WBD191 Audio Transcription

Beginner’s Guide #10: Buying, Spending and Earning Bitcoin with Matt Odell

Interview date: Monday 3rd February 2020

Note: the following is a transcription of my interview with Matt Odell from Tales from the Crypt & Rabbit Hole Recap. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

In Part 10 of the Bitcoin Beginner's Guide, I talk to Matt Odell, co-host of Tales from the Crypt and Rabbit Hole Recap. We discuss the best way to buy Bitcoin, privacy as well as how to spend and earn Bitcoin.

“Bitcoin is all about personal responsibility; there is no customer support line. You have to take matters into your own hands and make sure that your Bitcoin is safe and secure.”

— Matt Odell

Interview Transcription

Peter McCormack: Hey there Matt!

Matt Odell: How's it going, Pete?

Peter McCormack: Doing very well, thank you. Thank you for agreeing to do this show. As you know, I'm doing a beginner's guide to Bitcoin, a bunch of shows that people can give to their friends to help them learn about Bitcoin. I've covered some of the set up topics, why Bitcoin is important, why we need to care about it, talked about money, but now we're going to get into the bit where if somebody has been listening to this and they've never bought Bitcoin, and they've been sold on it and they want to get involved, we're going to get into the basics of becoming an active user of Bitcoin. Are you ready for this?

Matt Odell: I'm ready to go! I love the idea of the beginner's guide series, so cheers to that.

Peter McCormack: Thank you! So I'm going to cover some more advanced topics later on once the whole series is done. I'm definitely going to be getting into operating a node, security and privacy at a quite deep level, but I do want to cover as part of this, but we'll try and keep it top level, we’ll keep it super simple, but I think a really good starting point before we tell people how they could start buying or earning or using their Bitcoin is actually let's talk about some of the reasons that people might want to own Bitcoin.

Some of the reasons that maybe you or I or other people, and what we need to do with that is just respect that geographically or even politically people are going to have different reasons, but let's get into some of the reasons why people would want to own Bitcoin.

Matt Odell: Well it depends where you live and what your personal situation is. For a lot of people, it can act as like an... The way I look at is I personally look at it like it's almost like an insurance policy and I think that the way you store wealth in this world now is it's just everything relies on all these different trusted third parties where you have other people basically holding your money for you and Bitcoin is separate from all of that.

In like a worst case scenario, maybe Bitcoin keeps its value or goes up. Then the other reason I'm in Bitcoin is because of speculative reasons. I think the number is going to go up, I think the price will increase, it's a scarce asset and it's more scarce than anything else we've ever seen. I think as more people realize that, the price should naturally go up. But in other places, we're both from western countries, we can accept payments and use the traditional financial system if we want, but for a lot of people in the world, they don't have bank accounts and they can't access global marketplaces.

With Bitcoin, you're able to accept money through the internet and it doesn't matter where you're located, you just need the internet. For a lot of people, you can't open a bank account. With Bitcoin it's as simple as just downloading an app and then pasting this code into WhatsApp and you can receive money like that, it's pretty powerful.

Then for a whole other subset of people and of course there's overlap here, you have political turmoil and unrest, which goes back to my first point and because Bitcoin is independent of any company or government, it's particularly well suited for a political turmoil type situation where there's nowhere to put your money, so if you have no other option, you still have Bitcoin.

Peter McCormack: Let's go with that first couple of points. I think it's really interesting and as you said, we're from western countries, you're from the US, I'm from the UK and I think a lot of people think that their money in their bank accounts is fine. But we know from the financial crisis and at different points that governments have seized money from bank accounts. We know the Greek government seized money from the bank accounts, we also the Cypriot government back in 2013 were confiscating money from bank accounts to deal with their debt levels.

Also, I know for example, in the UK we suffered under the banking crisis, we've nearly had two banks collapse, Lloyds and the Royal Bank of Scotland and they had to be saved by the government. But your bank account deposits in the UK are only insured up to £85,000 pounds. You make a really good point there and even in western countries it is an insurance and protection of some of your wealth.

Matt Odell: Yeah, in America we're up to $250K per account. But still it's like, what is that security? If there's a systemic issue, do they just print a bunch of money to cover that amount? Does that insurance actually help you in the end? It helps if there's like one or two small banks go down or something like that. But everyone who's interacted with the bank knows what that relationship is like, where you have withdrawal limits and they're asking you questions about every single little thing you do and there's tons of paperwork.

But with Bitcoin, it's just independent of all that, it's pretty crazy! It feels more real... Like it's imaginary internet money, but it feels more real to me than like any other stocks or like my bank account or stuff like that. It feels more real than that to me.

Peter McCormack: Because you know you control it.

Matt Odell: Yeah, exactly! It's mine.

Peter McCormack: But people tend to think the money in their bank account is theirs, but really it's not. It is yours, but you're trusting somebody, somebody has to release that to you. So what you're really talking about is a hedge against any of those situations and further to that, you've also talked about it being a hedge, but the other thing it's a hedge against, is inflation and collapse of local currency.

Matt Odell: Right, exactly. These money systems that we have nowadays, these fiat systems, they're completely reliant on the government. It's just a full trust in the government and you see in countries like Venezuela and Argentina where this trust erodes and there's gross mismanagement and the currencies become worthless and that can basically happen anywhere. This is a very new experiment, this whole fiat idea, and it’s just like 50-years-old.

That's pretty crazy when you think about, everyone just says to themselves like, “oh, that's the way it's always been.” So why be so cocky about that? The way I look at it from a western perspective, like when I pitch it to my peers and stuff, is I say, “this is an insurance policy that may go up in value significantly” and so you don't put everything into Bitcoin, you just put in an amount that's a high risk investment.

Peter McCormack: So for somebody coming in new also, one of the first things they're going to do is they're going to read the white paper and they're going to understand that you can also use Bitcoin for payments. But it doesn't tend to be the primary reason that people want to get Bitcoin. Funnily enough, it was for me the first time because I had to go and buy something off the dark web, it was like a treatment for my mother. But payments are relevant, but almost a secondary to these... Where we see like hedging and investing speculating as a primary use, but payments are still a use that we have to consider.

Matt Odell: Absolutely! Good money can be spent and saved at will without any permission and that's what Bitcoin is. If you want to spend it, you can spend it, no one can stop you. If you want to save it, you can save it and it's very hard to stop you and that's the beauty of Bitcoin. It's because you don't have these trusted third parties, because it's not centralized and when you have these trusted third parties, those are the gatekeepers. Those are the people that tell you whether you can do something or whether you can't do something.

Matt Odell: Now, this comes back down to perspectives again, right? If you're using Bitcoin to reach a global marketplace that you wouldn't otherwise be able to, it's hard to accept international credit card payments, but you could be anywhere in the world and you can sell goods to Americans using Bitcoin, then obviously you're going to use it right now. But if you're in a Western country and you can send fiat through these banking systems, like relatively instantly, very low cost, why would you spend Bitcoin when it's harder to get Bitcoin and you think it's going to go up in value? It just depends on where you live and what your current situation is and I think more people will spend Bitcoin and more people will own Bitcoin.

Peter McCormack: What we're really saying is the reason people want Bitcoin generally is it's either an opt out or a hedge against the distrust of the banking system, the governments, how fiat money may operate. So like you’ve said, it's a distrust, but also an opportunity to opt out and do things your own way and if you bought into that then maybe Bitcoin is for you.

Matt Odell: Yeah, or if you just need to accept money on the internet and you can't do it otherwise. When there's no other option, there's Bitcoin.

Peter McCormack: All right, listen, before we get started, what we really need to just lay the ground for people is that it's very important if it’s going to be the first time they're going to go own Bitcoin, they need to just keep the levels quite low to begin with for two reasons. Firstly, they've got to get their head around using it. They don't want to buy a load and then make some mistake and lose that Bitcoin. But secondly, they shouldn't invest in any more than they can afford to lose, because they also need to condition themselves to some of the volatility. I think what we're saying is, if you're just about to dive in and this is your first time, you should keep those levels low.

Matt Odell: Yeah, my thing is I like stacking sats, right? I like dollar cost averaging. Bitcoin is a very scarce asset and it's as close to a free market as we've ever had. You have these marketplaces running 24/7 around the world, trading this super scarce asset that is not very liquid, there's not that many Bitcoin being traded around and that means the price is going to move up and down tremendously in the short term, up and down.

We had huge hits, last year it hit $14,000 and $3,500 in the same fucking year. This thing will move up and down a lot and no one has any idea where it's going in the short term. But long-term, the prediction is that the price will go up long-term, so if you dollar cost average and you put a little bit in every week, then you're able to not freak out at what the price is on any given day.

You can just say, "okay, this is just a long-term investment, I'm just averaging in." Maybe quit cigarettes or something like that and put that $10 a day into Bitcoin, money that you probably would've just thrown away anyway.

Peter McCormack: Yeah, my advice and most people when they come to me now is that you have to have a long-time horizon on this. If you're going to be buying Bitcoin for your first time, you really need to be thinking about price in four year cycles.

Matt Odell: Yeah, if not longer.

Peter McCormack: All right, so before we dive in and actually explain how to get the first Bitcoin, let's just go through a few of the things they really need to understand and get their head round. Just for transparency, I actually took this list from bitcoin.org, which I would recommend anyone listening to go to. It's a very good website with very good information, very balanced, very fair. The first thing we've covered was price volatility, but the next thing people need to understand is that if they start using Bitcoin, the payments are irreversible.

Matt Odell: Yes and there's no customer support line to call either. If you send your money to a Bitcoin address and that's the wrong address, you're never getting that back. Always double check your addresses!

Peter McCormack: So always double check your addresses and be very aware that if you make a mistake, it's down to you. Okay, so the next thing, and this is something people often get wrong, but people think Bitcoin is anonymous and it isn't anonymous and they need to be aware of that.

Matt Odell: It's not anonymous at all. You've got to be very careful with Bitcoin, because anyone you pay can track your payments. Anyone who sends you money can then track your payments from there. The actual addresses aren't necessarily tied to your name by default, but if people can tie them to your name, that's when they can end up tracking you. Yeah, there's no privacy.

Peter McCormack: And there are even companies out there who are operating in a space where they want to track every transaction of time and the people find out who you are.

Matt Odell: Yes, that's their business. They work with exchanges, these chain analysis companies and they track this. The Bitcoin blockchain is a ledger that shows every transaction publicly and it's going to last forever, it'll always be there. People can always look back, so even if someone's not trying to track your transactions now, they could in five years’ time, six years’ time. You never know if it'll happen.

You have to assume that all your transactions, anyone who pays you, can track your transactions or anyone who links your address. If you post your address on Twitter or something like that, then they can link it to you and take it from there and try and make judgment calls based on your addresses. If you go to btcprivacy.org, there's a bunch of reading material there if you want to try and use Bitcoin privately. But it is complicated and this is the beginner's guide, so just keep that in mind.

Peter McCormack: All right, the last thing that people should be aware of, and I covered this in a previous show with the guys from Coin Center, is you should be aware of local laws and taxes and how they relate to you before you dive in.

Matt Odell: Yes, pay your taxes. It's very different depending on where you live, and it's confusing. You have to do that research.

Peter McCormack: All right so listen, we've got some people here that are listening Matt and they're like, “all right, I get it now. I want to buy some Bitcoin. I'm ready to jump in.” Before they go and buy there's a few other things they need to be aware of when they’re about to dive into the boat of actually buying. The first thing is their keys and their private keys, security backing up and storing their private keys. This is almost like the single most important thing that everyone talks about, right?

Matt Odell: Yes, Bitcoin is all about personal responsibility, there is no customer support line, you have to take matters into your own hands and make sure that your Bitcoin is safe and secure. We've had multiple exchanges, get hacked. Mt. Gox is the big one that everyone knows about, Quadriga just happened recently. We have a saying in Bitcoin, "not your keys, not your coins." Basically there's two different ways to use Bitcoin and you can use Bitcoin in a way that someone else is holding your Bitcoin for you, which was the case with Mt. Gox and everyone lost their money who was holding it with Mt. Gox.

Or there's a case where you hold your Bitcoin yourself and then you could lose it because you forgot your password or you could get hacked, but at least you're not trusting someone else with your Bitcoin. That's become a lot easier lately, so lucky for you the beginners, you get to come in on that note.

Peter McCormack: We're talking about two different scenarios where you can lose your Bitcoin and lose the value that you've saved up. The first one is if you held it on an exchange, if they exchange gets hacked, the exchange gets into any kind of difficulty. If it goes under and they lose all their Bitcoin and you're holding it on that exchange in one of their wallets, then you've lost it.

Secondly, we are talking about the scenario where you're managing your Bitcoin yourself and you lose the private keys or you lose the wallet, and you don't have a backup, and you have no way of restoring it. They're the two scenarios we're talking about, right?

Matt Odell: Yeah. There's a third scenario where... There's a couple of scenarios where you lose your money if you're trusting an exchange to hold it, because the exchange owner could steal your money or the government could shut down that exchange and take the money.

You have: the exchange gets hacked, the exchange steals the money, the exchange gets shut down by the government and all three of those risks, if you hold your keys yourself, you have loss or hack, are your two risks. I would say that people, I think we'll go into buying options and earning options and stuff like that, but they'll come in on like a custodial, someone else's holding your keys for you

 That's probably where you earn them or you buy them, so it'll be like on a Cash App or a Lolli or a Fold and then you'll graduate to holding your own keys. I think a mobile wallet is a very good stepping stone there. Blockstream Green Wallet is a very good beginner's wallet in terms of, "I don't want to buy a hardware wallet yet." Then after that you can buy a hardware wallet, which is this little USB stick that holds your Bitcoin for you.

Peter McCormack: What we're really advising people to do, is even before you take that step of buying or earning any Bitcoin, is set yourself up with a wallet that suits you.

Matt Odell: Yeah and the first wallet I suggest to most people is Blockstream Green Wallet, because you'll hold your own keys and you get to keep a backup of it offline. They're going to give you these 12 words you write down the 12 words and if you have those 12 words, you can recover your funds. It's on your phone and phones are relatively secure. They're not near the most secure thing, but if you don't have a large amount of money on it, it's free, and you can download it today just from the app store.

Peter McCormack: Right, so first job is to go and find a wallet that you like. You obviously recommend Blockstream Green Wallet, I recommend Dropbit, who are a sponsor for full transparency, they're both non-custodial wallets for Bitcoin and they both give you the opportunity to back up your seed. Let's talk through this, because somebody might be listening to this and go, “what the hell are you talking about Matt, Pete? You're talking about a wallet and a seed.” Let's talk them through the logical steps of what that actually means, the downloading of the wallet and the process they're actually going to go through.

Matt Odell: So you're going to download the wallet like any other app on your phone, and once you download it, they're going to give you 12 words to back up and so these words derive your keys for you. That's all you need. If you have those 12 words, you can put the words in and you have access to your Bitcoin. You have to be careful, as that also means that if anyone gets those seed words, they can spend your Bitcoin as well. They can take your Bitcoin, so you have to keep that 12-word phrase safe, however you deem fit. Don't put them on a post-it note next to your computer!

Peter McCormack: Yeah, so what we're really talking about is, you download the wallet, you click the button for backup and all wallets do it differently and it gives you those words. Over time, I think what people will learn is that they're going to find different ways for backing up their seed words which suits them. To begin with, they might just get a pad and write it down on a piece of paper in two places and hide it.

But then eventually you might end up buying something like a BillFodl, which is like a steel lumber metal where you can store the private keys in it. But we don't want people to be scared off from doing this because it sounds too complicated. If you go through the process of just downloading a wallet, writing down those words and then deleting the wallet and restoring it, you'll see how easy it actually is.

Matt Odell: Yeah, that's what you should do and that's what I always recommend people do. Even if you maybe put like $10 worth of Bitcoin on it and then restore it, so you see that the $10 a Bitcoin is still there, it gives you a lot of peace of mind and you also learn to the process. Everyone should do that. The other thing to keep in mind here is don't put those seed words on any internet connected device. Don't put it in Apple notepad or whatever. Don't put it in your G-mail drafts folder or on Evernote or anything like that. The beauty of having it offline is someone has to physically get it wherever it is. If you have it on an internet connected device, you have to rely on the security of that device as well.

Peter McCormack: And this is the beauty of Bitcoin. Over time you develop your own practices. I'm sure you've got a security practice. I've got a security practice that probably overlap in some ways, but also probably entirely different. I don't know what yours and you don't know what mine is, but I know there's multiple scenarios where things can happen and I can still restore my Bitcoin.

Matt Odell: Yeah, it's all about personal responsibility. You're going to have to figure out a situation that works best for you, and you have to iterate on it and improve on it over time. Phones are a nice stepping stone, but really ultimately where you want to be is you want your Bitcoin to never touch an online device and that's why you have these hardware wallets. The three best hardware wallets are Coldcard, Ledger and Trezor. Ledger and Trezor are easier to use.

I guess if you want to use a friendly one, probably the Ledger X, which is the newest Ledger, because you can use it with a phone app as well, and so little USB stick. Then if you want the better one that's more advanced you get the Coldcard, it’s basically my recommendation now. But this is like a little USB drive that holds that secret for you on it, and it's got a pin. Someone needs to get that device and the pin to be able to take your Bitcoin, and then you also still have that word phrase, that seed phrase, those 12 words where you can back it up if for some reason the device gets lost or stolen or broken.

Peter McCormack: The great thing about those hardware wallets, they have that interface for being able to send and receive Bitcoin from and once you see it, you realize actually a lot of this is really easy and that it's all abstracted away from you. If I had a Ledger and I opened up and I wanted to send you some Bitcoin Matt, all I have to do is put your address in, put the amount, click send, and it sends to you. All the work with the private keys is actually done in the background.

Matt Odell: Yeah, exactly! I think the easiest way to learn is to get a little bit of Bitcoin and just start sending it around to yourself, deleting the wallet, putting it back in and putting your words in, restoring it, sending it, receiving it. That's the way you learn. That's why I really like the SatsBack stuff for beginners, I think that we should jump into that. I think that's the best way for someone to get in with minimal risk, at least if you're in the United States.

Peter McCormack: Okay, well we'll come back to that. But just to iterate your point then, and I also think you can do this all in within an hour or two of first get involved. You can go and get yourself a wallet on your mobile, you could write down the seed words, you could go and buy $10 of Bitcoin, you can send it to that wallet, see it appear, you can then delete that wallet, load it back on your phone, restore it with a private key and in doing those steps, you've learned so much about how Bitcoin works.

Matt Odell: Yeah, I mean the hardest part is buying the $10 of Bitcoin. That's why I got into my tangent.

Peter McCormack: We can get into that. There's a couple of ways, you could go down a full extreme exchange route, Kraken or a Coinbase and go on and buy. You could use an app, something like Cash App, which I would say it's a bit different from an exchange. I guess it's just like a buying service, right? And then you've got the options of peer to peer exchanges, like LocalBitcoin, which was my first place or Hodl Hodl or you can earn some Bitcoin. Let's go with the exchanges first, because I do think a lot of people will just go onto Google and search "buy Bitcoin" and they're going to end up at one of these sites or apps.

Matt Odell: It's very local based, right? We have Kraken as your sponsor, they're global, they're pretty good exchange. You say they’re the best, they're very good. There's been never been any issues with Kraken. Cash App, who's the sponsor of my podcast is in America only. Bull Bitcoin is great in Canada. You mentioned Hodl Hodl, they're great. Bisq is more advanced, so most people that will not be their way to get their first Bitcoin, but it's nice because it's more decentralized.

It's more distributed and it's not a centralized company, so it's harder to crack down on. You have GetBittr in Europe, which is a very simple brokerage interface. You have a lot of options. I think the best for most people, they should have... Hopefully they have a Bitcoin friend or two. I don't think a lot of people are coming in that are completely...

They don't have any friends who have been pushing them into Bitcoin for the last couple of years. If you do have a friend ask their advice because you're locally based, because a lot of this stuff depends on how your banks interact with the individual things, depending on where you are and whatnot. But they all relatively give you the same ability, you're able to buy Bitcoin and you're able to withdraw it.

You have to be aware, there's a couple of sites, in America there's Circle and Robinhood, and you can't withdraw your Bitcoin when you buy them there. You have to make sure it's a site or an app that lets you buy Bitcoin and then pull the Bitcoin off and actually own them, Even if you don't want to do that right away, there's no rush to do that, especially if you don't have a lot of money on exchange and it's a relatively well known exchange, you still need to be able to do that. It's a red flag if you can't pull your Bitcoin off when you want to.

Peter McCormack: But also, that first time you buy, it's kind of an exciting thing to do that first send, when you send it from the exchange to your wallet and you have the wallet open and you see the transaction appear almost instantly! Yes, in an unconfirmed status and it will confirm within hopefully an hour, but it's just quite exciting to see that first payment come through.

Matt Odell: That's when it's real. That's when you really feel that this is real money and that this is my money!

Peter McCormack: When somebody is first choosing to buy, whether they use Kraken or Cash App or any of these services, what are the things they just need to be aware of before they start buying?

Matt Odell: Well there's only a few exchanges in the world. There's only a few ways in the world to buy Bitcoin without providing a bunch of ID information. Whichever service you choose, you have to be ready that you're going to have to give them your information. The exceptions are Hodl Hodl and Bisq, and they both have their own UX issues and it's hard to use for a beginner. You should definitely check them out, especially as you go further down the rabbit hole.

 But any of these more user friendly ways to buy Bitcoin are going to require you to give ID information in America, give social security information. We call this KYC, it's know your customer, anti-money laundering laws. They are going to make you give tons and tons of personal information and then you have to remember, and they're obviously in most situations are going to take your bank account information. Sometimes it's a debit card, but they're going to have your bank account information.

So you have to remember that you're trusting whatever this company you choose, you have to choose a reputable one. Don't do it just based on whoever is the cheapest because you're trusting them with all this fucking information. Then they're going to be able to, as we said in the privacy part earlier, they're going to be able to connect that information with your addresses. You're trusting them with that information!

Peter McCormack: All right, so we've got them on board, they've downloaded a wallet, they've backed it up, they bought their first Bitcoin, they've sent it to their address, they've seen it pop up and appear. We've then got them to delete their app and they've removed it and then they've restored it again with their private key. What else do they need to know? Are they fully done at that point? Are they a full Bitcoiner?

Matt Odell: It's impossible to ever be done. Then the rabbit hole begins and you're just going to have to keep on learning and keep on iterating, keep on improving your set up.

Peter McCormack: I think what we're saying here is, the funny thing about Bitcoin is being decentralized. It has so many different ways into it, so many different ways of using, expending, and secure in it. As I said, you buy it from a different place that I buy it from, you secure it in a different way that I do, you manage your private keys in a different way, but the only way you're going to learn is just by diving in and start trying.

Matt Odell: Yeah and you just want to try and minimize risk as much as possible while you're doing that.

Peter McCormack: All right, cool. Over time Matt, say I've become a Bitcoiner, I've been regularly buying my Bitcoin, I've built up a nice stack and I decided, "okay, I want to start spending this and using this Bitcoin." Where can I spend it? How can I use it?

Matt Odell: That also is a very local thing. I think ideally we have more merchants accept Bitcoin every day. We're not really there yet, not that many do. I think more will naturally as time goes on. It does very much depend locally. We do have services like Bitrefill that try and bridge the gap and Fold, which I think is America only, but both of them, the idea is that you buy gift cards with Bitcoin and then you can spend the gift cards places.

In most places, there's one or two merchants where you can get a bunch of stuff online and you just have to do the research and figure it out. The best thing you can do in this regard though, is one of the great ways of getting your first Bitcoin is to be the merchant that's accepting Bitcoin. If you're listening to this podcast and if you have a small business or a store or something like that, consider accepting Bitcoin. You can still accept credit cards and cash, you absolutely should, but you might as well also accept Bitcoin.

Peter McCormack: What are the key differences for accepting Bitcoin as a means of payment rather than say PayPal or a credit card?

Matt Odell: Well with a credit card, you have to pay and PayPal you have to pay fees to them. In Bitcoin, the sender pays the fee. With both of them, you have to deal with them having all of your transaction information, you compromise your privacy to them with credit cards and PayPal. With Bitcoin, there's ways to mitigate privacy concerns, but at least you're not giving everything to a centralized company, you're controlling a lot of that yourself. Then last but definitely not least is we see tons of payment restrictions happen to people where they get cut off from these platforms.

 They get banned from PayPal, credit card processing isn't allowed to happen in America, we see that with the marijuana business. We see that with sex work, stuff like that where you have... What is it called, Operation Choke Point, where they take out their banking services. We see it with political speech and then around the world there's just a lot of situations where you can't accept credit card payments from certain countries, but you can accept Bitcoin. It's just code! Especially now that we have BTCPay server, you can just run this code and you can start accepting payments from anyone in the world.

Peter McCormack: Okay, so in terms of accepting Bitcoin as a payment, are there any services out there that make it easy to plug it into my website?

Matt Odell: Yeah, OpenNode is extremely easy and BTCPay is more advanced, but BTCPay doesn't rely on a centralized company. You can start with OpenNode if you think BTCPay is too complicated. It's getting easier every day, but OpenNode is extremely fucking easy and you will have to give them KYC information. They will want to know your identity, with BTCPay they won't. But I think OpenNode supports lots and lots of countries.

Peter McCormack: All right, cool. When I interviewed Andreas, he said the best way of getting Bitcoin is earning Bitcoin. I know you like the concept of earning Bitcoin, I certainly do. I've got ways I earn Bitcoin now, whether I accept payment from sponsors or whether I use something like Lolli or Fold. But I know this is something you’re really interested in and it's a great way for somebody new coming in to think, "I don't want to spend too much money, but I want to get some Bitcoin." Let's talk about the different ways you can do it. Let's start with the things like Lolli and Fold, talk about what they are and how they work.

Matt Odell: Lolli and Fold are part of this SatsBack phenomenon. Basically instead of getting reward points back you get paid back sats. There's 100 million sats in a Bitcoin, so sats are micro cents to the dollar, sats are to Bitcoin. This is awesome because you get real money in return that you can actually hold and save or spend wherever you want. It's not locked into any particular provider and in each of their cases, Fold uses a gift card system where you buy a gift card and then you get the sats back instantly and Lolli uses a referral based system where they wait for the order to go through, see if you don't return it and then you get the sats.

But in both cases they're basically the middleman taking a cut for bringing the customer to the merchant and they're giving you a portion. That's nice because Fold supports Amazon, people spend a shit ton of money on Amazon every year already. If you get 1.5% back on your purchases, and with Fold it’s cool because you can actually spend with Bitcoin if you want to and you get more sats back or you can spend with fiat, which is how I use it. All my Amazon purchases now, they just go through Fold and I get 1.5% back in Bitcoin and it's like I’m dollar cost averaging without ever actually dollar cost averaging. It's kind of fantastic!

Peter McCormack: And Lolli is really interesting as well because they have an app that you can download to your browser, and if you're using a website that offers SatsBack, it gives you an alert. For example, like if you're on hotels.com and you're booking a hotel room, you can get 3.5% of what you spend back in sats and you can withdraw that to that wallet that we've talked about.

Matt Odell: Yeah and Lolli has like 500 stores. I think Fold is like 12, but they have Amazon, which is key. If you think about it from a Bitcoin investment point of view, it's creating a lot of buy pressure for Bitcoin. As you were talking about earlier, Bitcoin is scarce. If you have people that are just spending thousands of dollars in our consumer society already and they're getting sats every time, they're intentionally buying sats every time basically, indirectly buying sats every time, I think that should create a lot of long term holders and push the price up.

Peter McCormack: And you can get a double bubble on this one soon because I'm aware of a couple of companies who are about to release credit cards where you get your cash back in Bitcoin sats as well.

Matt Odell: There you go! You make it even easier, it's the whole UX thing, that's beautiful.

Peter McCormack: All right, so we’ve talked about SatsBack. Another way of earning Bitcoin is mining. Now as a warning, it's complicated and difficult and you have to be careful about how much you're paying for your electricity. But you can earn Bitcoin by mining it.

Matt Odell: Yeah the beauty of mining is you don't have to submit any of that KYC information. Mining is the most private way you can get Bitcoin, because even if you do a cash transaction with Bitcoin, you're paying someone cash, it's way more private than if you buy on an exchange through their bank account. Mining is the ultimate in terms of that, but as a result, you're going to probably end up paying a premium of like 30% to 40%, because it's all about the electricity costs.

These big miners, they're situated next to dams and stuff and they're getting bottom rate, like 2 cents kilowatt hour to run their mining rigs, when if you're living in New York City, it's like 20 cents instead of 2 cents. You can't compete with that, so you end up paying 40%, 50% premium over if you bought it on one of these exchanges. It's just something to keep in mind. If you need more privacy, it could be an option.

If you have really cheap electricity, if your landlord is an idiot and gives you free electricity, it could be a good option. In countries where it's cracked down on, mining could be worth the premium, you know?

Peter McCormack: All right then, look we've told people how to buy Bitcoin, where to buy Bitcoin, how to earn Bitcoin and some of the practices they should use for securing their private keys and such. Let's just touch on a couple of more advanced topics just so they're aware. The first one is in terms of privacy, what are the more advanced things people can do if they really are concerned about their privacy? Maybe they're in a country or making some kind of payment, they don't want anyone to know what they're spending, what are the things they can start looking at?

Matt Odell: Anyone who is seeking to use Bitcoin privately has to realize early on that it is a transparent system, it's very difficult to use privately. It depends on who you're trying to hide it from. If you're trying to hide your Bitcoin usage from Pete, it's actually relatively easy to do. But if you're trying to hide it from your government, it's a lot more difficult. Don't just be conservative about it, don't run out there thinking you can use Bitcoin privately.

I mentioned it earlier, btcprivacy.org is run by @6102bitcoin and that's just a really good place to start, there's a lot of reading there. Basically, there's these different techniques that you can use to help gain back some privacy. There's some privacy techniques you can use. One of them is called CoinJoin, where you basically mix your funds with other people's funds, and for someone who's looking at the ledger, it's harder for them to tell where it's going. You have to worry about just general internet privacy things.

If you're sending a Bitcoin address and that message gets compromised somehow, like whoever you're worried about knowing about the transaction sees it, if your government can read your text messages, then they can see that Bitcoin address and they can track you accordingly. You have to try to extremely carefully and just take it slow and be conservative.

Peter McCormack: Another thing that you and I have come back and forth on, if somebody hasn't listened to our previous show for the New Year's show, then they'll hear you and I talk about a node and why these are important. Talk about what a node is, why they are important and why that may be something they want to look at a little bit down the line.

Matt Odell: If you want to use Bitcoin privately and if want to use Bitcoin with the least amount of trust possible, you have to run your own node. Your node basically connects to the distributed Bitcoin network and is constantly verifying the rules to make sure that all the rules are being followed the way everyone expects them to, the big one being that they'll only ever be 21 million Bitcoin and that the Bitcoin you have are real Bitcoin.

The only way you can do that without trusting someone is if you run your own node and also the only way you could even dream of having privacy with Bitcoin is if you run your own node because otherwise, we were talking about the ledger earlier, that hardware wallet, and both the mobile wallets that we were talking about, pretty much all the mobile wallets, they use the node of the company.

You're trusting the company, not with your funds, but you're trusting them with your privacy because they can see your transactions. There's an element of trust there. If you don't want the trust, then you have to run your own node.

Peter McCormack: Okay, well as I would say, the nodes are a little bit more advanced. For now let’s stick to the basics and let's go with some final caution, so people, just as a reminder, a lot of this might sound complicated. You might be like, "what the hell? How do I deal with all this?" The only way as we said is to jump in and step one is to go and get yourself a wallet. Whether that is the Green Wallet as Matt suggested, Dropbit as I suggested or you might find another one you like.

Once you've downloaded it, you need to back backup that private key, you need to get that written down and stored somewhere safe, but not on your computer, somewhere offline or something that's never been, or never will be connected to the internet. Then once you've done that, go and earn yourself some Bitcoin, come buy some Bitcoin, send it to that wallet, delete the wallet, restore it and have a play and going through all those steps. That will take you a long way in understanding how Bitcoin works.

Matt Odell: Yeah and I would just add that don't just open the app store and search Bitcoin Wallet. Just use Dropbit or Green Wallet, don't use any of the other ones. There's a lot of shitty wallets out there and you don't want to use a shitty wallet.

Peter McCormack: All right, let's go through some final cautions. Let's remind people about volatility and not to worry too much.

Matt Odell: Yeah Bitcoin is a volatile beast. You just have to expect that the price is going to go crazy both ways in the short term and you have no idea where it's going to go. No one knows, but long-term price should rise as more people use it, as more people own some. You have to think on a long term horizon and I'm thinking like a decade here. You said earlier, four years, but four years to a decade just seems like a decent time period. Somewhere around there is where you should be re-evaluating whether or not you made the right decision.

Peter McCormack: Yeah, and you could easily be sucked into watching the price move up and down. It could suddenly shoot up and you think, “oh no, I want to sell it" and then you can see some of these drop and you think, “oh no, I better sell it and save my losses.” I think at that point if you're worrying too much, you've probably invested more than you can afford to lose. But you should just set a longer term horizon. I've got in a habit Matt, I don't actually check the price anymore. I actually keep away from the price. The only time I'm aware is when people start going on about it on Twitter.

Matt Odell: Exactly, me too! I don't actually check the price. I just blindly dollar cost average once a week and I use Fold on Amazon and I get my sats back. The only reason I know about the prices is exactly like you said, people either freak out one way or the other on Twitter and then I'm like, “oh, I should probably check the price.”

Peter McCormack: What about in terms of trading? Because some people get into this and they might actually start to think, “oh, now I can become a pro trader. I can start trading this up and down and making a bunch of money.” What's your advice to new people who haven't traded before and are thinking about this?

Matt Odell: I think 99% of people will be better off dollar cost averaging than trading. Most people suck at trading, I suck at trading, you're just going to get your ass kicked out there. If you don't want to believe us, try with a little bit, get your ass kicked. Don't double down and be like, “okay, I'm not a good trader,” and just dollar cost average from there, because it's fucking hard out there.

Anyone I know who trades, even the few successful people I know, it drives them crazy. There's just no way to live. You don't want to live that way long term. It lowers the risk if you think long-term and you don't think on the short term trading, it just lowers the risk substantially for still a substantial potential reward and it's just not worth it.

Peter McCormack: All right, the next thing is like some people might have gone to Google or listened to something we've said and they found an exchange. They've gone on to buy some Bitcoin and they’ve seen some other things. They may be seeing something called Bitcoin Cash or Ethereum and they may be tempted to go down the rabbit hole of creating a basket of assets. I just made a show with Nic Carter talking about the history of alt coins, and it is a history of failure. What kind of warning would you give to people who are tempted by these other alt coins and some of the things they might have read about them?

Matt Odell: I think it's the same thing as trading Bitcoin and when we talk about trading Bitcoin, most people end up trading it with leverage and stuff too, which makes the volatility even worse. These alt coins are super volatile. I think they're going to all trend to zero in Bitcoin terms long-term, so they're not good long term investments.

You might be able to make some money short-term trading them, but most people are going to lose fucking all their money trading them and they'd be better off just dollar cost averaging Bitcoin and just not paying attention to it. That's all noise and it's just not worth it. But if you want to burn yourself, like you want to touch the stove, touch the stove a little bit and when you get burned, don't double down, just go dollar cost average Bitcoin instead.

Peter McCormack: One of the things you can do, is you can go to CoinMarketCap. You can click on any of the coins and look at their charts, look at the long term charts and see the trend. That gives you an idea of what you're trading with and you might get yourself in on Twitter, you might hear about something called alt season, you might see other people talking about the future prospects for alts etc and try and tempt you into this.

But really what we're saying to people here is that this is a long-term play. The only people who tend to have done consistently well with Bitcoin, are those who've been investing, maybe dollar cost averaging or just buying and holding for a long period of time and being very patient like multi-year patient.

Matt Odell: Yeah, and make sure when you look up the alt coin prices, every alt coin is listed two ways. They're listed in USD terms and they'll listen in Bitcoin terms. Make sure you look at the Bitcoin when priced in Bitcoin because you might think your alt coin is going up, but Bitcoin is going up even more and it's just being carried by Bitcoin.

As I said before, short-term maybe, there's been plenty of people that have made money on alt coin short-term to make more Bitcoin, but most people are just going to get their ass kicked and it's just not worth it. At the end of the day you have to... The way I look at it, is I'm just trying to accumulate as much Bitcoin as possible and I think that alt coins and trading Bitcoin are just a distraction from that goal and inevitably you'll end up losing more Bitcoin than gaining.

Peter McCormack: Yeah I can speak from experience that when I first got in, I was somebody who bought Bitcoin and then I was trading alt coins. I had some relative success, a bit like somebody walks into a casino and wins on the first spin or the first game of roulette and I kept carrying on and eventually I lost and I realized I didn't know what I was doing. I'm with you now, my best strategy with Bitcoin is I accumulate over time through a number of ways.

I earn it, I buy a bit, I get paid in Bitcoin as well and what happens is over time I know every single month my Bitcoin stack is going up slightly. I stopped checking the price and I'd have these long term time horizons and I just think that's a much more healthy way. Emotionally, psychologically, it’s a much better way to handle Bitcoin. Before we close out Matt, is there any final things you want to add? Any final warnings or cautions you want to give people?

Matt Odell: I've really enjoyed recording this episode with you Pete, but I've struggled with this episode because it is hard in the beginning. It seems very overwhelming trying to distil it down to the most basic level is very difficult task. But when you actually get your hands on it and you actually use it, you'll see that it's a lot easier than you think it is. People shouldn't be overwhelmed, they should just play with it with very little bit amount of money and just get to know it, because hands-on is the best way and it's way easier than you think it is in practice.

Peter McCormack: Yeah. It's funny you should say that. Of all the shows I've made of this beginner's guide, this has been the hardest one to prepare for, because the reality is what we're trying to say to people is just go ahead and give it a go. We could have made this a whole episode, just say, "just go and buy something and move it around and learn", because that's exactly how you're going to learn at this point.

All the theory of money and why we need Bitcoin and any of the macro things that people need to know about the global economy, that's a really easy thing to discuss, it's very hard to explain how to Bitcoin on a show. You can give people some pointers and put them in the right direction, but really it's just one of those things that you've got to go out and do and you're going to learn.

What's going to happen is the way you buy, secure and protect your Bitcoin in the first month is going to be very different a year later and almost entirely different five years after that, because you can learn new things. What we're really saying is just dive in now, if you've bought into what we said on the previous shows, if you understand that Bitcoin is important, really the next step is all about you and what you go and do.

Matt Odell: Absolutely, and I'd also just add, there's another great site, bitcoin-intro.com, which does a pretty good job, that's also @6102Bitcoin and it does a pretty good job of guiding you through that intro process, start from the basics and moving on. That's a good resource to check as well.

Peter McCormack: I agree, definitely check that out. You should also go and check out my previous show with Matt where we talk about a few things, talk about the whole year and that was released just before the New Year, I think it was the last show of 2019. Great show, it's a long one worth hearing! Matt, if people are listening to this for the first time, they've just been sent to the beginners guide and they think, "okay, Matt Odell seems like a bad ass, I want to follow him." Where do they follow you mate?

Matt Odell: I'm Matt_Odell on Twitter and my podcast is "Tales from the Crypt", so you just search that in the podcast app. My DMs are open on Twitter, so if you have any questions or anything, feel free to send me a DM and I will answer. Sometimes it takes a couple of days, but I will answer.

Peter McCormack: All right, my DMs are always open too. Anyway, thanks Matt, hopefully I'm going to see you soon and we'll have a catch up. Appreciate you doing this!

Matt Odell: Looking forward to it and enjoy South America!