? It’s important to keep your private keys (or seed phrases) in multiple physical locations so you can always get your funds back.
- Are you familiar with the many types of online scams and cryptocurrency scams? If not, read our article “How to spot cryptocurrency scams” to protect yourself from falling victim to one.
- Do you mind having your financial history, including account balances, recorded on a public ledger? Bitcoin is a transparent payment system where everyone can see everyone else’s transaction history. It is very difficult to make private transactions using bitcoin, so make sure you understand privacy best practices.
Saving
Many people are interested in Bitcoin because it is an alternative financial system – beyond the reach of central banks and governments – and is not prone to inflation or economic interventionism. The current economic system intentionally causes inflation as a way to encourage people to spend rather than save. This is done to discourage people from “hoarding money,” which ultimately makes traditional currencies a poor way to store long-term value.
On the other hand, Bitcoin’s monetary policy is controlled by computer algorithms and cannot be changed. There will only ever be 21 million bitcoins, which means that your share of the total supply cannot be diminished through monetary inflation. Despite the volatility of bitcoin’s price, its monetary policy gives it the potential to be a good store of value over the long term. If you’re undecided about what to do with your bitcoin, consider saving it for the future.
Expense
If you decide not to save your bitcoins, you can always spend them online. After all, Bitcoin was designed to be peer-to-peer electronic money. Paying for goods and services online using bitcoin is as easy as using a credit card. Upon checkout, you simply need to send the requested amount to the bitcoin address provided. Note that you may have to wait for your Bitcoin transaction to be mined (or confirmed) before receiving what you paid for. This wait can vary from 10 to 60 minutes, depending on the size of your purchase.
As Bitcoin matures, more and more companies accept bitcoin as payment. Some are even building businesses on Bitcoin. For a list of places where you can spend your bitcoins, take a look at “Where to spend Bitcoin.”
Keep learning
Perhaps the most important thing to do after buying bitcoin is to keep learning! Bitcoin is a multifaceted system that involves economics, technology, and some pretty big social implications.
Vijay Boyapati’s article “The Bullish Case for Bitcoin” does a great job of describing the monetary and economic significance of Bitcoin. The article takes about an hour to read, although it was originally released in four parts to make it easier to read (Part 1, Part 2, Part 3, Part 4).
For a better general understanding of how Bitcoin works on a technical level, watch this video “How Bitcoin Works in 5 Minutes”.
Finally, it is important to know the social implications of Bitcoin. A great place to start is “Why Bitcoin Matters for Freedom” by Alex Gladstein of the Human Rights Foundation, which describes some of the social impact Bitcoin is already having today.
