Transcription
Buying Bitcoin was the best financial decision I've ever made, but it took me way longer than it should have to find the right information when I first heard about it. So, in today's video, I'm going to walk you through the guide that I wish I had when I first heard about Bitcoin. And I'm going to cover what to learn first, where to buy it, how to store it so no one can take it, and the mistakes that most people make before Bitcoin actually pays off for them.
So, let's start with a simple explanation of why Bitcoin matters. So every year the stuff that you buy gets more and more expensive. And most people don't ever stop to question why this is. So prices go up because governments keep printing more money. And then when you print more dollars, each dollar that you have buys less. And this problem is only getting worse over time. So governments are loaded up on debt. And the only way to manage it is to keep adding more debt and to keep printing money.
Then we have Bitcoin that's fixed at 21 million coins and no one can print more of it. So when new dollars are chasing the same 21 million coin supply, the price goes up. And the debt problem Bitcoin solves has only gotten worse every single year. So as this continues, Bitcoin's price will continue to rise.
But most people who buy Bitcoin end up selling at a loss because they skip the most important step that you have to take before buying it. So if you skip this step, you won't know why you bought it and you'll get distracted like I did when I first found out about it. and you'll have a hard time holding through all the price swings and volatility that Bitcoin has.
So, if you've heard about Bitcoin before, the chances are that you heard about it when the price was up and it was probably all over the news. And this is exactly what happened to me in 2017. I bought some and then right after I bought it, the price dropped and I ended up just forgetting about it for a few years. Then when I came back to it in 2020 and read the right books, Bitcoin clicked for me and I really started to understand what it was and the problem that it solves.
So before you start buying, you have to spend a little bit of time learning about what Bitcoin is. And if if I could go back and give myself just a few resources in 2017 when I first heard about it, it would be these three things.
So the first thing is the Bitcoin standard by Safodina Moose. This is a great uh summary on what the history of money, what Bitcoin is, and good explanation of why it's valuable. Then if you want a shorter article, you don't want to read a full book, I'd recommend you read the bullish case for Bitcoin. It's a blog post. You can just Google it and it's by VJ Boyotti. Then after that, I would read the gradually then suddenly blog series by Parker Lewis and this covers most of the common misconceptions that people have that are out there about Bitcoin. And if you want to understand the debt problem and why our financial system is so broken, there's a video called How the Economic Machine Works by Ray Dallio on YouTube that I would highly recommend. It's about 30 minutes and it's the best explanation I've seen on how the financial system actually works. and it comes from one of the best investors of all time in Ray Dalia.
So going through these things will take you probably about a week if you read every night and it will get you up to speed on what Bitcoin is and give you just a good base to start from. Then the more that you understand it, the easier it is to hold when the price drops 50% in a bare market.
So once you understand what Bitcoin is and the problem that solves, now you're ready to make your first purchase. So, most beginners are going to use Robin Hood or Coinbase because it's what they're familiar with and it's one of the largest exchanges. But my problem with these platforms is they list thousands of different cryptocurrencies and most of these cryptocurrencies are scams or they're going to zero. So, these exchanges make money when you place trades on any of the these different cryptocurrencies. So, they're incentivized to push gambling features in constant activity trading in and out of all these coins. So, you want to be using a Bitcoin exchange instead. And I use River personally. Um I found them to be the best exchange after trying a lot of the different ones, but other popular Bitcoin only exchanges are Cash App or Strike.
A few reasons why I like River is that they have a really simple interface and it's just easy easy to use for someone that's buying Bitcoin for the first time. And they also publish proof that they hold the Bitcoin they do so that every month you can verify that the Bitcoin that they're selling you actually exists. This is important because big crypto exchanges have failed before. If you're familiar with FTX, they collapse in 2022. And when an exchange like this fails, all the people that were holding their Bitcoin on this exchange end up losing everything.
So, to set up an account on river.com, you'll create an account, verify your identity, and you'll start by linking your bank account and filling out just some basic information to get the account opened. Then, what you'll want to do after you open the account is you'll want to turn on two-factor authentication. And this is something you can do in these settings. So, you'll be using either Google Authenticator or another two-factor authentication app. This just gives you extra security on the account if someone were to get your password. If you haven't used this before, it's the same thing as getting a text message as a code before you log in, but just slightly more secure in case someone were to get access to your cell phone. Then I would recommend doing the same thing for the email that you use to sign up when you create the account so that if someone gets your email, they can't reset your password on the exchange or access your account in any way.
Then to buy it, you just want to press the buy button on River, select the bank account that you want to pull the money from, review the transaction, and then press submit. The fees run around 1 to 1 and 12% on one-time purchases. And this is going to be a standard fee that you'll pay for purchases across all these different exchanges.
Then if you want additional security on top of two-factor authentication, River has a feature called force field where you can activate it inside your account and it prevents you or anyone from withdrawing money from your account by turning this feature on. Then when you need to move the money out for any reason, you can disable the force field and then you have to wait the number of days that you selected when you first activated it. And this just makes it so that they can send you emails notifying you if someone were to disable the force field, you would get notified before they could actually take money out. This is what I do for additional security on my account. And I recommend setting this up if you're going to store any amount of Bitcoin on the exchange.
When you buy Bitcoin on an exchange, this is similar to buying a physical gold bar that you can actually hold yourself. But if you want to buy Bitcoin in a brokerage account or a retirement account that you already have with another investment company, you can buy a Bitcoin ETF. And this is an easy way to get access to Bitcoin and it's a fund that's going to hold the Bitcoin for you. So when you buy shares like with a gold ETF, the fund takes custody of the Bitcoin for you and then they charge you a 25 basis point fee every year. And the ones I like for this are FBTC or IBIT is going to be Fidelities is FBTC and Black Rockcks is IBIT. The trade-off with this is that you're trusting the ETF company to hold in custody the Bitcoin for you. And then if you own shares of a fund, you have to pay that small fee every year. The upside is that this is very simple and you don't have to worry about cussing the Bitcoin yourself. Then if you already have a brokerage account or an IRA or a 401k that you've had with an old employer or with your current employer, you can have Bitcoin exposure in about 10 minutes and don't have to worry about the custody at all.
But if you do decide to buy Bitcoin with an exchange like River, the next thing you'll need to do is find a way to store it safely without worrying about someone stealing it from you. If someone were to get a hold of your accounts or your Bitcoin, it's basically gone because transactions aren't reversible and there's not a bank that you can call like with a traditional account. So, once you have more than around $1,000 on an exchange, I'd recommend taking it off and learning how to custody it yourself.
So, the best way to hold Bitcoin yourself is with a hardware wallet. And this is basically just a small USB device that stores your Bitcoin offline, not connected to the internet. And it's going to cost you around $150. I would recommend Treasure for beginners and it's the wallet that I used when I first uh found out about Bitcoin. But these steps that I'm going to walk you through are going to work with any hardware wallet that you buy.
Step one is going to be to buy the hardware wallet. So you want to make sure that you're buying directly from the manufacturer's website. So for Treasure, this would be going straight to treasure.io. And you never want to buy the hardware wallet from either Amazon or eBay because what people will do is they'll buy the hardware wallet from the manufacturer and then they can resell them as a third party and replace the seed phrase, repackage them and resell them as new to you when you order from either Amazon or eBay. Then when you get it in the mail and set it up and send Bitcoin to it, then the attacker, the person that sold you the wallet can take your money because they already have the seed phrase and they already set up the wallet previously.
Step two is going to be set up the device. So, when it arrives, you want to make sure that the box is sealed and that it hasn't been opened at all. Then, you'll plug it into your computer and go to treasure.io/start and download Treasure Suite, which is their their software program. Then, you'll follow the instructions on screen when you plug it in, and it'll walk you through creating a new wallet. If you've set up your iPhone before, you can do this. It's pretty simple. You just follow the instructions on the screen, and during setup, uh, the device will generate your seed phrase and ask you to set up a pin. So, the PIN is going to be like your password on your phone to unlock it, and it's specific to only that device. The seed phrase is going to be a list of 12 or 24 words that act as the backup for the wallet, and it's connected to the Bitcoin network and can be used to restore the wallet on a new device if something were to happen to the one that you purchased.
Step three is you'll want to write down the seed phrase, those 12 or 24 words that the device gives you during the setup process. Anyone who has these words can take anything that's in your wallet. So, write them down on the cards that come with the wallet and never type them into a computer or anything that's connected to the internet. If it's connected to the internet, it can be hacked and you want to keep these words offline. So, anything like Google Docs or notes on your phone or computer should be avoided. Um, just the oldfashioned way on paper.
Step four, you're going to want to send a small test transaction from the exchange where you bought the Bitcoin to your wallet. So, you'll click the receive button on your hardware wallet software and copy the address that's going to look like a string of letters and numbers. Then, you'll go back to River where you bought the Bitcoin. Click send and you'll paste in the address that you just copied. You'll click continue and then you'll only send $5 or $10 from the Bitcoin that you just purchased as a test. After you click submit on the transaction, you'll wait about 10 minutes for it to then show up in your wallet. Then, when it shows up, you'll see the $5 or $10 in the wallet on your computer.
Step five is going to be to wipe and reset the device and then restore from the seed phrase that you wrote down. So, this is the most important step. And what you're going to want to do is reset the device in your treasure suite software in your computer. And this is going to be found in the settings section. Then you'll go back and set up the device the same way that you did the first time, but this time you'll choose restore from existing seed phrases instead of generating a new one like you did the first time. Then you'll enter the words only on the device, not in your computer, using the words that you wrote down in step three. Next, you'll confirm the test bitcoin you sent. So either the five or the $10 in step four shows up and that you can see it on the treasure suite app software on your computer. This proves that you can recover your wallet using the seed phrase if the device were to get lost or destroyed. I'd recommend practicing this a couple times before you start sending larger amounts so you can just get comfortable with how this process works.
Step six, you'll want to upgrade the paper that you use to write the words down into something more durable like steel. So, the paper can fade over time or it can burn in a houseire. So, I'd recommend buying steel seed plates and then stamping those words into the metal. I bought mine from Coin Kite and I bought a metal punch on Amazon to punch in the letters into the metal, but there's lots of other options out there. If you do a Google search for seed plates, just make sure you have a stamp or a way to engrave the words into the metal. These are fireproof, they're waterproof, and they don't degrade over time. So, I'd recommend just buying these when you purchase the wallet.
Step seven, you want to store your two seed plates in two separate locations. But keep in mind that if someone else has access to this, they can steal all of your Bitcoin. So, if you split them into two locations, I would only do this if you have a second home or if you're willing to use a passphrase that I'm going to cover in step eight. You want to do this so that if your house were to burn down or something catastrophic were to happen, you still have the backup to your Bitcoin at the second location. Some people like to split up the seedwords AC across multiple different locations and build like a complex treasure map. And I think this increases the risk that you either lose the pieces or it makes it a lot harder for your family to recover if something were to happen to you. So I would just avoid adding too much complexity.
Okay, so step eight. This is optional and more advanced, but if you have seed plates in two separate locations, I would recommend doing this as you get more comfortable with self- custody. And this is going to be to add a passphrase on top of your 12 or 24 words. And this matters because of how you store your seed plates. So, if you have two separate seed plates, if anyone finds one of your seed plates without a passphrase set up, they have full access to your Bitcoin and they can enter the words into any wallet and sear seal your funds. A passphrase makes it so that one seed plate is useless on its own because someone would need both your seed plate and your passphrase to access the wallet. This feature is found in your wallet software. So on Treasure Suite, you want to go to settings and enable a passphrase. Then every time after that when you plug in your wallet, it's going to ask you to enter a passphrase. If you plug it in and don't enter a passphrase, you'll see the original wallet that you set up earlier. But once you do enter a passphrase, this opens a completely separate wallet where your real Bitcoin is going to live. So it's a good idea to back up this passphrase in multiple places as well. And never store the passphrase with your seed plates. The whole point of setting this up is that someone needs both your seed phrase and your passphrase to access your wallet. So you want to keep them in different locations with backups of each.
So when you add a passphrase, you'll need to send your Bitcoin from the original wallet to the new passphrase wallet. So, you'll decide what your passphrase is going to be. Enter it after you plug in your wallet. It's going to open a blank wallet. You'll click receive in your wallet software. It's going to give you that address and you'll want to copy that. Unplug your wallet, plug it back in, enter nothing when it asks you for a passphrase, and then you'll see your original wallet with the $5 or $10. You'd then click send, paste in the address that we just copied, and then click send. And that's how you'll get the Bitcoin over to the new wallet. This is an extra step, but I think it's worth it once you're more comfortable with how to use the wallet.
So, now that your Bitcoin's secure, I want to make sure that you can keep it that way. So, let's talk about how you can avoid scams. So, scammers target Bitcoin holders because all of the transactions are not reversible. So, once it's sent, there's no bank that you can call to get it back. And these scammers like to go after beginners because they don't know what to look for. So, every Bitcoin scam, just as a general rule, runs on one thing that you need to be aware of. And this is getting you to feel a sense of urgency or panic. You'll see things like your account will be locked for 24 hours or this investment closes today. They do this because whenever you feel rushed or scared that you're going to lose money or that someone has access to your account, you immediately stop thinking and you start reacting. So, if anyone's rushing you, this should be a red flag and it's most likely a scam and someone trying to steal money from you. So, if you ever feel pressure or that someone uh is trying to get you to send money and you just don't feel good about it, close the app and just walk away and revisit it later.
There's four main rules that you can stick to to help avoid some of these scams. So, the first one's going to be never share your seed phrase. So, no real company is ever going to ask you for this. If anyone does, uh, it's a scam.
Rule number two is don't trust links in emails, texts, or DMs that you get. You could get an email that would look like Treasure is emailing you and asking you to verify your account or they're notifying you that your device has been hacked. Then this link that you're going to get is going to take you to a fake website that's going to look exactly like Treasor's website. They're going to prompt you to enter your password or your seed phrase and then they can drain your wallet cuz they just got access to all of your Bitcoin. As a rule of thumb, no one at any of these companies is going to ever reach out to you for login information or wallet seed phrases. And you can just completely ignore any of these emails or messages that you get. You can also get text messages and phone calls. I get these all the time that say that your account or the exchange that you're using has been hacked. They use this to try to get you to panic and give up your account login to get your account back. And then they'll they'll use this information to change your password and steal your money. Now, I personally avoid and immediately block and delete texts or calls from anyone that's claiming to be an exchange. They're they're never going to call you. And uh if you're ever unsure, just hang up and try to reach out to the exchange directly.
Rule number three is that anyone that's promising you guaranteed returns is trying to steal from you. So, for example, you'll see things like, "Send me one bitcoin and I'll send you two back." or another platform that's trying to get you to deposit Bitcoin and promising high or unrealistic returns and yield that you could get. These are all scams and you should never send your Bitcoin to someone expecting a return that's going to be unrealistic.
Rule number four is to look out for pig butchering scams and this is a newer scam that's popped up on the internet, but this is basically just where someone's going to reach out to you on either a dating app, social media, or a text that's pretending to like have the wrong number just to start a conversation. These are tactics that they attempt to build a relationship with you first and gain trust with you over a long extended period of time. Then they'll casually start mentioning either an investment platform they've been using and invite you to try it or they'll start trying to convince you to send them Bitcoin. Then once you start sending small amounts, they may allow this relationship that you've developed to continue to to keep convincing you to send them more and more money over time. Then once you get to the point where you can't pay anymore, they're going to completely disappear and the platform's going to shut down. They're going to steal all of your money. So if someone you've never met is trying to convince you to send them money, this should be an immediate red flag. And I would end that communication immediately.
So now you know how to buy, store, and avoid scams, the next step is how to build a position in Bitcoin and start buying it consistently over time. A lot of people buy Bitcoin once and then they try to figure out the perfect time that they need to get in and buy more with larger purchases. And this can be stressful because you're watching the price every day and it usually leads to one of two things. So you buy too much at the top or you never buy again because you're always waiting for the price to be lower.
So I've been buying Bitcoin regularly since 2020. So and I've bought it at all different prices. So $100,000, $10,000, and $60,000 and pretty much everywhere in between. And I've never once tried to time the price. I've just kept buying with any money that I had available. And the easiest way to do this is you can automate this by setting up a recurring buy on whatever exchange you're using. So River lets you do this automatically. So you click a zero fee recurring buy on their website and then you just set the amount that you want to purchase and the frequency that you want the purchases to be made at. So then you'd buy the same dollar amount on the same schedule regardless of what the price is. And over time all these purchases end up averaging out. And this way you never really have to stress about whether today is a good day to buy or not based off of what the price is doing. I would start setting this up with just a small amount that wouldn't bother you if Bitcoin were to drop 50% tomorrow. And you don't need a whole coin to buy Bitcoin. You can buy a fraction of one with as little as $1 on these plans. The goal is just to keep accumulating regardless of what the price is doing.
Every person that's committed to buying Bitcoin over a long period of time has had to sit through an uncomfortable period where all their purchases up to that point felt like a mistake because of just how Bitcoin's volatility works and how the price moves up and down. Over a long time frame, the people who sell early end up regretting it as the price recovers and the ones who kept buying consistently over time are rewarded in the long run.
But there's still a few mistakes that you want to avoid and you need to be aware of to succeed with Bitcoin long term.
All right, the first one is thinking that you miss it or that you're too late to Bitcoin. So, every time Bitcoin's hit a new all-time high, people will come out and say that it's too late. And I think this is just how human psychology works. The people who wait for the price to come back down will miss it because even if it does come back down, they'll still be waiting for the price to go even lower. If your time horizon is long enough, so past 5 years, the price you actually pay today matters a lot less than whether you bought Bitcoin at all in the first place.
Mistake number two is getting shiny object syndrome. So once you first buy Bitcoin and own it, you'll get pitched on different altcoins and cryptocurrencies, uh, Bitcoin treasury companies and different yield products and new strategies that are going to promise you more upside than what you can get with Bitcoin. Trading it will most likely leave you with less Bitcoin just because of how Bitcoin's price moves. I say this from experience because I bought Micro Strategy options in 2021 and ended up getting the timing completely wrong. Even though Micro Strategy has has gone on to do hundreds of percent returns since I first bought those options back then. So in this situation, I was directionally correct on where the stock was going, but got the timing completely wrong. I tried trading. I I got completely wiped out. So I just say this to try to help someone avoid making a mistake like this that I wish I could go back and correct if I could. So I would first just focus on buying and accumulating a Bitcoin stack first before you look at taking on additional risk.
Then number three is going to be giving up on Bitcoin during boring months where the price isn't doing anything. So most of Bitcoin's major moves happen in really small windows throughout the year. This means that most of the time Bitcoin's price is going to be trading sideways or down. And it's during these sideways months when nothing's happening and the stock market may be going up at the same time that people end up selling and just completely forgetting about it and moving on. that people who hold and stay in the market long term give themselves the opportunity to benefit from these short windows while everyone else is going to end up losing money by selling or trying to time the market.
All of these things took me a lot longer to figure out than it should have. And I hope this video saves you some time. And if you'd like to work with me one-on-one to build a plan around your Bitcoin, you can apply to my coaching program with the link below the video. And if you want to learn about my plan for retiring with Bitcoin, I break that down in this video.