There are a lot of “new people” around in Bitcoin this week, understandably.
As someone who advises cryptocurrency projects – Bitcoin and non-Bitcoin – for a living, one of the things I don’t like to do is invest in this cryptocurrency or that one.
My reasons for this are simple: if I own a token my opinions about the token might be influenced by my position in the token, so to the extent I might hold any cryptocurrency those holdings shouldn’t be allowed to become material to the extent my advice would be affected.
We now are in a truly insane, face-ripping Bitcoin bull run, with new ATHs being breached on a daily and hourly basis. Logic dictates this cannot go on forever. That will not stop new participants in the cryptocurrency markets from thinking otherwise and thinking that they can call the top.
Over the centuries, many an amateur trader has been ruined by mortgaging their home or investing their children’s college tuition funds into speculative investment; Isaac Newton, arguably the most brilliant human being who ever lived, was utterly rekt in the South Sea Bubble after making a huge sum in a bull run and doubling down and reinvesting in the proceeds before a massive crash.
This isn’t to say Bitcoin is or isn’t a bubble or that it will or won’t be the victor in the battle of technologies and ideas which will determine the future of money. These are matters of debate about which reasonable and intelligent people can disagree. It is to say that the simple fact about investing is that (1) it is never risk-free and (2) you are not smarter than the bubble and if you give it enough opportunity, the bubble is going to beat you.
With that said, there are ways that you can “get into” Bitcoin without getting exposed to it. These are not financial bets but bets on the use of your time: an investment of energy with limited upside but no downside that will, if you later choose to invest, be of use to you, as you will have learned more about the field that you’re investing in than you would have otherwise, and maybe could pick up a useful skill or two along the way.
1. Read the White Paper.
The Bitcoin White Paper is the seminal document which touched off the cryptocurrency revolution 12 years ago.
A lot of folks in the crypto business say it’s a bad launching-off point for beginners to start with because it requires total newbies to get familiar with things they may have never heard of before such as hashes or digital signatures. I say if you don’t understand these things you won’t be able to understand the future, and although cryptography will be understood by our digitally native descendants as second nature, those of us unfamiliar with the concepts need to get acquainted with them pronto.
Additionally, I note two things about the Bitcoin White Paper which are notably absent from most of the cryptocurrency white papers which followed:
- The functions it claims to provide were present on the date the software was first released for public use.
- The paper is not a marketing document and was not selling a product or advertising a token sale.
Learning to distinguish between a technical paper and a sales pitch is an important skill. Learn it sooner rather than later.
2. Run a full node.
“WTF is a full node?” I hear you ask. Great question, and if you don’t know the answer, that’s reason enough to run a full node.
A full node is a computer that stores a copy of the Bitcoin blockchain. Nodes help to verify honest transactions. The more honest nodes there are, the more difficult the Bitcoin network is to corrupt. Right now there are tens of thousands of honest nodes.
You won’t want to run a full node on your own computer as (a) it will suck up CPU (b) it will devour 300 gigs of storage and (c) if it’s a full node, you’ll want to be leaving it turned on most of the time.
This doesn’t require a huge financial commitment with fancy hardware. Here’s my setup:
Simple, right? Just a Raspberry Pi with some external storage. To get your own up and running:
- Get a Raspberry Pi 4 with relevant fixins. This starter kit with 8GB of RAM for $119 will be fine.
- You’ll also need to get some additional storage as the Pi doesn’t come with enough to store the whole blockchain. This here SanDisk 1TB MicroSD should do the trick. At $200 it’s the most important piece of the puzzle, but you’ll be glad to know you’re now done spending money.
- Start up the Pi and mount the external drive. If you don’t know how to do that because the only computer you’ve ever used is a MacBook Air, congratulations! You’ll get to experiment with the command line for the first time.
- Install the Bitcoin software.
Once you’ve done all that, congratulations! Without sending a single dollar to a cryptocurrency exchange, you’re providing a critical piece of network infrastructure for the global Bitcoin network, and you’ve acquired more familiarity with Bitcoin than 99.9% of the people who talk about it. Start teaching yourself to code too.
The benefit of doing all of this is that you literally lose nothing. You’re chipping in to the network and learning new skills you’ll never forget.
3. Get on social media and only listen to people who aren’t trying to sell you something.
There are lots of people on on social media who are responsible Bitcoin cheerleaders. Balaji Srinivasan, Jameson Lopp, Elizabeth Stark, Andreas Antonopoulos, Nic Carter, Caitlin Long, Izabella Kaminska, and Neeraj are some good voices to start with on Twitter.
If you’re interested in law and regulatory issues there are plenty of lawyers/legal scholars on that site too including Stephen Palley, Hailey Lennon, Lewis Cohen, Jake Chervinsky, Gabe Shapiro, Peter van Valkenburgh, Katherine Wu, and of course yours truly (also on Gab and @pjb on Soapbox and Clubhouse). (Full disclosure, Stephen and Hailey are my law partners.)
In the “skeptics” camp are a group of folks who Bitcoin cheerleaders would call curmudgeons, but who I would say simply have stronger views about downside risk. (I used to be one of them but I’ve since sold out.) The current leading skeptics include Tim Swanson, Cas Piancey, David Gerard, Amy Castor, Nouriel Roubini, and Bitfinexed. Cheerleaders are very well funded; skepticism is not, so follow them and people they follow to get a more balanced view.
4. Start reading the industry press.
5. Find a local MeetUp group.
The last and final step is really the best one. The folks I met in Bitcoin and Ethereum meetup groups and Skype rooms in 2013-14 wound up becoming professional colleagues, customers (when I was running a software company), clients (after I bounced back into the law), and some will be lifelong friends.
I’m cognizant COVID isn’t over yet, but it will be – soon – and once this is over I personally am very much looking forward to attending as many in-person events as I possibly can. There are meetup groups of Bitcoiners in your local area. Find the groups now, and when this COVID nonsense ends make a point of going to meet some of them. In the interim, you’ll probably be able to connect with these folks over other social media via those channels.
By virtue of the fact that you’re reading this blog post, you can be sure that people like you who share your interests about man, money and state are out there, and there are great conversations waiting to be had over a beer.
And that’s it!
Immersing myself in Bitcoinland nearly 8 years ago was the best decision I ever made. Nothing else even comes close. It has resulted in a very rewarding professional life. The space has grown by leaps and bounds, year on year, unceasingly. It will continue to do so until decentralized systems of all kinds have conquered the Earth, and put control over data and money where it belongs – back in the hands of the people. Today is as good a time to jump in as any.