Bitcoin is a form of digital money, which is similar to gold in many ways. One of the most important attributes of Bitcoin is that it affords the holder of it, the ability to become the bank (in a way). There are many benefits to owning Bitcoin, and it’s more than just ‘number go up’. There are some technical steps required to get started, but it’s easier than opening a bank account to get started(kind of ironic!). Once you understand digital scarcity, you will want to own Bitcoin, AND guard it diligently.

Before you read on, read this: If you read this article, and listen to the podcast discussion with Sarn Elliot, there’s another step you should take if you’re planning on buying Bitcoin. Take the free online course: ‘Crypto with Confidence’.  If you’re building new wealth for the new world, then at least some of it’s going to be digital – There’s often a premium for being late to emerging technology, so take the course today!

Setting Up and Managing Digital Wallets:

To become your own bank, the first step is to set up a cryptocurrency wallet (this is the type of wallet used in the podcast episode). A wallet is a digital tool that allows you to store, send, and receive cryptocurrencies like Bitcoin. There are two main types of wallets: software wallets and hardware wallets.

  • Software Wallets: These are applications or programs that you can download on your computer or smartphone. They are user-friendly and ideal for beginners. When setting up a software wallet, you will be given access to a seed phrase, which is normally 12 or 24 words long. This is the master key, which can be used to restore your wallet – guard this with your life. Write down this seed phrase and store it securely (do not take a digital photograph, or store the seed phrase online), as anyone with this information, can restore your wallet and gain access to your digital assets.
  • Hardware Wallets: For enhanced security, hardware wallets are physical devices that store your private keys offline. This means that even if your computer is hacked, your assets are safe. Hardware wallets are more secure but come at a cost, typically ranging from around $200.

Understanding Digital Scarcity:

One of the groundbreaking innovations of Bitcoin is the concept of digital scarcity. Unlike traditional currencies that can be printed in unlimited quantities, Bitcoin has a fixed supply of 21 million coins. This scarcity is enforced by the Bitcoin network, which operates on a ‘consensus mechanism’. Participants in the network agree on the rules, making it impossible to create more Bitcoin or manipulate the system.

Digital scarcity gives Bitcoin its value. Even gold, while finite, has an unknown and [technically] unlimited supply. Bitcoin It is a unique digital asset that can’t be replicated, and this is what makes it perfect as a reliable store of value in the digital age.

It’s Not ALL Beer and Skittles:

Imagine setting up a bank just for yourself – the branch, the massive safe, the regulation, staff, security…It’s ridiculous, and you’d never do it. Downloading a wallet and holding an asset like Bitcoin is super easy by comparison. There are challenges still:

  • Technical Complexity: Setting up and managing a digital wallet is extremely straight forward once you’ve done it once. The most important (by far) steps involves writing down your seed phrase and keeping it secure. Beyond that, much of the technical complexities reduce the more you interact with any type of digital currency.
  • Scalability: As more people adopt Bitcoin, the network faces scalability issues. Currently, Bitcoin can handle about seven transactions per second, and this can lead to high transaction fees during peak times (like Uber). Solutions like the Lightning Network, are being developed to address these issues by enabling faster and cheaper transactions.

Becoming your own bank offers unparalleled freedom and control over your financial assets. With Bitcoin, if you hold it in your own digital wallet, to custody and control a form of digital wealth that can be sent to any other user in the world, without restriction.  Yes, a very pleasant side effect is that the price of Bitcoin may increase significantly over time. However, there’s no point putting money in something that’s worth infinite tomorrow, if you fail at hanging on to it. Set up your own digital wallet, take security seriously, understand both the promise and the peril, and you’ll be doing the crypto thing well.

There’s a digital transformation of wealth occurring right now, and rewards may exist for the early adopter. It’s not going away, and you’re not too late. Learn more about owning Bitcoin and holding securely today. The ability to be your own bank may be the best step towards financial empowerment and independence you can take.

P.S. If you plan on owning a ‘significant’ sum of Bitcoin, take into account estate planning matters. Does your partner or family member know how to recover your assets in the event of your untimely death? Get in touch, because I can help you solve this problem.