Chapter Five Hoarding Bitcoin: The Thrill of Holding the Private Key
Storing wealth in a string of 'illusory' private key strings is a significant revolution in human value storage methods.
If you agree with the views expressed in the previous four articles:
(Bitcoin and Idealism) We are participating in a social experiment that has the potential for failure, but we have no regrets.
(Getting off the bus too early is due to a small vision) The goal of this experiment is vast; if all goes well, Bitcoin's price may rise to 1.6 million RMB in 20 years.
(Hoarding Bitcoin: How far are you from financial freedom?) We have no other abilities; we can only rely on hoarding Bitcoin and patiently waiting for our own financial freedom.
(Hoarding Bitcoin: Impulsiveness, Loneliness, Boredom, and Contradiction) Although you will experience psychological tests like impulsiveness, loneliness, boredom, and contradiction, we are ready to hoard coins.
So next, you will encounter a question: Where should you store Bitcoin?
If we accumulate gold, we may have two options. One is to rent a safe deposit box at a bank to store the gold; the other is to buy a safe at home to store the gold. The answer may depend on the situation.
However, for hoarding Bitcoin, there is always only one answer—hoard it in your own hands.
What does it mean to hoard in your own hands? It means that only you hold the private key that can access these Bitcoins.
It should be noted that:
- This specifically refers to hoarding coins, and it is long-term hoarding. If you only want to trade coins, then you can store them on an exchange; after all, time is money for traders.
- There are many so-called 'wallets' on the market that are not wallets in the strict sense because you do not hold the private key. They can easily be confused with real wallets because the interface can be identical, and even the usability may be better. I do not recommend using this type of 'wallet' for hoarding coins. [Note: This does not mean that this type of 'wallet' cannot be used; they have their purposes, such as holding a small amount of coins for daily consumption.]
- Some 'wallets' will also pay you interest, but you need to constantly think about the risks of p2p finance. You can also search for 'Bitcoin piggy bank' on Baidu if interested.
If you are unwilling to hold Bitcoin private keys yourself, it may be for two reasons: fear of risk and fear of trouble.
The so-called risk is related to skills; for those who master private key management methods, there is actually no risk. In fact, not mastering the private key is riskier. There was a guy who stored 900 coins on Mt.Gox; at that time, the coins were not worth much. Later, when the price rose to 1,000 dollars, he discovered that Mt.Gox was experiencing a run and he couldn’t withdraw his coins. It was originally a wonderful story, but the ending was tragic; Mt.Gox announced bankruptcy, and this guy committed suicide.
The so-called trouble is related to meaning; we never feel troubled by things that are meaningful. We will discuss later how troublesome private key management can be. What this article wants to express is that no matter how troublesome it is to manage private keys, it is worthwhile to possess them. The reason you fear trouble is merely because you have not yet realized how important this matter is.
Li Xiaolai once said:
Bitcoin is the first time in human history that technology has achieved the sacred and inviolable status of private property.
I fully agree with this statement, but it is not easy to understand, especially for those who have never encountered Bitcoin private keys. My personal understanding is as follows:
Bitcoin has made it possible for us to store wealth in a string of 'illusory' private key strings for the first time. This is revolutionary; it signifies one of humanity's greatest needs—the need for everyone to store wealth, which has undergone a significant transformation.
- If you store wealth in cash, when you have a large amount of wealth, your cash may fill an entire room. In reality, you do not own this wealth because you cannot take it with you. Your cash will gradually mold, or one day be carted away by someone, causing dozens of bill validators to burn.
- If you store value in bank deposits, transferring and withdrawing are convenient, but your account is at risk of being frozen by the bank.
Even if you do not have much cash to carry with you and your deposits are not frozen, you still face the risk of dilution of wealth due to currency inflation. How much purchasing power remains from a 10,000 yuan deposit 20 years ago?
- If you store value in gold, you also cannot take it away, so you may end up smuggling 44 kilograms of gold out of customs like some securities mogul and get caught.
- If you store value in real estate, it is not only about the inability to take it away; there is also the risk of forced demolition and expropriation.
- If you store value in stocks, you are also in danger; if things go wrong, you might unexpectedly die, and your shares will be donated to charity.
Only Bitcoin perfectly solves the above problems.
Whether you hide the private key in a book or memorize it, you can carry wealth without any barriers worldwide. Moreover, this wealth belongs to you as long as you don’t speak of it; no one can take it away, and no one even knows you have this wealth.
As the saying goes, wealth is external to oneself. This saying only applies to before 2009. After the birth of Bitcoin, wealth is no longer external. Although you cannot take it with you when you are alive, you can take it with you when you die.
If you do not want to pass Bitcoin on to your descendants, you only need to destroy the private key; the result is equivalent to a donation because all the coin holders in the world are beneficiaries.
Therefore, if there is one thing in this world that truly belongs to you, it is Bitcoin. Of course, there is a prerequisite: you must hold the private key yourself.
- If you do not hold the private key, you cannot enjoy this revolutionary method of storing value.
- If you do not hold the private key, you cannot truly understand the significance of this social experiment.
- If you do not hold the private key, you have never truly owned Bitcoin, let alone hoarding it for the long term.
- If you do not hold the private key, you will not experience that feeling of 'you can no longer do anything to me.'
Of course, freedom comes at a cost; holding the private key also has its price, which is that you bear all consequences. It sounds scary, but it's not as serious as you might think; I have never lost any coins.
If you cannot take care of yourself, then letting go to take care of yourself indeed carries significant risk. But once you learn to take care of yourself, letting go carries no risk.
Now the question arises: Do you want to live in dependence forever, or do you want to quickly learn to take care of yourself so you can be free and enjoy true freedom?
A few years ago, the scene of me creating a cold wallet for the first time is still fresh in my memory. As a novice, I used the dumbest method: I reinstalled the system on an old laptop, downloaded the Core wallet (then called QT), installed the wallet after disconnecting from the internet, generated a new address, backed up the wallet onto two formatted USB drives, and then sent coins to the wallet address. From then on, I had a cold wallet, I mastered the private key, and I had two backups. I remember feeling both excited and doubtful, with a bit of unease.
It was only much later that I finally understood hash functions, asymmetric encryption, and elliptic curves. The doubts and anxieties about security gradually dissipated. Over time, one year, two years, three years, it remained very secure, and my confidence in it grew stronger, and my understanding of private key management improved.
By mastering the private key, you will gradually develop a new understanding of Bitcoin. You will naturally focus on Bitcoin's decentralization and security because these are the most important things for you. Decentralization ensures that Bitcoin is not inflated and not frozen, while security ensures that Bitcoin is not cracked. All other flashy attributes are secondary. You will also come to understand that the king of coins is the king of coins; most of those flashy coins are garbage, created by people who missed out on Bitcoin.
You will open a whole new world; you will truly possess your wealth. You may even begin to look at people in the old world with pity; they are busy but still do not realize that nothing truly belongs to them.
They still hold a skeptical attitude toward the value of Bitcoin, perhaps because they have never experienced the thrill of holding a private key.
