An Open Letter To New Bitcoiners
Although the journey into Bitcoin can be daunting, newcomers can have an easier time by adjusting their mindset.
To my newly interested friends,
First of all, congratulations! You should be proud of yourself for getting this far. If you are reading this letter, you have taken an interest in learning about Bitcoin, which is a difficult step to take. As the saying goes, Bitcoin is a journey not the destination. Step 1 of that journey is showing interest. Kudos!
As you enter the mysterious world of Bitcoin, please keep in mind that Bitcoin is not an investment—Bitcoin is money. Please treat it as such.
I have recently become more active in educating my peers about this amazing technology. By far the most common question I receive is, “Where can I spend it?” To me, this question illustrates that most people only think about one of the uses of money: spending. Bitcoin may take some time to fulfill that role at scale. However, money has another function that Bitcoin is currently the best at: saving. Bitcoin is the best piggy bank the world has ever seen.
Approaching Bitcoin as a piggy bank rather than an investment vehicle can help us make more responsible decisions. The purpose of using a piggy bank is to accumulate small amounts of savings that may develop into a significant balance over time. However, you get an additional benefit with Bitcoin. Not only will the balance of your bitcoin holdings grow, but over time, Bitcoin should appreciate against whatever currency you currently use. This is because Bitcoin’s monetary properties are better than those of any other money in history.
Now that we have established that Bitcoin is great for saving, but not yet great for spending (in most cases), we can now set a goal.
By the time we’re ready to spend bitcoin, we want to own the most bitcoin we can.
This goal might seem obvious, but while making decisions within this space, knowing the end goal is of the utmost importance. The decisions you make about how to acquire and store your bitcoin can impact how much you ultimately end up with.
How you acquire and store your bitcoin is a personal decision. People take different approaches to accumulating bitcoin, and each strategy carries risk. Bitcoin’s price tends to move sharply, either upward or downward, causing the perception that bitcoin is either “cheap” or “expensive” at any given time. These price movements cause emotional responses that then result in people making decisions that ultimately leave them with less bitcoin. The most effective way to remove the effects of emotion in this market is to make regular purchases over time, a strategy known as dollar cost averaging (DCA). Slow and steady wins the race.
DCA is a winning strategy for beginners for two reasons. As I mentioned before, it removes the emotional trap of trying to time the market. Equally as importantly, DCA allows you to “grow your know” while you accumulate. As time passes, both your bitcoin balance and your Bitcoin education grow together. By the time you acquire a significant balance, you will be able to make good decisions about bitcoin storage yourself with confidence. There have been countless stories about bitcoin fortunes lost over the years, and the people who don’t understand Bitcoin are the most likely to lose it.
I wish I could tell you differently, but the truth is, understanding bitcoin is hard. Learning how to use bitcoin is hard. You will have to tackle subjects that are completely new to you. You will have to question your assumptions about the way the world works.
Even though understanding Bitcoin is difficult, it is possible. If my mom can do it, so can you! Don’t get discouraged. Remind yourself that everyone in the Bitcoin space started exactly where you are right now. We all understand how difficult it is for beginners. If you know someone who is into Bitcoin, ask for help. If not, ask your favorite Bitcoin content creator or Twitter personality. From our perspective, there is nothing more satisfying than helping someone who is new to the space grow into a sovereign individual, ready to take control of their future.
This tweet from John Fakhoury says it all:
“If I ever talked to you about buying bitcoin, that was my way of saying ‘I love you.’”
This is a guest post by Justin Siegel. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or BitcoinLinux.
The Little Bitcoin Book (beginner, general)
Inventing Bitcoin (beginner, technical)
Grokking Bitcoin (advanced, technical)
Layered Money (beginner, monetary)
The Bitcoin Standard (advanced, monetary)
“Gradually Then Suddenly,” Parker Lewis
“Down the Rabbit Hole,” Gigi