Ask Doctor Bitcoin: How do I "Use Bitcoin like Money?" [Free, #13]

El Salvadore declared Bitcoin legal tender last night, and several LatAm countries are expected to follow suit. What suite of tools and techniques best help a Bitcoiner actually use it like money?

Well, hello there! Welcome to another issue of Ask Doctor Bitcoin!

Everyone in the crypto community, particularly the Bitcoin corner of it, is particularly hyped after the massive Bitcoin 2021 conference in Miami. We will showcase a few of the roundups and summaries I found particularly poignant, but perhaps the most landmark and impactful stories to come from the event was the announcement that El Salvador would be declaring Bitcoin “legal tender” in the country.

This is an announcement that has several legal implications, but is already proving to have some important cultural ones as well. It’s begun a domino effect of other Central and South American nations following suit with their own Bitcoin declarations.

This will inevitably lead people down the path of the challenge of using Bitcoin as an alternative form of money. This is not a risk-free nor a process that feels natural to users of our fiat-based permission-less digital payments system, but as someone who’s tried to live crypto-first for many years, I thought I’d put together a primer on what you need to consider when going crypto-first.

As always, if you like what you read here, feel free to forward this email to someone who needs to see it, regardless of whether it’s the paid version of the newsletter or not! I always include a link for a two week free trial in the issue, so if they like what they read, they’re likely to sign up and support my work!

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Blockchain Bulletin

  • Google lifts its ban on cryptocurrency exchanges, wallet adverts. Google has lifted a three-year-old ban on cryptocurrency exchanges and wallet services, reported CoinTelegraph. The updated policies will come into effect in August.

  • Kraken exchange launches mobile app for U.S. customers. In order to tap into more retail customers looking to bitcoin and crypto tokens, Kraken has released a mobile app for U.S. customers that will allow them to buy and sell crypto.

  • Jack Dorsey says Square is considering a bitcoin hardware wallet. Square may be considering a bitcoin hardware wallet for securely storing the cryptocurrency connected to the company’s CashApp capability, reported The Block.

Blockchain Behind the Scenes

  • El Salvador seeks to become the first country to make bitcoin legal tender. El Salvador President Nayib Bukele announced that he intends to propose legislation that will make Bitcoin legal tender in his country.

  • Vitalik Buterin says people problems slowed Ethereum 2.0 rollout and not technical problems. Ethereum’s cofounder Buterin spoke at a recent conference about the show pace of scalability solutions for the blockchain and said that the slow pace was due not to technical problems but people problems.

  • It looks like NFT sales are plummeting, down by 90%. According to recent reports about the NFT space, it appears that the recent bubble is popping. NFT prices not only are prices falling significantly, and active wallets are also dropping.

Other Blockchain Tidbits from the Group Chat!
We’ll come up with a better name for this at some point.

Blockchain Deep Dive: How to effectively de-bank yourself.
The full version of this post is around 2,000 words, and goes into much more detail, but this outline contains the basics. The full version is only available in the paid version of this newsletter!

The constellation of tools needs to address the following:

  • Inbound Liquidity (The “Buy-Side” of BTC)

    • Dollar Cost Averaging solutions: Swan or Coinbase..

    • OTC trading solutions (find a local provider on Paxful or Local Bitcoins).

    • Direct acquisition for goods and services.

    • Custodial wallet / purchasing services / exchange services.

  • Outbound Liquidity (The “Sell-side” of BTC)

    • Card services (BitPay, Crypto, etc).

    • Direct usage.

    • Custodial wallet for emergencies.

  • Exchange Solutions (Intra-converting your currencies)

    • KYC-less / federated services like ShapeShift or Changelly. This is the preferred method of inter-coin conversion (from one crypto to another).

    • Basic custodial services like Coinbase or CashApp. Good to have at your disposal, but not good for storing your crypto.

  • Layer Two solutions (fee reduction techniques).
    Sometimes fees are too high on the mainnet to use it as a currency. Know your options.

    • Lightning. Lightning is the premier L2 Solution, but is really for advanced users.

    • OTC networks like LBC or Paxful are useful as an L2 provider in this context if you’re using them to chain-feelessly convert to gift cards or fiat.

    • Use lighter networks, like DOGE or LTC. Fees are lower, and fiat converters and shopping carts still take them

  • Storage solutions. (Last, but not least: security).

    • Paper Wallets: This is an advanced solution. Only attempt if you know what you’re doing.

    • Trezors and Lattice Ones are over-kill for most users

    • Custom hardware wallet: an airgapped mobile device used ONLY for crypto is as effective as any other expensive solution.

    • Basic hot wallet security. For your daily use, non-airgapped mobile device, turn your security all the way up on everything, and keep track of your passphrases!

The full version contains detailed descriptions on the why’s and how’s.

To effectively be your own bank, you’ll find that if you understand the following constellation of tools and techniques, you will have a much easier time navigating the challenges that tend to trip up those trying to make this leap. Unlike many of our guides, this set of instructions will assume some basic familiarity with the topics being detailed. 

If you get lost in the details, however, that’s fine - we’ll be covering every one of these sub-topics in future issues of the newsletter!

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