If you’ve done any research into Bitcoin you’ve heard people talk about private key storage.

What are keys?
What’s the difference between hot and cold storage?
Which should I use?

Keys are one of the most important topics in Bitcoin. Let me break it down for you 👇
To understand keys you need to know a little bit about cryptography.

Keys generally come as a pair of public and private keys.

The most common use of keys is to encrypt and decrypt messages.

However, in Bitcoin they are primarily used to generate and verify signatures.
In order to spend Bitcoin you need to produce a signature by signing every tx you make in order to prove to the network that you control the UTXOs being spent.

You use your private keys to produce this signature.

If you need a refresher on UTXOs:
Ok so why do we need to store them?

Well, if you ever want to be able to create a transaction that moves your Bitcoin then you will need your keys.

Without your keys your Bitcoin is locked forever. There is no forgot password flow and no admin that can reset your password.
Ok got it, I need to store my keys safely if I want to use my Bitcoin. What’s the difference between hot and cold storage?

The terms largely refer to whether or not your keys have ever been stored on a device that is connected (or will be connected) to the internet.
If you store your keys so they will never be connected to the internet then we call that cold storage. Examples are writing them on a piece of paper, stamping them into steel, or my personal favorite @COLDCARDwallet .

If it connects to the internet then it’s a hot wallet.
What you should use largely depends on your comfort level, your risk tolerance, and the amount of Bitcoin being stored.

For smaller amounts it’s likely fine to use a hot wallet on your phone. For larger amounts you likely want to move them into some form of cold storage.
Why is it dangerous to store your keys on a device connected to the internet?

It comes down to the fact that securing a device like your laptop or phone is incredibly difficult.

Security has improved over time but it’s hard to be sure your devices aren’t compromised.
If the device you store your keys on is compromised AND connected to the internet then the attacker will be able to take your keys and along with it your coins.

Humans have been securing things in the physical world for thousands of years, not so much in the digital world.
There are lots of ways to set up cold storage which I’ll detail in future thread. A solid starter setup imo is to use a coldcard hardware device with a steel backup.

Using steel is important to protect against water, fire, acid, etc which all can easily destroy a paper backup
I hope this helped you understand some basics about private keys and different ways to store them.

If you enjoy content like this then be sure to follow along for your daily dose of Bitcoin education.

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More from @JohnCantrell97

16 Jan
If you’ve done any research on the lightning network you’ve probably heard about Hash Time Locked Contracts (HTLCs):

What exactly are they?
Why do we need them?
How do they enable trustless payments?

I’ve been working with lightning for years, let me break it down for you 👇
Hash Time Locked Contracts are a way of doing conditional payments using smart contracts on Bitcoin.

As the name implies they use both a hashlock and a timelock to enable this functionality.

So what exactly are hashlocks and timelocks?
A hash refers to the output of a hash function like SHA256.

The important property to understand is that the hash provides no info about the input used to generate it.

A hashlock is a payment that is conditional on the recipient knowing the input that generates the hash
Read 12 tweets
15 Jan
Bitcoin is designed to emit a total of 21,000,000 coins with the last bits of coin to be mined in the year 2140.

What exactly is the supply schedule?
What happens after 2140?

The supply schedule is one of the most important aspects of Bitcoin, let me break it down for you 👇
Every block that is mined is allowed to produce a certain amount of bitcoin.

This amount is called the block reward and it started at 50 bitcoin per block.

Every 210,000 blocks (roughly every 4 years) this reward halves. From 50 to 25 to 12.5 to 6.25 and so on.
This is what is referred to as the supply schedule.

The exact parameters aren’t important, it’s the fact that it is known ahead of time and cannot change that makes Bitcoin so revolutionary.

Everyone can know exactly how much BTC will exist at any point in the future.
Read 9 tweets
14 Jan
What an exciting week it’s been in Bitcoin. Is it ever boring? Definitely not.

I hope you learned a lot from my educational threads this week.

In no particular order, here’s what I found most important or interesting this week 👇
@adamcurry explains to @joerogan why he believes his money is safer in Bitcoin, why it will be a huge part of our future, and why to stay away from shitcoins.

A must listen.

Read 9 tweets
13 Jan
You probably saw the news this week that two people have solo mined a Bitcoin block and earned 6.25 BTC worth over $250,000. You’re probably wondering

What is solo mining?
How much does it cost?
What are the odds?
Should you be mining?

Let me break it down for you 👇
Solo mining is exactly what it sounds like. It’s what you probably think of when you think of mining. It means someone is mining all by themselves.

So why is it explicitly called out as “solo mining”? It’s because the norm these days is to mine as part of a pool.
What is a mining pool? Well as more and more people mine it becomes harder and harder to mine a block by yourself.

This means the time it takes for you to find a block is also increasing. In order to generate a steady stream of revenue miners often pool together.
Read 16 tweets
12 Jan
We learned yesterday that when you own Bitcoin, you control keys that can spend UTXOs. In case you missed it:

Let me explain how with proper UTXO management you can save money and maintain your privacy 👇
How can learning to manage your UTXOs help you save money?

Well if you remember from this thread:

We learned that the cost to send Bitcoin is proportional to the size of the tx and that the size of the tx depends on the size of the inputs and outputs.
The UTXOs we control are used as inputs for all txs that we make. This gives us control over the size of our tx.

When picking inputs to use we need to make sure the total amount in is >= the total amount going out. We can save money by minimizing the number of inputs we use.
Read 15 tweets
11 Jan
You’ve decided it makes sense to own some Bitcoin, congrats! You took an important step but you might be wondering…

What do I really own?
Where and what exactly are the coins?

I’ve been working on Bitcoin for years, let me help explain it in simple terms 👇
First things first, if your Bitcoin is still on an exchange or some other custodial service then you don’t really own any Bitcoin. You own a promise or an IOU that will hopefully be redeemable for Bitcoin some day.

Not your keys, not your coins. A thread for another day.
Ok so you have your keys but what coins do you actually have?

There’s not some record in a database that says “Alice owns X Bitcoins”.

Technically, you have keys that can sign a transaction that spends an unspent transaction output (UTXO).

Let’s further break that down:
Read 8 tweets

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