A crypto newbie asked how to invest in crypto without dealing with an exchange, because he’s afraid of being FTXed. We’d call it Mtgoxxed but he’s new, let’s cut him some slack.
And Saifedean calmly replied to this.
Here’s his tweet:
If you don’t want to get FTXed:
-avoid ‘crypto’, bitcoin only
-hold the private keys to your own bitcoin
-you can buy from an exchange but withdraw your coins immediately to your custody
-can buy in-person for added privacy, or through Bisq
Saifedean
Let’s look at these 4 rules one by one:
Avoid Crypto, Bitcoin Only
Cryptocurrency enthusiasts are spoilt for choice, with more than 6000 cryptocurrencies available in the market. However, not all cryptocurrencies are created equal. Bitcoin is the pioneering cryptocurrency and continues to reign supreme in terms of market capitalisation and popularity. Despite several ups and downs, Bitcoin has proved itself to be resilient and reliable over the years.
From a risk management perspective, it is advisable to focus on Bitcoin rather than over-diversifying the crypto portfolio with other coins. Other cryptos, referred to as ‘altcoins’ – an amalgamation of ‘alternative’ and ‘coins’ – generally have lower liquidity, are more vulnerable to market manipulation and often don’t carry the same potential long-term stability as Bitcoin. Detractors would argue about the potential gains offered by these altcoins, but the cons often outweigh the pros for people looking for a safer crypto investment.
You don’t have to be a bitcoin maxi from the start, but it’s best to keep it in mind and to study bitcoin. Saifedean’s own book The Bitcoin Standard is great to start on that journey. https://loveisbitcoin.com/why-should-you-read-the-bitcoin-standard/
Where can you buy bitcoin?
We have a page with all the exchanges we like, it depends on your geographical area. https://loveisbitcoin.com/bitcoin/
Control Your Private Keys
Owning Bitcoin is much like owning a piece of digital real estate, and controlling the private keys to your Bitcoin is akin to having the deed to that property. When you hold the private keys to your Bitcoin, you have complete control over your assets. These keys are the only way to access and move your Bitcoin from one address to another.
Some trading platforms or wallets retain control of these keys on behalf of the user. This is risk-laden as you are inherently dependent on the platform’s security from hacks, their honesty, and their financial health. The popular saying in the crypto space, “Not your keys, not your coins,” emphasizes the importance of owning your private keys.
You should take a look at our wallet guide to find the perfect self-custodial solution for you. https://loveisbitcoin.com/wallets/
Withdraw Immediately From Exchanges
While buying Bitcoin from an exchange is often the most convenient method, leaving your Bitcoin on these platforms can expose them to potential risks such as hacking, internal fraud, or even bankruptcy of the exchange itself. It is wise practice to withdraw your Bitcoins to a secure, preferably offline, hardware wallet that you control as soon as possible following a purchase. This makes sure that you have full custody of your coins, and their safety is not reliant on a third-party service.
Again, our wallet guide will help you with holding your own sats.
Seek Alternatives for Greater Privacy
For those who prioritize privacy, buying Bitcoin in person or through decentralized platforms like Bisq might be a good option. In-person purchases, often referred to as over-the-counter (OTC) transactions, can effectively avoid leaving a digital trail. Though it’s crucial to ensure such transactions are legal in your jurisdiction and approach them with due caution.
Bisq, on the other hand, is a decentralized Bitcoin exchange that facilitates peer-to-peer trading of Bitcoin. As there’s no central point of control, it can’t be shut down, and trading on Bisq never requires you to surrender control of your coins to the exchange. The platform is designed with privacy as a top priority and it encrypts all communications between its users.
While Bisq is indeed an excellent choice, another easier alternative might be Peach Bitcoin app. Use the coupon code LOVEISBITCOIN for bonus points. https://loveisbitcoin.com/need-sats-then-download-peach-%f0%9f%8d%91/
Other non-KYC options are Robosats and Vexl.
Conclusion
While the cryptocurrency space can seem daunting, and the risk of getting ‘FTXed’ remains ever-present, focusing on Bitcoin, retaining control of your private keys, and maintaining privacy can help mitigate these risks. As with any investment, due diligence and a proactive approach to security are paramount. Always remember, the power of controlling your financial assets and privacy lies in your hands; with the right approach, you can navigate the energetic and often unpredictable world of cryptocurrencies with relative ease and assurance.
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