Introduction

First of all, thank you for purchasing this book! Any feedback would be appreciated. For any questions or issues, please send email to feedback@BitcoinHandsOn.com.

I’ll start out by telling you what this book is not. It’s not about the “why” of Bitcoin. I’m going to assume that since you’re reading this book, you’re convinced that Bitcoin has a lot of promise, and you believe that learning how to use Bitcoin directly, without intermediaries, is important.

It’s also not about the history of money, why government currencies (also known as “fiat currencies”) seem to inevitably fail, how inflation is actually theft, or similar topics. There are writers much smarter than I am who have gone over these topics, in depth. I list some of the best books in the Resources section.

Instead, this book is all about actually using Bitcoin. It’s about using software to create wallets that you control directly—in other words, self custody. It’s about understanding, at a very practical level, what a private key is and why it’s important. It’s about learning to manage your wallets, and sending and receiving sats (short for satoshis, 1 bitcoin equals 100 million sats) without needing to go through gatekeepers like banks or investment firms. Learning how to use Bitcoin may be the most important technical skill you ever develop.

Why is self custody important?

Holding your own bitcoin—self custody—is key to getting the benefit of Bitcoin, over the long run.  

If you already own bitcoin, is it in self custody? Well, if you don’t have the private key—the private key that you could use to send and receive the bitcoin directly—then it’s not in self custody.

Let’s look at some cases where people think they own bitcoin, but they don’t actually control it:

·       If you’re holding bitcoin on an ETF (exchange traded fund), then you don’t have bitcoin in self custody, it’s all managed by the fund. It’s not possible to withdraw actual bitcoin from the exchange. Instead, you need to sell the bitcoin and withdraw USD.

·       If you’re holding bitcoin on an exchange, such as Coinbase or Kraken, then you still don’t have bitcoin in self custody.

An exchange is an improvement over an ETF, because usually you can withdraw the bitcoin into a self custody wallet.

But still, many exchanges have failed—through hacks or fraud—since Bitcoin’s creation. Early bitcoiners learned through bitter experience that they shouldn’t trust exchanges.

The history of Bitcoin exchanges is full of these scams and thefts, ranging from one of the earliest and most famous (Mt. Gox in 2014) to more recent scams (FTX and Celsius in 2022).

There’s one thing these disasters had in common. It’s that the supposed “owners” of the bitcoin did not actually hold their own keys. Instead, they left their bitcoin in the custody of others, in what are called “custodial wallets”. People thought it was safer to have their bitcoin in the custody of large firms, instead of managing it themselves. They were wrong.

Not your keys, not your coins

If you didn’t understand “Not your keys, not your coins”, you wouldn’t have necessarily known that you were doing something dangerous, by relying on other people to manage your bitcoin.

For instance, take one of the more recent exchange failures, FTX. Mainstream media news coverage of FTX was glowing. It stayed positive until just before the whole thing unraveled, and was revealed as a huge scam. Most users didn’t realize they were taking a serious risk by leaving their bitcoin on the platform.

It’s not as hard as it seems

For many people, self custody—using bitcoin directly and holding the private key themselves—is intimidating. Without an intermediary like a bitcoin exchange or ETF, people worry about making mistakes and losing their hard-earned money. Many people avoid self custody because they don’t understand seed phrases and private keys.

Bitcoin can seem mystifying and complex. It may seem that using Bitcoin requires an understanding of the underlying technology, and in-depth knowledge of cryptography.

But that’s absolutely not true. I’m here to tell you that you do not need this in-depth knowledge. Do you need to understand how a car engine works, in order to drive? No, you don’t. You also don’t need to understand every technical detail about how Bitcoin works, in order to safely use it.

Taking small steps in a safe environment

The learn-by-doing exercises in this book will walk you through the process of learning Bitcoin, one simple step at a time.

When you’re learning to drive a car, do you immediately start driving on the highway? No, you don’t. You head to a large parking lot, and practice driving there. You make a lot of left turns and right turns, starts and stops. That’s what you’ll be doing in Bitcoin, Hands-On—lots of practice, in a low-risk environment.

Working your way through this book will help you overcome the anxiety that can come with managing your own bitcoin. The exercises use a few temporary, small test wallets, that you create and control. This is the Bitcoin equivalent of taking your first drive in a parking lot, to learn about the steering wheel, gas pedal, and brake.

With these small wallets, you’ll make steady progress through the exercises with small amounts, gaining confidence and learning to avoid the problems that can occur. You master the skills you need to safely send, receive, and store bitcoin.

How to get the most out of this book

Here’s a few tips on going through the exercises, and how to really learn the practical aspects of Bitcoin—in a way that sticks.

·       Name the wallets exactly as shown in the instructions. This makes it easier to follow along, because the same wallets are used throughout the whole book.

·       Complete all the exercises, even if you think you know what’s going to happen. Actually doing the steps is key to learning. Just reading isn’t enough.

·       Consider doing each exercise twice. First, follow along step by step with the book. Then, try it again without the instructions—just from memory and the name of the exercise. That’s where the real learning happens.

·       Transaction fees now (early 2025) are quite low. But if you’re concerned about fees, the lowest fees are usually on weekend mornings, US east coast time (EST). So, consider doing the exercises that involve transactions during that time. You’ll learn more in exercises 17 and 18 about fees.

Author’s note on Bitcoin capitalization:

Standards are still evolving on when Bitcoin should be capitalized, but the consensus seems to be—upper case when speaking of Bitcoin as a system, and lower case when speaking of the currency units, or as an adjective. That’s what I do in this book.