There are thousands of these guides: But hey, here's mine. Don't trust my setup. Verify what best works for you.

1. About the historical moment1. About the historical moment

On February 24, 2022, a new era began in the lives of all of us. Assets and investments were suddenly held hostage, without the ability to convert and export. Western banks and fintech companies have started nagging and freezing accounts for everyone. It turned out that everything we own on paper can be lost in one moment (or gradually as a result of devaluation). The existing financial system has become a trap. There is no trust in her anymore.

How to maintain control over assets? How to dispose of them freely? How to regain confidence in the future for yourself and your loved ones? The answer is: Bitcoin. With the right skills, described below, it is the best tool for long-term savings, international transfers, and instant payments.

It is easy to send Bitcoin at any distance to your family and friends. Bitcoin is not subject to inflation. On the contrary, its mathematical structure guarantees a decreasing volume of new unit emissions over time. Bitcoin is indifferent to states, nationalities, forms of government, laws, and borders.

With such a virtual currency, you don't need to carry anything with you except a smartphone. Any amount in your wallet is weightless and formless. If the security rules are followed, your bitcoins cannot be taken away, confiscated, devalued, frozen, or banned. The mechanism of instant payments in bitcoins has already been debugged and is functioning successfully.

2. Bitcoin, not “crypto”2. Bitcoin, not “crypto”

I can imagine your skepticism: “They've already buzzed their ears with their crypt... It's too complicated, I won't even try to figure it out... A dark forest and only scammers… All this will be banned soon anyway.…” Undoubtedly, the mathematical theory and software implementation of Satoshi Nakamoto's idea are difficult to understand. But Bitcoin has been living and developing for 13 years, despite any skeptics and attempts to discredit it.

Bitcoin is not just a “blockchain technology". This is a network of nodes that are scattered around the planet and together store an impersonal history of all operations. Miners are also nodes that, in addition, can package new operations into blocks. Transactions: accounting transactions from address to address, debit/credit. Everyone can own a node that is inexpensive and uses minimal energy (unlike miners).

All nodes, and there are already thousands of thousands of them, keep a complete history. It's impossible to fake information, and it's impossible to erase it all at once. The total balance at each address is easily calculated from the transaction history. The person whose wallet is able to send bitcoins from this address is the owner of the balance on it.

A bitcoin wallet is just a program on a computer or an application on a smartphone for sending money to another address. It doesn't store anything except the secret key. The “coins” themselves are securely recorded on the blockchain. The secret key, and this is the most important thing, must be carefully stored in secret places. Then the loss of your wallet or phone will not lead to the loss of your bitcoins.

Why do I contrast Bitcoin and cryptocurrencies? Because I don't like plagiarism and scammers. Bitcoin became the first successful electronic money project (after a series of unsuccessful ones) that solved the problem of decentralization. Its open source code is both a strength and a weakness. Power, because everything is in plain sight, and everyone can check everything. The weakness is because any programmer can copy an idea, tweak it a bit, make a fortune in advance, and then start agitating for a “new, even better” cryptocurrency. There are thousands of such projects for the profit of the founders.

The attempts of central banks to launch their “sovereign cryptocurrencies” (CBDCs) look especially comical. This is nothing more than a desire to continue to control financial flows and money supply, with unprecedented surveillance of citizens and the ability to deprive everyone of money for any offense. The new reality is that people will soon no longer need banks or government banknotes. There are already many places in Latin America where you can pay with bitcoins directly, instantly, and with almost no commission.

Bitcoin maximalists, to whom I consider myself, recognize only one blockchain. Where the rules of the game were spelled out immediately and forever and whose scale of decentralization can no longer be repeated. Where the main rule says that there will never be more than 21 million bitcoins in nature. As of today, 19 million of them have already been mined. At the same time, about 4 million are irretrievably lost.

Until 2140, in the next 118 years, only 2 million new coins will be born, 13% of the existing ones. That is, almost zero inflation! The algorithm is designed so that it won't work faster, no matter how hard you try. The more miners join the game, the more difficult the job becomes for everyone. This is also one of the original rules that cannot be changed. Plus, the remuneration for miners is halved every 4 years (halving), slowing down the already low inflation and guaranteeing an increase in exchange rates.

The fact that the creator of Bitcoin was able to remain anonymous makes it unique among all similar projects. There is no one to put pressure on, no one to fine and force to make changes. The project continues to develop thanks to a voluntary community of programmers, many of whom are also anonymous. Open source encourages such collaboration. You can ban Bitcoin only by destroying the Internet on the planet.

“But there's terrible volatility!” You might object. Any new technology, be it railways or dot-coms, has always attracted speculators. When there are no analogs, the price is easy to manipulate with the help of rumors and coordinated actions of “whales”. I hope that Bitcoin has already overcome its most turbulent phase.

Now the time is coming, which he was thinking of, to become a universal digital currency for payments. And as it is recognized as such, volatility should decrease. The long-term growth of the exchange rate against major currencies (“fiat” money based on trust) is guaranteed by their accelerating devaluation due to uncontrolled issuance.

3. Lightning Network3. Lightning Network

Critics of Bitcoin often point to its main disadvantages as a means of payment: slowness and excessive cost of transfers for small amounts. You can send a billion dollars to the opposite side of the globe for $10.00 in commission and wait for 10-20 minutes and pay exactly the same amount and wait for a cup of coffee in a bar.

Indeed, payments on the blockchain are recorded in blocks with an interval of about 10 minutes. And to get into the nearest block, you have to compete with other similar payments. Those who specify a higher commission will be processed earlier. It is more profitable for miners to pack blocks this way.

The amount of the commission at the time of payment will be indicated by the wallet itself, looking at the network usage. If you were greedy and specified too small a commission, your payment may take an hour, two, or even a day or two. Such a transaction can be “replaced with a higher commission” or simply wait for the network to unload.

However, the volunteer developers did not put up with this situation. They came up with and created the so-called second-level Lightning Network. Wallets in this network are able to transfer small amounts to each other in a matter of seconds. For such payments, it is more convenient to operate on “satoshi”, the smallest indivisible part of bitcoin.

There are exactly 100,000,000 (one hundred million) satoshis in one bitcoin. I will not go into details here about how this “second-level network" works. We will trust her with only a small part of our capital, for about a week's worth of pocket expenses. How to organize it. Read on.

4. Your first wallet4. Your first wallet

It's better to start learning about Bitcoin by installing the Coinos wallet on your smartphone. It allows you to receive and send bitcoins both via the blockchain (slow and expensive) and via Lightning (fast and cheap for small amounts). The third option, Liquid, is another second layer of Bitcoin. It is convenient to withdraw funds from exchanges such as Bitfinex through it. It allows you to do this without commission.

After creating a wallet, you must save its username and password. This is an extremely important moment! They will allow you to restore access to your wallet if you lose your phone or delete cookies in your browser.

5. Replenishment of the wallet5. Replenishment of the wallet

Congratulations! Now you have a Bitcoin wallet. But it's still empty. The simplest solution is to buy bitcoins on a centralized exchange. There are a lot of them now, but passport registration is required everywhere. Kraken and Binance are reliable but not accessible to everyone. The advantage is that you can withdraw bitcoins from them using Lightning.

It is important to read all the terms and commission amounts very carefully. How to make deposits in fiat and bitcoins, what is the liquidity (the spread of buying and selling), and how much will it cost to withdraw Bitcoins to your wallet? If there is no Lightning or Liquid, it is not profitable to withdraw small amounts.

Few exchanges work with Lightning (today it's only Binance, Bitfinex, and Kraken), and it's better to withdraw purchased bitcoins as often as possible. As long as you keep coins on the exchange, there is always a risk of losing them. As they say, “Not your key, not your Bitcoin.” The Coinos wallet is also a custodial one. There is always a risk that the site will disappear or be blocked.

6. Cold wallets6. Cold wallets

When storing large amounts, it is better to get a “cold” wallet, that is, not connected to the Internet. There are several so-called “hardware wallets". They look like flash drives or mini calculators and store the secret key outside of a smartphone or computer. The most popular ones are Blockstream Jade, Coldcard, Trezor and DIY Krux devices.

These days there are also software wallets that can be installed in airgapped old phones, like Metrovault, and the latest CryoBrick.

The risk when buying such a device is that your personal data may leak from the store. This has already happened, and many customers have been targeted by hackers or bandits.

• For advanced users, there is an alternative way to create a cold wallet. The Electrum application in the Tails operating system. To do this, you need to buy an ordinary USB flash drive with a size of 8 GB or more. Further instructions are available here. On my own, I'll just add the following steps:
• To verify that the process was completed successfully, generate an address for receiving bitcoins (not Lightning) and look at its first three characters. They should be bc1.
• Write down the 12 or 24 “seed” words obtained during the creation of the wallet on paper with a pencil and store them in a safe place (the ink dries over time). Someone engraves them on metal so as not to lose them even in a fire.
• Install BlueWallet on your smartphone and export the public key to it, creating a “view-only" wallet. This will allow you to replenish it by generating addresses and see the balance but will not allow you to spend. Bluewallet can indeed be used as a cold wallet in an old airgapped phone. From a cold wallet, you can then replenish hot Coinos by periodically downloading Tails from a flash drive and making payments.
• Plausible deniability: create another wallet by adding an additional word to the first seed phrase, and do not write it down anywhere (it should be well remembered and may not be from the list). Keep your fixed assets on it and a symbolic balance on the first wallet. If you are forced to open the safe under pressure or the seed is stolen, the principal amount will remain safe. In this case, a copy of the seed can be stored in a password-protected archive on Google Drive. If it leaks, you will find out about it.

Before you trust a cold wallet with large amounts, I advise you to first learn how to restore it. Top up your Tails/Electrum wallet with a few satoshi, and then delete it. You can format the flash drive altogether and reinstall Tails. Now create a new wallet in Electrum once again by selecting the option “I already have a seed” and entering your 12 words. After synchronizing the blockchain, you need to make sure that your Satoshi is returned to you.

What is a “seed"? The seed phrase sets the initial value of the pseudorandom number generator when creating a secret key. The probability of guessing 12 or more English words from a large list, in the right order, is almost zero. This is the basis for the security of your bitcoins. To prevent the leakage of such important information.

An important note about the difference between the balance on the exchange and the balance on your own wallet. On an exchange or a centralized (“custodial”) wallet, you do not have direct access to the blockchain. The balance can be replenished with any amount and spent just as flexibly. It's just a number on the screen, the coins don't belong to you. The exchange itself will arrange the withdrawal of the required amount and combine it into one transaction with other clients.

When you directly receive bitcoins to an address with your own secret key, each such arrival is stored as a separate UTXO (unspent transaction output). You can only spend UTXO in its entirety by paying a commission to the miners in proportion to the number of bytes in the transaction. The change will be returned to the wallet as a new UTXO. If the miner's fees increase in the future, it will become unprofitable to spend UTXO on small amounts (the commission is commensurate with the payment amount). Keep this in mind when replenishing your cold wallet: receive receipts for large amounts at once and spend them without change!

7. Decentralized Exchanges7. Decentralized Exchanges

Recall that centralized crypto exchanges are those where you need to register with your passport, where all actions are recorded, and where your funds are trusted by third parties. In addition to the risk of hackers hacking, leaking personal data and passwords, such exchanges lend your bitcoins to hedge funds that play short (short sale). Recently, the risk of account freezes has been added to this list.

It is better to trade bitcoins directly from person to person (person-to-person, or p2p). An example of such an exchange is Bisq. Its disadvantage is low liquidity and slow operation speed, because the transfer of Bitcoins takes place on the blockchain.

Another alternative: trade through the Lighting Network using Robosats or the lnp2pbot Telegram bot. Transactions on these exchanges take a few minutes, and the counterparty's costs and risk are minimal. The latter is solved through an escrow account, which is automatically managed by the bot.

8. Reception at retail outlets8. Reception at retail outlets

The Lightning Network allows you to pay and accept bitcoins instead of credit cards, saving 1%-3% acquiring fee. More and more shops and restaurants in the world are appearing on this map. One of the transitional stages today is virtual debit cards like Freedomia and Bitrefill gift certificates.

9. World Currency9. World Currency

Thanks to Bitcoin, you can easily solve the problem of transferring funds across borders:

Do you live in the West and want to help your relatives? Buy satoshi for dollars and euros, then send it to them for sale in your local currency.
On the contrary, do you want to withdraw funds? Then buy satoshi for fiat and sell it in the foreign currency anywhere in the world.
As the inflation of unsecured national currencies worsens and awareness of Bitcoin grows, more and more people will prefer to save their money in it and accept it as payment for their goods and services. Then there will be no need for constant conversion (and bank accounts in general).

Similar to cash payments, bitcoin payments cannot be stopped or tracked if both parties use non-custodial wallets. Owning such a wallet or taking it through customs is reduced to memorizing or storing 12 seed words in a secret place.

States will probably try to legally prohibit the possession of lists of 12 words, but this will not cause anything but laughter. They have been abusing the issue of money for too long and have brought the world to a dead end. Wars funded by the mechanism of inflation (in fact, a tax on all of us) are a sad example. Bitcoin deprives all states of the monopoly on issuing money.

If you like this kind of future, you can help the enlightenment process by sharing the link to this article with your friends!