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- Six sections
- Bisq
- Bitcoin
- Security
- Privacy
- Wallets
- Open source
- What is my word budget?
- 4 sections per domain
- 600 words per domain
## Bisq
### Exchange, decentralized
Bisq is an exchange application where you can buy and sell Bitcoin for national currencies or other cryptocurrencies. Unlike most exchange alternatives, Bisq is both decentralized and peer-to-peer.
It is decentralized because it does not depend nor is it controlled by any single company, team or government. Decentralization makes Bisq a resilient network: just like Bitcoin, it exists because of users like you. Since there is no single element on which everything relies, it is significantly hard for anybody to stop or hurt the network.
It is peer-to-peer because each trade you perform is matched with another user just like you. This helps you protect your privacy from centralized elements like governments and traditional financial institutions. It also makes Bisq permissionless: you don't need anybody's authorization to use it, and nobody can stop you from doing it.
Currently, two applications exist: Bisq 1 and Bisq 2. Bisq 2 is the application where you are reading this. We recommend you to get familiar with Bisq 2 before you try to learn more about Bisq 1.
### Why Bisq
For many users, Bisq is the preferred method to buy or sell Bitcoin in exchange for national currencies. This is because Bisq's nature results in a completely different experience to that of Centralized Exchanges.
Many users value the privacy-respecting nature of Bisq. You don't need to provide any kind of personal information to use Bisq. Whenever you trade, you only need to share your payment details with your trade partner. Nobody else has access to this data, and there is no central database where all of your information and transactions will end up stored for years or decades.
Bisq also allows users to overcome any lack of permissions that can be imposed arbitrarily by their local governments or financial institutions. Examples of this can be governments that declare Bitcoin possession or trading illegal, or banks that forbid customers from sending their own money to exchange institutions. Users in these situations find in Bisq a way to work around them being excluded from the traditional financial system for any kind of reason.
Finally, Bisq is a safe way to exchange Bitcoin and national currencies. The existing trade protocols and reputation systems prevent bad actors from stealing your funds. Mediators are always available to support you if another peer is not behaving properly and will step in if necessary to work out a solution for your case. The result: Bisq users can happily trade with others without having to worry about losing their funds.
### Trade safely
Exchanging your Bitcoin and national currencies with other peers comes with great benefits like not depending on companies or protecting your privacy. But you might be wondering: how can I know if the peer I'm trading with is honest? Won't I get scammed? Those are valid concerns that you should always keep in mind and that Bisq addresses in several ways to allow safe trading.
The different trade protocols (you can think a protocol as the rules you and your peer will have to follow) minimize the risk of any actor scamming his peer during a trade. You can read more in detail about the different protocols available in Bisq 1 and Bisq 2 here #TODO: add link. There is usually a trade-off between security and convenience: some protocols are more robust, others are more convenient and fast. It is up to you to decide which protocol to use on each trade, depending on your preferences and needs, as well as the traded amount. Protocols like Bisq Easy are recommended for small sums of money, while more robust and structured protocols like Bisq Multisig are advisable for larger amounts.
If your trade ends up in a conflict with your trade peer, or the peer simply disappears and becomes unresponsive, you will not be left alone. Mediators and arbitrators are always available to advice and provide solutions in these situations. These roles will observe each case, propose friendly solutions between the traders, and potentially make final decisions if no agreements are reached. If you have acted honestly and followed the rules, the outcomes will be in your favor and you will never lose your funds. You can read more about mediation and arbitration here #TODO: add link.
In summary, Bisq is designed to minimize the need for trusting other peers and to discourage scamming and other bad behaviors. This translates in very few trades having any kind of conflict, and those which do will always be solved in a reasonable way through mediation and/or arbitration. The result: trading in Bisq is a safe and smooth experience.
## Bitcoin
A peer-to-peer electronic cash that allows online payments to be sent directly without intermediaries.
### What is Bitcoin
Bitcoin is the largest and most popular cryptocurrency in the world. It is a digital form of cash that allows anybody to send value to other people without the need for intermediaries. It started out in 2009 and has grown massively since then, gaining adoption throughout the world because of its unique and appealing properties.
Bitcoin differs from all national currencies in several aspects. Bitcoin is not controlled or issued by any government or institution. It is decentralized, and it exists only because of the thousands of people across the world who use it. This makes it neutral money, where nobody is in a privileged position that allows abuse. This also means that you are free to use Bitcoin without requiring any kind of permission, and nobody in the system has more power than you. It's an open system that welcomes everyone. Another important property is that you can hold Bitcoin in self-custody. In other words, you can own it yourself without depending on any other company or entity. Comparing it to traditional currencies, it's more similar to cash in your pocket (which you completely control) than to a balance in a bank account (where you are subject to the bank's conditions and wishes). Because of this, you are also always free to send Bitcoin: you don't need anybody's approval to do so, and your transactions can't be stopped or reversed. A third interesting aspect is that Bitcoin's supply is limited to a maximum of 21 million. This means that the value of each bitcoin, unlike the value of each dollar for example, can't be debased by creating more of it. Bitcoin is created through a costly process called mining, and the amount and schedule that can be created through mining is strictly defined and can't be modified. This makes the supply limited and certain, making Bitcoin attractive due to its scarcity.
### Why use Bitcoin
Bitcoin's properties make it a unique asset that attracts different people for different reasons. How Bitcoin appeals to you depends on your profile and needs.
One of the most common reasons for people to use Bitcoin is its capacity to protect value over time. The national currencies of most countries in the world lose value continuously over time due to currency debasement. This means that by holding your savings in cash or in a bank account, you are gradually losing them because their value goes down over time. Bitcoin's limited supply prevents this from happening, so even if it behaves in a volatile way in the short term, it is a powerful tool to preserve your wealth in the long term.
Another reason for individuals to use Bitcoin is to protect themselves from the actions and decisions of governments and financial institutions. Since Bitcoin is something you can own, send, and receive in a permission-less way, the value stored in it is not affected by situations like a central bank printing more units of its national currency, a bank deciding to block your transfers for arbitrary reasons, or a government imposing confiscations on its population. With Bitcoin, the rules of the game are well-known and predictable, and you can count on the network being fair and treating everyone equally.
Bitcoin is also very attractive for those who engage in international trade and seek to send or receive money to other countries or regions. Bitcoin has no concept of borders and works the same whether you send some to your neighbor or to someone on the other side of the world. Since making payments to people or companies in different regions of the world usually means long waiting times, significant fees, and cumbersome red tape, some people chose Bitcoin as a simple and convenient alternative for their cross-region payments. It also means that you can use it to send money to countries that your government or bank have decided to block.
Finally, some people chose Bitcoin for its simplicity and convenience. Bitcoin presents many advantages in this sense with respect to traditional currencies. With it, you don't need to deal with contracts and long bureaucratic processes to do simple things like opening an account. You can easily access your money on all your devices. You can send it anywhere and to anyone without the need for different forms of payment (cash, bank transfers of different sorts, credit cards, etc.). You can easily protect and secure your funds with the right knowledge, and you will enjoy not having to worry about someone stealing your wallet or credit card details.
Bitcoin is a huge and innovative step forward in the world of money and payments. There is almost certainly some reason for which Bitcoin can be attractive and useful for your needs, so we encourage you to learn more and to become familiar with it.
- What is Bitcoin
- Why Bitcoin
- How to obtain and use
## Security
Because Bitcoin is quite different from national currencies in the way it works, the precautions you need to take are also quite different from what you are probably used to. This is also a highly important topic because, while Bitcoin provides you with a lot of power and freedom, it also makes you responsible for taking care of your funds. Therefore, you should invest some time and effort to learn how to do so securely.
While security is a complex topic, we can boil things down to three main goals: to ensure that other people never have access to your private keys, to ensure that you always have access to your private keys, and to avoid accidentally sending your bitcoin away to scammers and other untrusted peers.
### Securing your keys
First of all, you must understand one simple idea: not your keys, not your coins. This means that, in order for you to truly own your Bitcoin, it should be stored in a wallet where you, and only you, own the keys. This means that a Bitcoin balance in entities such as banks and centralized exchanges is not really Bitcoin that you own since it's those entities, and not you, who hold the keys to your funds. If you truly want to own your bitcoin, you must store it in a wallet for which only you control the keys.
There are many Bitcoin wallets out there, each with its own unique design and features. What they all have in common is that, somehow, somewhere, they will store your private keys. These keys provide access to your funds. Whatever wallet you use, you must make sure that only you, or people you fully trust, have access to these keys. If anyone else has access to them, they will be able to steal your funds from you, and nothing can be done to reverse this transaction. On the other hand, losing the keys yourself is equally terrible. If you lose your keys, you will not be able to send your funds anymore, and there is no way to take back control of them. While this might sound daunting, you can easily avoid these situations with a bit of learning and good practices.
Most bitcoin wallets will provide you with a 12 or 24 words long backup, commonly known as the mnemonic phrase or simply the seedphrase. This backup phrase allows you to restore your wallet on any device, making it the most important element for you to secure. It is generally advised to store these backup in analogical form, mostly by writing it in a piece of paper or in a small metal sheet, and to have multiple copies of it. You should also store it so that you can find it if you need it, but no one else can access it.
For significant amounts of Bitcoin, it's usual to employ specialized devices called Hardware Wallets to store your keys. These devices offer a superior level of security with respect to storing your keys in a smartphone or laptop wallet, while providing a convenient experience when it comes to making transaction. You can learn more about these and other types of wallets in the Wallets section of Bisq Learn.
Finally, make sure to avoid overly complicated storage schemes.An advanced storage plan with many details and subtleties will keep thieves away from your funds, there is also a significant chance that you might not be able to access your own wallet due to mistakes, confusion, or simply forgetting how you organized the backups. Aim for a balance between a set-up that is too simple and anybody could easily break (like storing your seedphrase in a plain text file in your laptop's desktop) and one that is so complex that not even you can crack (like storing the words of your phrase across 12 books in 12 different locations).
### Avoid scams
Another source of problems and risks are scams. Bitcoin's transactions are irreversible, which means that if someone tricks you into sending them some Bitcoin and then runs away with it, there isn't really much that you can do about it. Because of this, it is common to encounter different schemes where people will try to convince you to send some Bitcoin to them. Most of the time, scammers will present you with some wonderful "opportunity" for you to earn money easily, which tends to sound too good to be true. The specific stories and details surrounding these scams are extremely diverse and creative, but the common pattern will always look the same: you will be offered some wonderful returns, but first, you will have to send bitcoin in advance. Once the Bitcoin is sent, you will probably never see it come back to you. Defending yourself against these scams is simple: interact only with reputable and trusted companies and people. If you feel some entity is sketchy, ask for references or simply steer away from it. If you are offered an opportunity that feels almost too good to be true, it probably is, and you should stay away from it.
## Privacy
Keeping your financial information and identity private is a common need among Bitcoin users. It is natural and logical to not want other people to know about your funds and transactions without your consent. After all, you wouldn't wear a T-shirt with your bank account balance and credit card reports while you walked down the street, would you? Privacy is an important topic in Bitcoin because the transparent nature of Bitcoin transactions and addresses makes mistakes in this area especially costly. In this section, we cover some points on privacy in your Bitcoin journey.
### Why privacy is relevant
Many users value the freedom that Bitcoin provides them to own their property and transact freely and without permission with others. But without good privacy practices, these features of Bitcoin get seriously eroded. Disclosing information about yourself and your Bitcoin funds will put you at risk of several kinds of attacks from others that will restrict your own freedom. Reflecting on what data you are sharing and being mindful of this will prevent you from making costly mistakes that you might regret down the line.
The first obvious issue with revealing your identity and details about your funds is personal safety. If someone knows details such as how much bitcoin you hold, where you live, and what kind of wallet you are using, they could easily plot a physical attack against you in order to get hold of your keys. This is especially tempting in comparison with national currency bank accounts, since Bitcoin transactions are irreversible. Thus, if a thief manages to force you to send your bitcoin to an address of his own, or just steals your wallet keys and does so himself, there will be no way to cancel that transaction and your bitcoin won't be yours anymore. Keeping your identity and financial details private prevents you from becoming a target of this kind of attack.
Another good reason to keep your details private is the danger posed by hostile government regulations and actions. Governments throughout the world have repeatedly taken actions against their citizens' private property in various ways. A great example of this is Executive Order 6102, which made it illegal for US citizens to hold gold and caused a unilateral confiscation of gold for millions of citizens. Just like with regular thieves, ensuring that government entities and personnel hold no information about you and your funds protects you in case the government starts a negative policy against owners of Bitcoin.
Finally, overall, you probably just don't want others to know how much Bitcoin you hold or what transactions you perform. Just like we protect our bank accounts with various methods so that only we can check our balances and movements, it makes sense to ensure others don't have the ability to view the transactions and their details, such as when, how much, or with whom we transact.
### How we give up our privacy
There are many ways in which one can voluntarily or accidentally disclose personal details. Most times, these are easy to prevent with a bit of common sense, since we frequently just give our details away by not being thoughtful about it. Some more subtle leaks will require some technical knowledge and time. But the good news is that, with minimal effort, the most significant issues can be avoided.
The clear champion of privacy mistakes, both because of how frequent and how terrible it is, is simply providing your ID when buying or selling Bitcoin. Nowadays, most centralized exchanges (companies like Coinbase, Kraken, Binance, etc.) are subject to government KYC regulations (KYC stands for Know Your Customer). This means that governments force these companies to ask for your passport, national identity card, driver's license, or similar documents so that this information can be associated with your account. From the moment you give these away, every purchase and sale you make will be recorded and linked to you. Furthermore, the exchange and government agencies will have full visibility of your balances at any time. Even if you decide to take your Bitcoin out of these exchanges and into a wallet you custody yourself, these parties will be able to track which addresses your funds were sent to. And if this is not worrisome enough, there is another concern to keep in mind: if any hacker gains access to the databases of these companies, your information could be leaked publicly to the internet, enabling anyone in the world to know all your stored personal and financial information. This is a situation that has happened many times in the past few years, with terrible consequences for some of the affected customers of the exchanges.
Another area where attention must be paid is address re-use. Every time you provide someone with an address of your wallet in order to receive a transaction from them, this person learns that this address belongs to you. This means that, from this point on, the person could monitor the address and all its activity. If you reuse this address repeatedly, every person you interact with will be able to see the different transactions going through the address, including when they happen, where the funds are coming from and going to, and the amounts being transacted.
Finally, relying on other people's nodes to read blockchain data means that the node runner could potentially monitor what addresses your wallet is interested in. When handling significant amounts of Bitcoin, it pays off to learn how to run your own node and connect your wallet to it. Or, at least, be mindful about which node you are connecting to and choose one from a person or organization you trust, such as a friend who is more experienced in Bitcoin or a local Bitcoin community.
### Bisq helps protect your privacy
Bisq allows you to buy and sell Bitcoin from other peers. This simple difference comes with a world of advantages regarding privacy when compared to using centralized exchanges. By using Bisq, you protect your safety and privacy from governments, companies, and other hostile third parties that would otherwise record and use your data against your own interests.
When you transact in Bisq, only your peer and you know the details of the transaction. And even between both of you, the information that needs to be shared is completely minimized and restricted to the strictly necessary payment details, like, for example, your bank account number if you want to receive a fiat payment in your bank account. This means there is no need to provide information like your ID, address, etc. Furthermore, the ability to interact with different peers on every trade prevents any single individual from accumulating data about you over time, thus distributing your transaction history across different counterparties and preventing any single entity from holding a complete view of your financial life. Bisq also allows you to receive any bitcoin you purchase directly into an address of a wallet you control, enabling you to keep control of your funds at all times, and to distribute them across different addresses so that no single peer can monitor your entire wallet.
Finally, remember that Bisq is just a piece of software that runs in your computer, and only connects to the internet through privacy friendly networks like Tor and I2P. You don't even need to sign up anywhere in a pseudonymous way. Because of this, nobody can even know that you are using Bisq, and your communication with other participants can't be monitored, tracked or accessed by third parties.
## Wallets
### What is a wallet
Wallets are your tool to perform the most fundamental actions in Bitcoin: receiving it, storing it and sending it. Since Bitcoin is an open system, anyone can build a wallet for it, and many different ones exist. This is great because it means you have plenty of different options in the market from which to choose, and you can even use multiple different wallets to cover different needs.
Generally, a wallet is a piece of software that does several things for you: it reads the blockchain to check the balance of the addresses you control. It can build and send transactions when you want to pay someone else. And it holds your keys so that you can sign your transactions. Some of these features look different in different wallets, and some wallets only cover parts of them. To understand this better, it's useful to be familiar with the different characteristics that make wallets different from each other.
First, you should understand the difference between a hot wallet and a cold wallet. A hot wallet is a software wallet where the keys that control your bitcoin are stored on an internet-connected device. A cold wallet, on the other hand, is a setup where your keys are stored on a device that is never connected to the internet, and you use a different software to track your balance and prepare and send transactions. Hot wallets are typically a simple app on your phone or laptop. A cold wallet, on the other hand, means you use a software in your phone or laptop that does not hold your keys, and you combine that with a second device that holds the keys and never connects to the internet. This second device could be a dedicated laptop or smartphone, or more commonly, a hardware wallet. Hot wallets are simpler to manage and use, but they are also less secure. Cold wallets require a slightly more complex and cumbersome setup, but offer a much higher degree of safety against hacks and mistakes when handling keys. How to handle the risks of managing your funds is a personal decision, but it is generally recommended to use hot wallets like your traditional wallet for bills and coins in your pocket, and cold wallets like a safe box in a bank. You wouldn't carry a million dollars in your wallet. And you wouldn't use the contents of your safe box to pay for a coffee.
Hardware wallets are special physical devices that are designed and manufactured with the sole purpose of storing the keys to your funds and signing transactions with those keys. They offer a convenient way to sign transactions to spend your funds, while storing your keys in a safe way that prevents leaking them to others. Using a hardware wallet improves your safety by orders of magnitude in comparison to using a hot wallet on your main computer or smartphone. If you are getting started on your Bitcoin journey, you don't need to have a wallet since day one, but you probably want to obtain one once you start accumulating an amount of bitcoin that would hurt to lose. There are many hardware wallets on the market, with typical prices being around $100.
And a final note: a balance in a centralized exchange is not a wallet. Since you don't control the keys, you are relying on and trusting the centralized exchange to actually hold your bitcoin. If, for any reason, they do not send it to you when you decide to withdraw, there is no way for you to get hold of it. Remember: not your keys, not your coins.
### How to pick a wallet
Choosing the right wallet for you is a decision that depends on many factors, such as how you are going to use Bitcoin, what amounts you will be handling, or what devices you own. Nevertheless, there are a few general recommendations that you can follow and specific wallets that have a good track record.
The first and most important general advice is to pick an open source wallet. Ensuring your wallet's code is verifiable is paramount. You can learn more about this in the Open Source section of Bisq Learn. Another important recommendation is to pick a wallet that doesn't support other cryptocurrencies besides Bitcoin. Wallets that handle multiple cryptocurrencies need to use more complex code to work with the different supported currencies, which introduces bigger security risks. Hence, it is better to choose a Bitcoin-only wallet for your funds. Finally, try to look for wallets that have been around for a while, have strong user bases and have a good reputation. It is best to leave brand-new wallets for advanced usage or experiments at most.
If you plan on using your wallet on your smartphone, we advise looking into one of the following wallets: Bluewallet, Blockstream Green or Nunchuk. On the other hand, if you want to use a PC, we would suggest using one of the following: Sparrow, Bluewallet, Electrum, Blockstream Green or Nunchuk. These are all good wallets for beginners. You can try several of them to find which one suits you better, or even use multiple ones simultaneously if you want to. As you acquire more experience and knowledge, you might start developing preferences depending on the more advanced features that make these wallets a bit different from each other.
Once you have enough funds to start taking security even more seriously, it will probably make sense to acquire a hardware wallet. With a hardware wallet, you will be able to store your keys in it and sign transactions with it, while you can still use a software like Sparrow, Bluewallet or Nunchuk to read your balances and prepare transactions. When it comes to hardware wallets, most of the same advice applies: pick wallets that have transparent and public designs, that only support Bitcoin and that have a good reputation and track record. Some well-known brands are Coldcard, Bitbox, Trezor or Foundation.
The world of wallets is rich and diverse, which is both great and confusing. It's perfectly fine to be a bit overwhelmed at first. If you are just starting out, we would advise researching a bit, trying on some of the options we have shared with you, and, once you find one with which you feel comfortable, stick to it. As you keep learning more about Bitcoin, you can always explore new and more advanced options and switch to any other wallet, or use multiple of them, whenever you like.
## Open source
### Bitcoin and open source software
Open source software is software for which the code is publicly accessible and anyone can read, copy and modify that code in any way they see fit. This is in contrast with closed-source or proprietary software, where the original author decides to keep the code to himself and no one else has access or permission to it. Even though this might feel like a technical topic, it is in your interest to understand the implications of open source software on your Bitcoin journey. Let's dive into it.
The world of Bitcoin is deeply influenced by and related to open source software. The Bitcoin software itself has been open source since day one. Bisq is also an open source project. Many other surrounding technologies, like Lightning clients, mixing services or mining firmware, are typically built as open source projects. Many wallets are also open source, and as we discuss in the Wallets section of Bisq Learn, we heavily recommend that you pick wallets that are open source.
Why is this so? Closed source software is usually built and kept private by companies and individuals that want to charge others for licenses and keep full control of the project. In the Bitcoin space, this is rarely the case. Bitcoin is an open and welcoming system by nature, and the code is a representation of this. Anyone can see the code, modify it, share copies of his own version with others, and, put simply, do as he pleases with it. Bisq is also an open source project where everyone is welcome to participate, expand the application, and make improvements in different ways.
### How open source benefits you
You might think that, since you are not a software developer, whether the code of some software is public or not has little relevance to you. This is not the case at all. Even if you don't plan to look at or modify the code of the apps you are using, your experience with them will be deeply affected by whether the code is open or closed source. This is even more critical when we are talking about the software that will run your financial life and support your ability to save, receive and send money. Generally, using open source software will be more beneficial to you than using closed source equivalents. Let's break down a few important reasons that make this important to you.
A highly important reason to choose open source software is security. Since open source software can be read by anyone, hackers and malicious actors regularly try to find errors and security holes in it. You might think that this is dangerous, but it is actually the other way around! This is because the fact that the code is open to everyone means that anyone can look for security issues and either point to them, fix them themselves or exploit them maliciously. Collectively, the community of users and developers around the project will be able to spot and fix most errors quickly, often even before they are released. And if someone uses this error in a malicious way to exploit the software, it won't be long until it gets noticed and solutions are applied. On closed source software, only the small, paid team behind the project is reviewing the code, which translates into a much higher chance of errors going unnoticed. More eyes, fewer bugs. And companies also have an incentive to not disclose the fact that their closed source products have security issues, which leads to many bugs and hacks being kept secret instead of disclosed. Finally, since in closed source projects only the developing team can see the code, how can you or anyone else be fully confident that the software is safe? This links with one common saying in the Bitcoin culture: don't trust, verify. Overall, open source software leads to much more secure and robust results than closed source software.
Another great reason to choose open source software over closed source is the long term continuity of the former. Code that is public does not depend on any single entity or individual to be maintained over time. Even if the original team behind a project eventually disappears, others can take over and continue maintaining and evolving it. The greatest example of this is Bitcoin itself: even though its pseudonymous creator, Satoshi Nakamoto, disappeared more than ten years ago, the project has kept growing and thriving beyond all expectations. Thus, every time you choose open source software over closed source, you are dramatically reducing the chances that some company or developer will leave you stranded with some unmaintained software that fades and becomes outdated.
Finally, open source projects with widespread usage, like Bitcoin, Bisq or wallets such as Electrum, tend to lead to high-quality products by attracting the best talent. The open nature of the projects allows anyone to collaborate, and many great developers in the space would rather collaborate by building on top of a good project than start a duplicate effort from scratch. Over time, the cumulative contributions of these individuals lead to impressive results that frequently eclipse what most companies, even well-funded ones, could ever achieve.
Summing up, choosing open source options for your Bitcoin tooling comes with a great set of advantages that help you enjoy safe and useful products of high quality. We hope that you become curious about the nature of the code that you use in your daily life and that you make informed choices over the software you run.