Learn about Bitcoin
What the Hell is Bitcoin?
By Stuart Pritchard, Journalist and Contributor to Trezor Blog
You’ve probably heard all about the rapidly fluctuating value of Bitcoin, mostly upwards. This is the result of countless businesses acknowledging Bitcoin as a solid investment and hoarding all they can get their hands on. Even Harvard’s been quietly stacking coins for years. After all, with only 21 million Bitcoins in existence, it’s in massive demand. So, while the likes of your Dollars, Pounds and Euros etc. suffer badly in the markets when inflation comes to town, Bitcoin has no such problems.
While breaking free from banks and enjoying privacy in your financial affairs may not be for everyone, it is an option growing in both popularity and the public consciousness, and the average Bitcoin user is most likely not who you would expect. Sure, the likes of Elon Musk, Björk, and Donald Glover may be high-profile, eccentric Bitcoin holders, but the average Joe you pass on the street each day could equally well be a Bitcoiner too. That person probably has a day job, takes public transport, and behaves just like everybody else — because they are. They simply saw a better way to take control of their money.
Plus, with an ever-increasing number of retailers, property and travel companies accepting Bitcoin payments, its value as both an investment and everyday alternative to banking grows daily.
Bitcoin myths and more
It may be a bit rich saying this online, but don’t believe everything you read online. Firstly, contrary to what the interweb might have you believe, Bitcoin is not some eco-disaster in action that burns vast swathes of rainforest on a daily basis — that’s just silly and no one would back it if it were. Most Bitcoin is created by renewable energy, using excess power that would otherwise become a load of hot air — like most reporting on the topic.
Secondly, Bitcoin is not some construct of Bond villain-esque bad guys. No one is holding governments to ransom threatening them with shark-strapped missiles they’ve bought on the Dark Web using Bitcoin — that too is very silly.
Thirdly, the idea that Bitcoin is not secure is simply something that the banks like to whisper in the shadows, in a bid to fuel paranoia and keep the public in their own collective pocket– silliness in the extreme, especially when you look at the fact that banks illegally laundered over $2 trillion without any need for help from the so-called ‘funny business’ of Bitcoin.
The truth of the matter is this: Bitcoin is just a digital currency and using it is a bit like using PayPal, but without the need to be linked to a bank account or government. It’s no more mysterious, no more dark, and — I’m afraid — no more sexy than that.
How does Bitcoin work?
Unlike having to go through the meddling middleman that is a bank, Bitcoin offers an easy, A-to-B means to your money. To pay someone else, just grab your wallet, enter a PIN, say how much and who you want to pay and then — as if by magic — the money’s sent. Anywhere, anytime.
That transaction — like every Bitcoin that exists– is recorded on a single, ever-growing file shared by thousands of computers, so everything is legitimate, transparent, and executed with all the efficiency you won’t get from your bank.
Naturally, when you’re not moving around that hard-earned digital dosh, your keys to your Bitcoin sit in your online “hot” or offline “cold” wallet safe and sound. There’s not much else to being a Bitcoiner, as long as you have a wallet you can trust. Speaking of which…
Hot or cold wallet?
One colossal consideration when it comes to Bitcoin is how to best store it. The first step is to never leave it on an exchange. It’s money that lives online, but all manner of devious hackers lurk there too, sniffing around your cryptocurrency stockpile with malicious hackery intent. While many online app-based options, known as hot wallets, are alright for moving coins around, there are issues with trusting a device that connects to the internet.
That’s why people use offline wallets like Trezor, the first hardware wallet ever made. Cold hardware wallets are an increasingly enticing option when Bitcoin prices skyrocket. These little devices take your keys offline and out of reach of those who would trick or infect you to get to your coins. Even for beginners, it’s safe and easy to play around and try things out, and you can even buy Bitcoin directly from it.
Hardware wallets are virus-proof and operable only by the owner. They let you store your Bitcoin keys, as well as your 2-factor identity tokens, guarding everything like a digital Fort Knox, bolstered by a passphrase and PIN-only access.
A top tip here, for the sake of security and convenience, would be to keep the bulk of your Bitcoin on a cold hardware wallet and a small smattering of spending money online in your hot wallet of choice, but that would be entirely down to what makes you most comfortable — unlike with the banks, the choice is entirely yours.
Why Bitcoin?
So, are you considering embracing a new form of monetary control, one away from conventional hard currency, one that breaks you free from the constraints and control of the banks, and one which liberates your money from the spying and prying eyes of creaking, old financial institutions? Good, you’re taking your first steps into a new world of money.
For financial restraint, there’s banking. For a lifestyle of financial liberation, there’s Bitcoin.
Is Bitcoin the only way to achieve such independence? Well, no, it isn’t. However, withdrawing every last cent from your bank account and stashing the cash under your bed is both uncomfortable and downright dangerous. Whereas, equally, investing in gold and hoarding ingots in stacks in your basement just isn’t practical. But with Bitcoin you can keep all your money in one handy, personal and incredibly safe place, with access just a few taps away.
In the same way that credit and debit cards reinvented how we interact with our money, Bitcoin takes that evolution much further, removing the need for hard cash, ditching the need for bank cards and bank accounts, indeed, eliminating the need for banks and all the charges they love to levy on letting you use your money entirely. Doesn’t that sound like a better way to be?
Money’s metamorphosis
Oh yes, returning to the original question: what the hell is Bitcoin? Well, it’s money. It’s revolutionary. It’s controversial. It’s political. It’s democratic. It’s freedom. It’s all of those things and many more and it’s starting to scare the one percent who benefit from banking. But, ultimately, the brilliance of Bitcoin lies in the fact that it is the only safe and efficient way to enjoy complete independence over your assets.
For financial restraint, there’s banking. For a lifestyle of financial liberation, there’s Bitcoin.
