Are you ready for Bitcoin?
Bitcoin Insights #4
Let’s start with a recap of the past three issues.
The first issue shed light on the origins of Bitcoin. At the beginning of the 21st century, the bursting of the dotcom bubble and an expansive monetary policy led, at least indirectly, to the emergence of Bitcoin. After the real estate bubble and the subsequent bailouts, Satoshi Nakamoto published the Bitcoin Whitepaper and launched the Bitcoin network.
The second issue emphasized the difficulties in understanding Bitcoin. Experts such as Jameson Lopp and Andreas M. Antonopoulos point out the complexity, while erroneous assumptions, such as those made by the World Economic Forum (WEF) on the power consumption of Bitcoin mining, add to the confusion. This WEF article is still online despite its flawed nature.
The third issue was dedicated to Satoshi Nakamoto and the innovative concepts behind Bitcoin. It discussed the low inflation compared to fiat currencies, the progress of Bitcoin adoption compared to the Internet and the need to separate money from the state. Bitcoin’s sophisticated protocol change process, which does not allow for centralized control, ensures the security and stability of the network and makes it a superior currency.
First understand Bitcoin, then buy it!
In previous issues of the newsletter, many topics have only been dealt with on the surface. The aim is to encourage people to think and to do their own research, thus enabling them to enter the Bitcoin Rabbit Hole.
Before investing in Bitcoin, it is crucial to understand Bitcoin — or at least make an attempt to understand it. This approach should be a given for all investments, but is often neglected.
Excited about Bitcoin but don’t know where to buy it?
Fortunately, there are many different ways to buy Bitcoin today. A few years ago, things were very different. The best options are presented and categorized here.
The cheapest alternative: Exchanges
Large international exchanges, often outside the EU, offer the opportunity to buy Bitcoin very cheaply. The best known include Binance, Kraken and Coinbase.
Advantages
- Very low trading fees
- Other products and services are offered in addition to Bitcoin [can also be interpreted as a disadvantage]
Disadvantages
- Not based in the EU
- Risk that the exchange implodes quickly like Mt. Gox or FTX
- Money must be transferred to a bank account in another (non-European) country
- Sending Bitcoin to your own wallet is often very expensive
- Confusing, as there are often thousands of cryptocurrencies on offer
The supposedly best option: Bitcoin-only providers
Some providers in the DACH region only offer Bitcoin for purchase, including 21bitcoin, Relai, Pocket [and Strike, based outside the DACH region].
Advantages
- Favorable trading fees, especially for savings plans and with referral code*
- Flexible savings plans: hourly (Strike), daily, weekly, monthly (Strike recently became fee-free on Dollar-Cost-Averaging, DCA)
- Low or no fees for sending Bitcoin to your own wallet (Auto Wallet-Transfer possible)
- Focus on Bitcoin provides a clear and straightforward trading offering
- Lightning integration (Bitcoin’s very affordable second-layer solution)
Disadvantages
- More expensive than exchanges
- A referral code* is sometimes required to reduce trading fees
The intermediate option: European all-round providers
In the DACH region, there are providers that offer both Bitcoin and other cryptocurrencies for purchase, such as Bitpanda, Bison (BSDEX), Bitwala, Trade Republic and N26.
Advantages
- Low fees
- Selected range of cryptocurrencies [can also be interpreted as a disadvantage]
- In addition to Bitcoin, shares, ETFs and other banking products can also be purchased/used in some cases
Disadvantages
- More expensive than exchanges
- Bitcoin cannot always be sent to your own wallet (Trade Republic, N26)
Which providers are recommended?
21bitcoin
- Very low fees (0.79% instead of 0,99% for a savings plan with the referral code BTC-INSIGHTS) and low spread (good purchase price)
- Purchase possible directly to your own wallet (Auto Wallet Transfer)
- Bitcoin withdrawals cost only 1,000 sats and are always made in the next block
- User-friendly and clean app
- Made in Austria 🇦🇹 with a German bank account at Volksbank Raiffeisenbank Bayern Mitte 🇩🇪
Relai
- Favorable fees (reduction of 0.5% with the referral code BTCINSIGHTS)
- Lightning integration ⚡️
- On the market for over 5 years with over 125 thousand active customers
- Made in Switzerland 🇨🇭
Strike
- No fees for a savings plan (shortest DCA with hourly trades) and low spread (good buy rate)
- Lightning integration ⚡️
- User-friendly and clean app
Bitpanda
- Larger selection of cryptocurrencies [can also be interpreted as a disadvantage]
- Purchase of shares, ETFs, commodities and precious metals possible
- Benefits through the Tell-a-Friend program with the ID 9147554864570031059
- On the market for over 10 years with over 5 million customers
- Made in Austria 🇦🇹
Bison
- Larger selection of cryptocurrencies [can also be interpreted as a disadvantage]
- Favorable fees
- Receive €10 in Bitcoin upon registration with the code 6ynspk
- Purchase of shares, ETFs and commodities possible
- Made in Germany 🇩🇪
How much Bitcoin should you buy?
This is very individual and depends on how many assets you have. In principle, you should only invest what you are prepared to lose due to the risk. It is advisable to start with smaller amounts and gradually increase them.
At what intervals should you buy Bitcoin?
This is also individual. In principle, however, a regular savings plan is much better than a one-off investment. With a single purchase, it is rarely possible to find the optimal time to buy. With regular purchases, this balances out, a principle known as dollar-cost averaging (DCA).
My analysis for the period from 2020 to today has shown that a weekly savings plan has generated the highest return over this period. Daily, weekly, monthly, quarterly and annual intervals were compared.
When should you buy Bitcoin?
First of all, you should understand Bitcoin — or at least try to understand it. Only then should you buy Bitcoin. Or, in the words of Michael Saylor: “Everyone gets Bitcoin at the price they deserve.”
Free Satoshis (sats)
If you have read this far, you will now receive your first satoshis (sats) free of charge. This way I can estimate how many people actually read the newsletter.
Answer the question here whether you like the newsletter and enter your wallet address to receive free sats via Lightning (Bitcoin’s second layer solution).
You can find out exactly what the Lightning Network is all about in the next issue.
Note on content and affiliate links
The information in this newsletter is subjective and reflects the personal opinion of the author. It is for general information and educational purposes only and does not constitute investment advice on the purchase of Bitcoin. Decisions to buy Bitcoin should only be made after careful personal research.
This article contains referral links (also known as affiliate links). If you use the links or codes to create an account or make a purchase, I may receive a small commission. There are no additional costs for you, and you even benefit from lower fees or receive free Bitcoin or other benefits.
*Referral Codes
21bitcoin — 0.2% fee reduction: BTC-INSIGHTS
Relai — 0.5% fee reduction: BTCINSIGHTS
Pocket — 5€ in Bitcoin from 500€ trading volume: HTW6N2
Bison — 10€ in Bitcoin: 6ynspk
Bitpanda — up to 100€: 9147554864570031059
Trade Republic — 15€: m19f4kg0
N26 — changing offers: philipph0479
This commission helps me to run this newsletter and continue to provide high-quality content for free. I only recommend providers that I consider to be reliable and trustworthy and that I use myself. My opinions and recommendations remain independent and honest. The use of referral links has no influence on the editorial content.
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Philipp J.A. Hartmannsgruber holds a master’s degree in Finance & Accounting. He is a Board Member of the Blockchain Bundesverband (Bundesblock). In 2019 he founded PJAH Consulting, a bitcoin-consultancy.
