The events surrounded the meetup outrage this year made me realize that our community is not as anti-fragile as I would like. We are vulnerable to attacks that attempt to reveal our identities while still depending on corporations to facilitate the spread of our message, especially concerning e-commerce. One potential problem is through our use of credit cards and payment companies like Paypal, Authorize.net, and Payoneer to purchase products created by “thought criminals.”
Not only do financial companies maintain extensive records on all your purchases, but they can instantly pull the plug on “hate” content that goes against the establishment line. In addition, companies like Amazon and Apple are being actively petitioned by the mob to burn books and other products like the Confederate Flag that go against the leftist narrative. One way to solve the problem of customers wanting to remain anonymous and sellers wanting to be immune from witch hunts is to use Bitcoin as an alternative for the exchange of goods and services.
What Is Bitcoin?
Bitcoin is a decentralized digital currency that is used for electronic purchases. It is not backed by any government and maintains value primarily by being scarce (only 21 million Bitcoins will be produced). People who want to use this currency create a “wallet” that stores their Bitcoins without having to reveal their identity. While all Bitcoin transactions between wallets are publicly stored on node computers, determining the identify of a Bitcoin user is significantly harder than through using credit cards or Paypal.
Here’s a quick video that explains what Bitcoin is:
Describing how Bitcoin works can get extremely technical. If you want to learn more specifics, I recommend this Bitcoin.org guide.
How Does A Bitcoin Wallet Work?
A Bitcoin wallet consists of two components: a private key and a public key. The private key enables you to claim ownership of a wallet in order to send money. The public key, which is mathematically linked to the private key, is what you share to others in order to receive money. You can create as many public keys to your wallet as you want (this is often done to keep the wallet more anonymous).
Here’s an example of a private key:
Private keys represent 10^77 possibilities, meaning that it is just about impossible to guess a private key, or even to use the power of all the world’s supercomputers to do so. If you successfully keep your private key private, your wallet is as secure as a safe deposit box in a bank (if not more so). Click here to learn more about how keys work.
If you’re going to use your Bitcoin wallet primarily for internet purchases, you’ll use a “hot” wallet, meaning that the private key has seen the internet since it’s handled by a private online service that you choose. Recommendations on which hot wallet service to use are made below.
If you want to use Bitcoin to store some of your life savings, experts agree on using a “cold” wallet. This means that you generate a private key using BitAddress.org on a computer that has never seen the internet before and then write down that key on a piece of paper (the BitAddress website can be saved offline to a USB stick that is then loaded onto a cold device). As long as no one has access to that piece of paper, your wallet is safe. I know an individual who has several cold paper wallets distributed in various locations within his city.
The Advantages And Disadvantages Of Using Bitcoin
If your credit card get stolen right now and used by a thief, you can simply call your card company and get the charges revoked. If you lose your Bitcoin wallet’s private key, you lose everything. If you accidentally send the entire contents of your wallet to someone you don’t know, you will never see your money again. If you store your life savings in a hot wallet and then install malware that sniffs your private key, all your Bitcoin will soon be gone. The main disadvantage of Bitcoin is that you have no recourse in the case of theft.
For a typical mass market consumer, Bitcoin is considered “unsafe” because you have to be smart about your own security. In one way, Bitcoin represents the pre-banking era in which a traveler with gold had to make arrangements to reduce the chance of being robbed. It forces you to be methodical and mindful about your money, especially if you’re using it to store significant sums, which is beyond the scope of this article.
In exchange for securing your own money, you are afforded four large advantages of Bitcoin over traditional banking:
1. Highly anonymous. It’s extremely difficult to associate a wallet with someone’s identity by examining transactions in the Bitcoin public ledger (i.e. the “blockchain”). It would take a concerted investigation by a dedicated team.
2. Near-instant settlements outside of the banking system. No entity can halt your transactions or place a freeze on your wallet assets. As long as your private key isn’t leaked, you’re safe.
3. Live off the banking grid. You can theoretically live off the grid using only Bitcoin, exchanging it for cash locally in person when needed. If you are wrongly declared a “person of interest,” you can stay hidden by using only Bitcoin instead of traditional banking.
4. Tiny transaction fees. Credit card transaction fees are about 10 times higher on average than Bitcoin. Since Bitcoin is a global currency, you also don’t need to worry about currency exchange fees.
If you don’t want to put the mental effort to safeguard your Bitcoin, never have more money in your hot wallet that you aren’t prepared to lose. For occasional digital transactions, I recommend transferring $50-100 and using it when you need. You can always add more money later. I currently have only a couple hundred dollars in Bitcoin, though I met a man who showed me a Bitcoin wallet representing approximately $40,000. The Bitcoin underworld mirrors the Wild West in some ways.
How To Get Started
First thing you need is a wallet. I highly recommend using BitGo as your hot wallet. They offer exemplary security measures such as encrypting your private key with an extra password, and even offer a way to recover your private key in case the site goes offline. BitGo is reliable and ideal for making infrequent purchases online from your desktop computer.
If you’re looking for a mobile solution, check out Xapo, available on both Android and iPhone. It also has tight security measures and ease-of-use features.
Once you have a wallet, it’s time to load it with some Bitcoin by converting it from your local currency. The easiest way to do that is through Coinbase, a reputable exchange that can withdraw money from your bank account and then deposit the Bitcoin equivalent into your wallet. A more clandestine option is Local Bitcoins, an escrow service where you link up with someone near you who has been vouched for a gentlemanly exchange of money and Bitcoin.
Once you have a wallet with Bitcoins in it, you’re ready to make a purchase from a site that will ask you to send an amount to a specific public key (it be represented as a scannable QR code). Simply access your wallet and send a payment to that public key. The transaction will likely clear within ten minutes.
If you would like to do a test transaction, check out ROK’s Tip Jar and make an anonymous Bitcoin donation. I will have no idea where the donation came from, or who sent it.
While there are risks associated with storing large amounts of money with Bitcoin, and there is always some Bitcoin developer drama that spells the end of days for the platform, I believe it is more than sufficiently secure for basic transactions. In the upcoming months, I will begin offering Bitcoin as a payment option to purchase my books and forum subscriptions. This allows me to have a backup in case my e-commerce accounts are frozen as a result of another manufactured outrage.
While our community is more anti-fragile than most, we still have some work left to do, and I believe Bitcoin is a great step towards that goal. The fact that Bitcoin allows us to exchange money and goods without knowing each other’s names is a tremendous advantage that will serve us well if the cultural climate continues to deteriorate.