I Bought Bitcoin, Now What?
Congratulations on taking your first step on the path to financial self-sovereignty! Before deciding whether to save or spend your bitcoin, take some time to familiarize yourself with concepts around bitcoin security. Bitcoin is very different than traditional payment systems and comes with a different set of security risks. This article introduces some important security considerations, explains why bitcoin is so popular as a way to store value and touches on how to spend your bitcoin.
If you haven’t already learned how to securely use and store bitcoin, you will want to make that your priority. To get an idea of your current level of bitcoin security, consider the following questions:
1. Does anyone else, including cryptocurrency exchanges and wallet providers, have access to your bitcoin private keys? If your answer is yes, then you will want to consider moving your bitcoin to a wallet that only you control. To understand why this is important, read “Why Do I Need a Bitcoin Wallet?”, and if you need help choosing a wallet, check out our guide. We recommend using a hardware wallet like a Ledger Nano X if you plan to store other cryptocurrencies, or a ColdCard if you plan to store bitcoin only.
2. If your house burned down tomorrow, would you still be able to access your bitcoin? It’s important to store your private keys (or seed phrases) in multiple physical locations so that you can always recover your funds.
3. Are you familiar with the many types of online scams and cryptocurrency scams? If not, then read our article “How to Spot Cryptocurrency Scams” to protect yourself from falling victim to one.
4. Do you mind having your financial history, including account balances, recorded on a public ledger? Bitcoin is a transparent payment system where everyone can see everyone else’s transaction history. It is very difficult to transact privately using bitcoin, so be sure to understand the privacy best practices.
Many people become interested in Bitcoin because it is an alternative financial system — outside the reach of central banks and governments — and is not prone to inflation or economic interventionism. The current economic system causes inflation intentionally as a way to encourage people to spend rather than save. This is done to discourage people from “hoarding cash”, which ultimately makes traditional currencies a poor way to store value in the long term.
On the other hand, Bitcoin’s monetary policy is controlled by computer algorithms and cannot be changed. There will only ever be 21 million bitcoins, which means your portion of the total supply cannot be decreased through monetary inflation. Despite the volatility of bitcoin’s price, its monetary policy gives it the potential to be a good store of value in the long term. If you are on the fence about what to do with your bitcoin, consider saving it for the future.
If you decide not to save your bitcoin, you can always spend it online. After all, Bitcoin was designed to be peer-to-peer electronic cash. Paying for goods and services online using bitcoin is as easy as using a credit card. When checking out, you simply need to send the requested amount to the bitcoin address provided. Note that you may have to wait for your Bitcoin transaction to be mined (or confirmed) before receiving what you paid for. This wait can range from 10 to 60 minutes, depending on the size of your purchase.
As Bitcoin matures, more and more businesses are accepting bitcoin as payment. Some are even building businesses on top of Bitcoin. For a list of places where you can spend your bitcoin, take a look at “Where to Spend Bitcoin”.
Perhaps the most important thing to do after buying bitcoin is to keep learning! Bitcoin is a multifaceted system that involves economics, technology, and some pretty big social implications.
Vijay Boyapati’s article “The Bullish Case for Bitcoin” does an excellent job describing the monetary and economic significance of Bitcoin. The article takes about an hour to read, although it was originally released in four parts for easier reading (Part 1, Part 2, Part 3, Part 4).
For a better overall understanding of how Bitcoin works on a technical level, check out this video “How Bitcoin Works In 5 Minutes”.
Finally, it is important to learn about the social implications of Bitcoin. A great starting place is “Why Bitcoin Matters for Freedom” by Alex Gladstein of the Human Rights Foundation, which describes some of the social impact Bitcoin is already having today.