Podcast Summary: The Peter McCormack Show – Beginner’s Guide #10: Buying, Spending and Earning Bitcoin with Matt O'Dell (WBD191)
Release Date: February 4, 2020
In the tenth installment of The Peter McCormack Show’s Beginner’s Guide to Bitcoin, host Peter McCormack sits down with Matt O'Dell, co-host of the Tales from the Crypt and Rabbit Hole Recap podcasts, to delve into the practical aspects of buying, spending, and earning Bitcoin. This comprehensive episode serves as an essential roadmap for newcomers eager to navigate the Bitcoin landscape effectively.
1. Reasons to Own Bitcoin
The conversation kicks off with a discussion on the fundamental motivations behind owning Bitcoin. Matt emphasizes Bitcoin as an "insurance policy" against systemic financial failures and as a speculative investment due to its scarcity.
Matt O'Dell [06:27]: “I personally look at it like it's almost like an insurance policy... Bitcoin is separate from all of that.”
Peter reinforces this by highlighting historical instances where governments have seized bank accounts, underscoring the trust issues inherent in traditional banking systems.
Peter McCormack [09:14]: “Even in Western countries, it is an insurance and protection of some of your wealth.”
2. Getting Started with Bitcoin
Both hosts agree on the importance of starting small when entering the Bitcoin space. They advocate for selecting a user-friendly wallet, backing up private keys securely, and understanding the basics through hands-on experience.
Matt O'Dell [14:25]: “Bitcoin is a very scarce asset and it's as close to a free market as we've ever had... Dollar cost averaging... is just a long term investment.”
3. Choosing and Securing Your Wallet
Securing private keys is paramount. Matt recommends non-custodial wallets like Blockstream Green and Dropbit, which allow users to maintain control over their Bitcoin.
Matt O'Dell [21:28]: “The first wallet I suggest to most people is Blockstream Green Wallet... If you have those 12 words, you can recover your funds.”
Peter adds practical steps for setting up a wallet, emphasizing the need to write down and store seed phrases offline.
Peter McCormack [23:51]: “Download the wallet, write down the seed words, and restore it to see how easy it is.”
4. Buying Bitcoin
The hosts explore various avenues for purchasing Bitcoin, including exchanges like Kraken and Cash App, as well as peer-to-peer platforms like Hodl and Bisque. They caution about KYC (Know Your Customer) requirements and the importance of choosing reputable services to safeguard personal information.
Matt O'Dell [32:24]: “Any of these more user-friendly ways to buy bitcoin are going to require you to give ID information... Choose a reputable one.”
5. Earning Bitcoin through Satsback
A significant portion of the discussion focuses on earning Bitcoin through reward systems, specifically via platforms like Lolli and Fold. These services offer users "satsback" – rewards in satoshis (the smallest unit of Bitcoin) instead of traditional points.
Matt O'Dell [38:28]: “Instead of getting reward points back, you get paid back sats... It's awesome because you get real money in return that you can actually hold and save or spend.”
Peter highlights the psychological and financial benefits of this approach, likening it to indirect dollar cost averaging.
Peter McCormack [40:08]: “It's like dollar cost averaging without ever actually dollar cost averaging. It's kind of fantastic.”
6. Spending Bitcoin
When it comes to spending Bitcoin, the duo discusses the current landscape of merchant adoption and the use of services like Bitrefill and Fold to bridge the gap between Bitcoin and everyday purchases. They compare Bitcoin payments to traditional methods like PayPal and credit cards, noting the advantages in privacy and reduced fees.
Matt O'Dell [37:30]: “With Bitcoin, the sender pays the fee... You're not giving everything to a centralized company.”
For merchants interested in accepting Bitcoin, tools like Opennode and BTCPay are recommended to streamline the process.
Matt O'Dell [37:30]: “Opennode is extremely easy and BTCPay is more advanced.”
7. Security and Privacy
A critical segment of the episode is dedicated to Bitcoin security and privacy. Matt underscores the mantra, "Not your keys, not your coin," emphasizing the risks associated with custodial wallets, including potential hacks and thefts.
Matt O'Dell [18:57]: “Bitcoin is all about personal responsibility... Not your keys, not your coin.”
They explore advanced privacy techniques, such as CoinJoin, and the importance of possibly running a personal Bitcoin node to enhance privacy and reduce reliance on third-party services.
Matt O'Dell [43:05]: “Anyone who is seeking to use bitcoin privately has to realize early on that it is a transparent system.”
8. Trading and Altcoins: A Word of Caution
The hosts advise against active trading and involvement with altcoins, highlighting their volatility and the high likelihood of losses for inexperienced traders. Instead, they advocate for a long-term holding strategy focused solely on Bitcoin.
Matt O'Dell [49:45]: “Altcoins are super volatile. I think they're going to all trend to zero in bitcoin terms long term.”
Peter shares his personal experience, emphasizing the emotional and psychological benefits of a patient, long-term investment approach.
Peter McCormack [51:07]: “My best strategy with bitcoin is I accumulate over time through a number of ways.”
9. Final Advice and Cautions
In wrapping up, Peter and Matt reiterate the importance of practical engagement with Bitcoin: setting up wallets, securing private keys, making small transactions, and gradually building confidence. They stress the necessity of investing only what one can afford to lose and maintaining a long-term perspective to navigate Bitcoin’s inherent volatility.
Matt O'Dell [53:27]: “People shouldn't be overwhelmed. They should just play with it with very little bit amount of money and just get to get to know it.”
Peter concurs, highlighting that Bitcoin’s decentralized nature offers numerous ways to interact with it, each tailored to individual preferences and security needs.
Peter McCormack [54:25]: “Dive in. Now if you've bought into what we've said on the previous shows... all about you and what you go and do.”
Key Takeaways
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Start Small: Begin with a modest investment to familiarize yourself with Bitcoin transactions and wallet management.
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Secure Your Wallet: Use reputable non-custodial wallets like Blockstream Green or Dropbit, and diligently back up your seed phrases offline.
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Choose Reputable Exchanges: Opt for well-established platforms like Kraken or Cash App for purchasing Bitcoin, being mindful of KYC requirements.
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Earn Bitcoin: Utilize satsback services like Lolli and Fold to earn Bitcoin rewards on everyday purchases.
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Prioritize Security: Control your private keys to safeguard your Bitcoin, and consider advanced privacy measures as you gain experience.
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Adopt a Long-Term Mindset: Avoid the pitfalls of active trading and focus on accumulating and holding Bitcoin for the long haul.
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Continuous Learning: Engage with resources like Bitcoin.org, BTCPrivacy.org, and Bitcoin-Intro.com to deepen your understanding.
Resources Mentioned
- Wallets: Blockstream Green, Dropbit
- Exchanges: Kraken, Cash App, Hodl, Bisque
- Earning Platforms: Lolli, Fold
- Spending Services: Bitrefill, Fold
- Merchant Tools: Opennode, BTCPay
- Privacy Resources: BTCPrivacy.org, Bitcoin-Intro.com
Final Thoughts
Peter and Matt conclude by encouraging listeners to actively engage with Bitcoin through practical steps, assuring that the learning curve is manageable with hands-on experience. They emphasize that Bitcoin’s evolving ecosystem offers diverse opportunities for users to tailor their journey, fostering both financial autonomy and security.
Peter McCormack [55:06]: “If you've bought into what we've said on the previous shows... what you're going and do.”
For those embarking on their Bitcoin journey, this episode serves as a crucial guide, blending strategic insights with actionable advice to empower new users in the dynamic world of Bitcoin.