Thread by @econoalchemist

Part 1 of a 5-part series: The Importance of Self-Custody & the Dangers of KYC.

A thread for total Bitcoin beginners to share a message I wish I had received when I was first starting out.

2/38 This thread is the short version of a more detailed article that can be found on the @BitcoinMagazine website here:
bitcoinmagazine.com/guides/bitcoin…

3/38 And also on my blog here:
econoalchemist.com/post/bitcoin-w…

4/38 Many Bitcoiners discover the importance of self-custody & the dangers of KYC after they have started acquiring #bitcoin . Since bad habits are hard to break I want to share my opinions on the matter as a preamble to explaining how to install, secure, & use Bitcoin wallets.

5/38 When you install a Bitcoin wallet on your mobile device or desktop, you are taking the radical responsibility of self-custody. This means that you and you alone are responsible for your bitcoin. Some of this may be alarming, but it's the honest truth:

6/38 If you lock yourself out of your wallet, then that is 100% your fault and you are responsible for that loss.
If you fall victim to a phishing attack and share compromising information with a scammer, that is 100% your problem and your loss.

7/38 There is no Customer Support hotline in Bitcoin. There is no charge back feature in Bitcoin. And there is no card-lock security in Bitcoin. Unlike using a bank, you and you alone are responsible for your bitcoin once you cross the threshold into self-custody.

8/38 As the saying goes: "A ship in harbor is safe, but that's not what ships were built for".

Here are 3 examples why self-custody is better than a trusted 3rd party, even with the radical responsibility.

9/38
#1) Your purchasing power is continually being siphoned out from underneath you through various forms of inflation, which is confiscation. Every dollar printed is stealing the value of the dollars you accepted in exchange for your time and effort in labor.

10/38 #Bitcoin helps ensure that the value stored today will be preserved for the future, and when you self-custody your bitcoin, you can verify that your wealth is cryptographically in your possession at all times without trusting a third party.

11/38
#2) Have you ever had a transaction blocked by your bank because they don't support the type of business you are attempting to interact with? That's what permission looks like; your money, their rules.

12/38 Maybe the business was legal in your state but illegal at the Federal level like marijuana. With bitcoin in self-custody, no one's opinion of your business is relevant, Bitcoin is software & will execute as expected for any person for any reason every single time.

13/38
#3) Have you ever been blocked from opening an account at a bank or had your account closed? That's a form of censorship. In 2019, my Bitcoin ATM business was rejected by a total of 17 banks across the country.

https://twitter.com/econoalchemist/status/1159509320226299908?s=20

14/38 Because of Bitcoin's decentralized nature, there is no central authority to deny your transaction or shut you out of the network. With #bitcoin in self-custody, you can meaningfully interact economically with the world uninhibited.

15/38 Trusted 3rd parties are security holes. Maybe you have heard of EXMO, Quadriga, or Mt. Gox? These exchanges custodially held customers' bitcoin and the customers were rekt.
coindesk.com/uk-crypto-exch…
en.wikipedia.org/wiki/Quadriga_…
en.wikipedia.org/wiki/Mt._Gox

16/38 There is no #bitcoin exchange that carries FDIC or SIPC insurance. There is no publically verifiable way to protect customers against rehypothecation either.

Ask yourself what happens when the SEC arbitrarily decides to halt all #bitcoin trading?
sec.gov/news/press-rel…

17/38 The other problem with most exchanges is AML/KYC regulations. KYC is an invasive scare tactic used to preemptively collect the data and personally identifiable information about you that would prove beyond a reasonable doubt your ownership of bitcoin.

18/38 KYC is enforced by FinCEN under the US Treasury & echoes globally. Originally an attempt to prevent US citizens from funding foreign enemies, KYC has morphed into an excuse for corporations, gov't contractors, & state agents to harvest, track, and share your personal info.

19/38 This opens the means by which you are controlled. The range of KYC requirements can vary from full name, birth date, email, phone number, social security number, physical address, IP address, financial background statements, picture of you holding an ID, or all the above.

20/38 Exchanges are required to comply with KYC regulations or they face fines or can be shut down. This means your best interests take a back-seat. The federal government has irrationally raised the KYC requirements when it comes to bitcoin.

21/38 For example, the proposed Travel Rule would require exchanges to automatically file suspicious activity reports to the federal government for #bitcoin transactions exceeding $250 USD in value that cross a US border among other things.
econoalchemist.com/post/fincen-fa…

22/38 The Travel Rule was fueled in part by the FATF which is basically a group of assholes that take the broken AML/KYC policies of the US and try to force them into the #Bitcoin ecosystem by writing recommendations like this: fatf-gafi.org/media/fatf/doc…

23/38 The regulations are supposed to inhibit money laundering, however, the worlds largest banks are the ones facilitating the majority of money laundering & when they get caught, the penalties are less than the profits; which is incentive to do it again. icij.org/investigations…

24/38 Ronald Pol wrote a thought provoking article stating: ..."anti-money laundering policy intervention has less than 0.1 percent impact on criminal finances, compliance costs exceed recovered criminal funds more than a hundred times over..." tandfonline.com/doi/full/10.10…

25/38 The rules governing the legacy system failed, it's disturbing that people want to force these same rules into Bitcoin. The rules don't even work where the orchestrators have all the control, why would those rules make Bitcoin better? I say cut the ties, burn the bridge.

26/38 Can you see what kind of potential problem is mounting here? There are millions of hard working people who have struggled their entire life having their purchasing power confiscated from them through inflation…

27/38 ...and their money held hostage by the rules of bankers, and their freedom of financial expression being censored. People have discovered a solution to those problems with #Bitcoin and they have volunteered their personal information to get it.

28/38 The requirement for that information is a cascading shadow of a failed financial system that prolongs the agonizing death of central banking. As country after country falls into a full blown currency crisis, the demand for bitcoin will increase.

29/38 This means any information related to individuals who are in possession of #bitcoin becomes more valuable. With the sovereignty of nations threatened and the masses left to fend for themselves, survival depends on adaptability and the ability to remain anonymous.

30/38 Imagine what happens when a Ledger-style data breach occurs on an exchange with more detailed PII & the individual's BTC addresses.

31/38 Suddenly, your name, physical address, photo, & BTC holdings are publically available. This may sound like I'm being an alarmist, but this will be an unfortunate reality that many people will have to face. vice.com/en/article/akd…

32/38 But kidnappings & ransoms are only 1 prong of this threat; it is already known that major exchanges actively partner with law enforcement agencies. Take for example the CoinBase announcement.
econoalchemist.com/post/fuck-brian

33/38 These corps are not your friends, they don't have your best interests in mind, they will protect themselves first and foremost, and they will obey the government's commands to make sure they can stay in business and to make sure you are the product.
econoalchemist.com/post/intrusive…

34/38 Consider another attack, if the gov't knows your PII & BTC holdings then you are more likely to become a target of theft through unrealized capital gains tax, enforcement of 6102 or forced to forfeit your BTC as a matter of "national security".
en.wikipedia.org/wiki/Executive…

35/38 Keep in mind that #Bitcoin was created because the ruling authorities completely fucked up the money to begin with. Not by accident, but systematically & methodically destroyed the functions of money to purposefully enrich the few & create debt slaves out of the many.

36/38 Spend some time reflecting on these war games. Hope for the best, be prepared for the worst. Users can mitigate the issues above through self-custody & non-KYC #bitcoin. The first step is to install a wallet on your Android, iPhone, or desktop.
6102bitcoin.com/wargame/

37/38 Thanks for reading! I hope that this article got you thinking about the importance of self-custody and the dangers of KYC. Check out the full article on the @BitcoinMagazine website here: bitcoinmagazine.com/guides/bitcoin…

38/38 Be sure to read Part 2, dropping tomorrow, for a step-by-step guide on installing @Samouraiwallet on an android device.
Part 3 will cover @bluewalletio on iPhone.
Part 4 will cover @SparrowWallet on desktop.
Part 5 will cover ATMs & @bisq_network
econoalchemist.com/post/bitcoin-w…