August 07, 2017
Recently, I got back into cryptocurrencies. I got interested in bitcoin around 2010/2011, did a bit of CPU mining on my laptop (never won a block) and got ₿0.05 bitcoins for free from the Bitcoin Faucet (now worth about ~$150). Bitcoin seemed a very enticing alternative, given I was living under capital controls in Iceland at the time. However, bitcoin back then was super niche and the utility had not yet materialised. With time, I lost my bitcoins and mostly forgot about them but stayed loosely up-to-date over the years. Until now.
This blog post was put together after a few exchanges on Twitter:
I recommend reading through the getting started guide on bitcoin.org. bitcoin.com also has some decent supporting material but it seems to be a business pushing its own agenda. Roughly speaking the process is as follows:
Wallets are how you securely store cryptocurrencies. There are varying types of wallets that serve different purposes:
Hot wallets are for your daily spending. Do not store more in them than you would carry around in cash. The wallets I would recommend the most are offline hardware wallets. Long term, the safest option in my opinion would be laminated paper (to avoid water damage) wallets stored in fireproof safes at a minimum of two locations. Another interesting deep-freeze option is engraved stainless steel.
I look at bitcoin as a long term (5-30 years) storage of value: digital gold. Transaction fees can range from €0.5 to €4, so the only thing I will do with bitcoins is to hold on to them, buy other cryptocurrencies and maybe take part in ICOs. I will look into other currencies for utility, like buying and trading things.
I do not hold any allegiance to any specific cryptocurrencies. My strategy so far is more or less to “buy into crypto”. That means I split roughly on total market capitalisation of each coin:
Personally I do keep a maximum of €200 on Kraken. I accept the risk of losing it but in return I have the option to buy more on short notice (when price drops). Furthermore, I never invest more into cryptocurrencies than I would be okay with loosing entirely. A hard earned lesson from the 2008 financial crash in Iceland.