How to manage Bull season psychology in crypto? Section 3

5-YEAR OUTLOOK MINIMUM

Most people get interested in Bitcoin during one of its parabolic bull runs. I was one of them. We are all interested in getting ahead financially, especially with the specter of inflation hanging over our heads.
If you are new to Bitcoin and this is your first foray, make sure you are prepared to hold this asset for a minimum of 5 years. You are likely here during a bull run, and unless you got lucky, it’s probably on the trailing end of the bull run. As of the date of writing in December 2023, I believe we are at the beginning of the next bull market. With the ETF approval, the halving in April 2024, and the Fed poised to turn dovish, many catalysts are aligned. This does NOT make it inevitable. Black swans are always a possibility. With that black swan caveat aside, we seem poised for massive price appreciation in the next few years.

SELF CUSTODY

The first time you buy Bitcoin at the exchange of your choice, it will feel like buying any other asset at a brokerage. You buy Bitcoin, and the number on the screen reflects the amount of bitcoin you now “own.”
It is critically important that you take custody of your Bitcoin. We have seen exchange failure and downright fraud go on very recently. When these frauds are uncovered and prosecuted and the price of Bitcoin gets hammered because many people associate the asset Bitcoin with the exchanges that sell it, this becomes a HUGE buying opportunity. When FTX failed 1 year ago, the price of Bitcoin was negatively affected, and those who understood that Bitcoin had no fundamental problem loaded up. They understood that fear was coursing its way through the market (back to why being educated is SO IMPORTANT in this space). If you bought Bitcoin at that time (around 16k), you secured well over a 100% gain in a year!
Think of seed keys as the password to your Bitcoin, which must be protected because if anyone else gets it, they can take possession of your Bitcoin—no bueno. Bitcoin Seed keys are generally protected by a hardware wallet or signing device. This device protects your seed keys from hackers or bad actors. I have been using Coldcards for years, and they are some of the best devices for protecting seed keys. It works very simply. You create your secret keys using the device; it saves them and keeps them offline, never connected to the internet. That last point is IMPORTANT. You do not EVER want to save these words on an internet-connected computer. The only place to safely store your Seed Keys is on a device designed for them. If the computer is compromised (and believe me, it is VERY LIKELY COMPROMISED) the signing device will protect your Bitcoin.

This may all sound very difficult and complex if you have never done it before, but trust me, it’s easy. I would recommend that you watch BTC Sessions videos about using the signing device you choose. He has incredible walk-through videos on YouTube that explain how to do everything in detail.
Collaborative custody with a company like Swan Bitcoin or Unchained Capital is also a good idea for those new to the space. They will hold your hand and protect you from making simple mistakes that can cause issues. Collaborative custody is worth the cost if you are worried about losing your Bitcoin. Unchained offers a collaborative custody product that can hold multiple keys and can help your relatives retrieve your Bitcoin in the case of your demise.

DO NOT BRAG ABOUT YOUR BITCOIN

There is a temptation to brag about success. If you stay the course for five years, you will likely have it. You are proud that you have had the discipline and self-control to master yourself and successfully acquire what you view as a significant amount of Bitcoin. Don’t share how much you have with others. This should be obvious, but there are people that may not be so excited for you. They may tell their friends, and sooner or later someone who you don’t know, who may have the capacity for violence, may decide you are an appetizing target. This is yet another reason to use a multi-sig setup. Even if someone obtained 1 of 3 keys, they cannot steal your Bitcoin.

DON’T BUY BITCOIN THAT YOU DON’T CONTROL

Don’t purchase the shiny new ETF Wall Street is offering. Buy Bitcoin only at places that allow you to take actual custody of your Bitcoin. Don’t put your Bitcoin on any kind of service that offers a yield, especially if that yield seems unrealistically high. As a general rule of thumb, just don’t do it.

The first and most important reason you should take custody of your Bitcoin is that you have absolute and complete control of it. There is a saying in Bitcoin, “not your keys, not your coins.” If you do not have custody of your Bitcoin, you simply have an IOU. This is the entire reason for Bitcoin’s existence. To remove middlemen and allow people to control their financial destiny.

When you have custody, you do not incur a fee like you would with an ETF. These fees can seem low, but over time they can be SIGNIFICANT. GBTC is a trust that is the most similar to a Bitcoin ETF. GBTC charges a 2% fee PER YEAR (now 1.5% with the ETF). Over time this can be significant. Additionally, the ETF products that Wall Street is selling don’t allow you to EVER custody the bitcoin. An ETF could make sense for some people in some scenarios, but for anyone who can confidently build a Lego set, taking custody of Bitcoin is of similar complexity. Just do it yourself.

As Bitcoin becomes more mainstream, it will be possible to use it as collateral. Yes, I understand that using your Bitcoin as collateral takes it out of your possession and requires trust in a 3rd party. This is another case where you should educate yourself and be SURE that you have chosen a lender that is trustworthy and will not go bust. Always defer to self-custody if in any doubt.

Borrowing against your Bitcoin is impossible if you don’t have custody of it yourself. You cannot lend the Bitcoin that Blackrock is holding on your behalf. This is significant. There are tax benefits from borrowing against Bitcoin instead of selling it. If you don’t control your Bitcoin, you are boxing yourself out of some predictable use cases in the near future and many unpredictable uses that have yet to be invented. Programmable money is not useful if you don’t have custody of it.

The final reason you should hold your Bitcoin is a bit darker. Bitcoin was designed to be uncensorable and unconfiscatable. When it becomes apparent to the state that it is losing control of the money, it will likely come for yours. This has precedent in U.S. history. In 1933, Executive Order 6102 made it illegal to own gold for U.S. citizens. They compelled people to turn in gold and receive $20 per ounce. The government then repriced gold at $35 per ounce. You could get jailed for owning gold coins in the U.S. from 1933 until the mid-1970s. This could happen again, and you have optionality if you hold Bitcoin yourself. Custodians WILL be compelled to give the government your Bitcoin in this scenario. What you do with your Bitcoin in this situation should be YOUR call, not a custodian’s.

RESPONSIBILITY

If you take the steps to self-custody your bitcoin, you are responsible. This is a type of radical responsibility that can worry people. If you lose your seed keys, your Bitcoin is lost forever. There is no number to call, and no one who can help you. IT. IS. GONE.

In 2017, one of my friends at the firehouse lost what was then $1300 worth of bitcoin because he put the Bitcoin on a paper wallet. These aren’t used anymore because they are so insecure, but you can print out a QR code that will hold your bitcoin. He left the piece of paper in his car. He then cleaned out his car and vacuumed up the paper wallet. That Bitcoin is gone forever. It is now worth somewhere in the range of 4-5 thousand dollars, and it's just gone. Well, it's technically not gone, it's still there; just not accessible to anyone. Without the password, no one can move the bitcoin, so it’s effectively bitcoin that is frozen forever.
Another good friend of mine lost a significant amount of Bitcoin at a company called BlockFi. This was an exchange that offered yield on Bitcoin kept at their exchange. That Bitcoin is not frozen, but it is now locked up in litigation for the foreseeable future. To add insult to injury—because the Bitcoin when held by BlockFi was not technically his, it is theirs based on the “agreement” he signed when opening the account, he will at some future date get the dollar value of that bitcoin at the price when BlockFi went bust—which is 16 thousand dollars—we have rounded squarely back to why you should take self-custody seriously!
The old saying in bitcoin is “Not your keys, not your Coins.”

Bitcoin is an endless learning journey. If you want a rabbit hole to explore, you are in luck! The amount of solid content offered in the space is light-years better than in 2017. You can go from zero to proficient in a fraction of the time it would have taken back then. As was alluded to above a couple times, we have curated a Basics Series at Blue Collar Bitcoin that you can use to get started. The list of great content creators and resources is so long that we can’t name them all. Just go exploring and be careful to verify, not trust.

Continue learning, and above all—think for yourself!
Remember the wisdom of Matt Odell: “Stay humble and stack Sats.”

This is a guest post by Josh. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Josh is a career firefighter/paramedic who has been interested in finance and economics for over a decade. He discovered the value of Bitcoin in 2017 and has become more resolved in its world-changing capabilities every year since. Josh is the co-host of the Blue Collar Bitcoin Podcast alongside fellow firefighter Dan.
https://bitcoinmagazine.com/culture/surviving-the-bull-run