Setting up your plan

Choose your profile

Getting your first bitcoins

Choose your profile

Why define your user profile?
The main criteria for defining your profile
Wallets and Security Strategies
Methods of Acquisition and Transaction Volumes
The 4 Types of Bitcoin Users
Which profile is right for you?

Now that you've learned the theoretical foundations of Bitcoin, it's time to move into the practical side. This section will help you understand how to acquire your first bitcoins, how to store them securely, and how to tailor your approach based on your personal situation. The goal is to help you identify what type of user you are so you can adopt a strategy that matches your needs and constraints.

Bitcoin isn't like traditional assets. It requires a thoughtful approach and a solid understanding of both the technical and economic implications of using it. Unlike fiat currencies, Bitcoin operates on a model of individual sovereignty; meaning you are fully responsible for the management and security of your funds. As we discussed in earlier sections, this financial autonomy is a major advantage, but it also comes with specific best practices, which we'll explore in the next few chapters.

This course assumes that you're just getting started with Bitcoin. So we'll focus on simple, beginner-friendly solutions that are easy to set up. We won't cover indirect exposure methods such as mining, buying stocks in Bitcoin-related companies, or complex financial strategies. The goal here is to help you pick a wallet that fits your situation and safely acquire your first bitcoins.

Why define your user profile?

There's no one-size-fits-all approach to buying and managing BTC. Every user has a unique context, shaped by their financial situation, technical knowledge, and expectations around Bitcoin. That's why it's important to choose a strategy that aligns with your personal profile. Knowing your own approach helps you make better decisions and avoid common mistakes that come from misjudging your needs.

Here are some of the factors to consider when figuring out the best way to buy and store your bitcoins:

The amount you want to invest: Are you buying a small amount just to experiment and learn without taking on much risk? Or are you planning a more substantial investment meant to be held long-term?
Your investment frequency: Do you want to make a one-time purchase and secure your funds right away, or would you rather spread out your purchases over time using a strategy like Dollar-Cost Averaging (DCA) to smooth out price volatility?
What you want to do with your bitcoins: Are you holding it strictly as long-term savings? Using it for daily payments? Or maybe a bit of both?
Your stance on privacy: Are you comfortable providing personal information and using centralized platforms to buy bitcoin? Or do you prefer privacy-first methods like peer-to-peer, no-KYC exchanges?
Your personal, legal, and geographical context: Depending on where you live, access to certain exchanges might be restricted. Local laws and tax rules can also influence how you store and use your bitcoin.

Each of these factors plays a role in shaping the right strategy for you. Some users will value simplicity and ease of use through regulated services, while others will prefer a more autonomous and privacy-focused approach.

That's what we're going to explore next: the different ways to acquire and secure your bitcoins, so you can make informed decisions based on your profile and your goals.

The main criteria for defining your profile

Choosing the right strategy for acquiring and securing your bitcoins starts with an honest assessment of your personal situation. Several factors influence these decisions, including the risks you may face, your lifestyle, and how you plan to use your bitcoins.

Potential risks and threats

Cyber attacks: If you're not well-versed in cybersecurity or are using vulnerable devices, you could become a target for online attacks. In that case, storing your bitcoins offline (cold storage) might be a safer option.
Physical threats: Unfortunately, physical attacks do happen; break-ins, robberies, even kidnappings have targeted bitcoin holders. While these incidents are still rare and mostly affect high-profile individuals, it's worth considering them from the start when designing your security setup.
Natural disasters: If you live in an area prone to wildfires, floods, or other extreme weather events, it's crucial to have a resilient backup system that protects your private keys.
Government confiscation: If your country has restrictive or unstable financial regulations, you might face limits on buying or using bitcoin. In such cases, you'll want to favor private, non-custodial solutions.
Memory loss or data loss: Managing private keys requires you to store and retrieve sensitive information. If you're concerned about forgetfulness or potential health issues, it's wise to implement strong backup systems; or even involve a trusted person in your security plan.

To better understand your vulnerabilities, rate each of these risks on a scale from 0 (low) to 10 (high). This self-assessment will help you prioritize the right protections moving forward.

Lifestyle and Personal Habits

Your day-to-day life also plays a big role in how you'll manage your bitcoins. Choosing a setup that aligns with your lifestyle will make things easier and help you avoid unnecessary friction.

Limited time or interest? Opt for simple, automated solutions; like scheduled purchases that automatically transfer to secure storage.

Tech-savvy or hands-on? You might prefer more advanced solutions like multisig wallets that offer greater control and security.

Investing for loved ones or future generations? Think early about inheritance. There are ways to make sure your bitcoins can be passed on securely if something happens to you.

Privacy-conscious? Some buying methods require personal information (KYC platforms), while others (like peer-to-peer or mining) offer more discretion.

Using your bitcoins

Your storage and management strategy should reflect how you intend to use your bitcoin. Being clear on this from the beginning will guide your decisions.

Long-term savings: You're buying bitcoin as an investment and don't plan to use it anytime soon. In this case, maximum security and minimized access risk are key.
Gradual accumulation: You're buying small amounts regularly. A strategy like Dollar Cost Averaging (DCA), paired with a secure wallet, works well.
Day-to-day expenses: ou use bitcoin like money. Use a mobile wallet for small daily payments (maybe with Lightning), and keep most of your bitcoin somewhere safer.
Preparing for retirement or passing on your wealth: You want to pass your bitcoin to someone later. Use tools that make it easy and safe to transfer funds when the time is right. Strategies such as Multisig with timelock or specific inheritance plans can be put in place to ensure that your funds are neither lost nor accessed too early.

Once you've thought through your risks, lifestyle, and goals, you'll be ready to make smart choices for your bitcoin journey.

Here are the four key things to decide:

Which wallet to use
How to secure your bitcoin
How you'll buy bitcoin
How much you'll be transacting

Wallets and Security Strategies

Securing your private keys (the ones that give access to your bitcoins) is the most important part of owning and using Bitcoin. Unlike a traditional bank account, where a third party manages your funds, Bitcoin puts you in full control. But with that freedom comes responsibility: if you lose your keys, your bitcoin is gone forever. There are several types of wallets you can use. Each has its own pros and cons depending on your needs and level of experience.

Hot Wallet

Hot wallets are apps or software connected to the internet. They store your private keys on the same device where they're installed. These wallets are great for everyday use or storing small amounts of bitcoin.

Examples: Blue Wallet, Green Wallet, Sparrow Wallet With Lightning support: Phoenix, Wallet of Satoshi, BitKit

Advantages:

Easy to use and quick access to your funds.
Great for small payments and daily use.
Some support the Lightning Network for fast and cheap transactions.

Disadvantages:

Less secure: your keys are on a device connected to the internet, which increases risk of hacks.
Not suitable for storing large amounts over the long term.

Best for: Beginners, small balances, and frequent transactions.

Hardware Wallets

Hardware wallets are physical devices that store your private keys completely offline. They're much more secure than hot wallets because they reduce the risk of online attacks.

Examples: Ledger, Trezor, Coldcard, Jade, BitBox

Advantages:

Keys are offline = much harder for hackers to access.
Designed specifically for security.

Disadvantages:

Slower to use; you need to connect the device and physically confirm transactions.
You'll need to buy the device, which can cost you a fair amount of money.

Best for: Long-term holders and anyone securing larger amounts.

Multisignature Wallets

Multisig (Multi-signature) wallets require more than one key to approve a transaction. Think of it like a vault that needs two or three combinations to open. These setups are ideal for advanced users, businesses, or anyone looking for top-tier security.

Examples: Liana, Casa, Specter, Sparrow

Advantages:

Very strong protection; if one key is compromised, your funds are still safe.
Can reduce risks from theft, loss, or coercion.
You can distribute keys between people or locations.

Disadvantages:

More complex to set up and manage.
May require coordination between multiple people/devices.
Risk of loss of funds if Multisig is mismanaged;
Higher initial acquisition cost, potentially requiring the purchase of several hardware wallets.

Best for: Power users, families, companies, and long-term storage with high security.

Custodial services and ETFs

Some people choose to store bitcoin with third-party services like exchanges, custodians, or ETFs. This lets you gain exposure to bitcoin without managing private keys yourself. But it comes with major trade-offs.

Examples: Exchanges like Coinbase or Binance, financial products like BlackRock's Bitcoin ETF.

Advantages:

Easy to use; no need to handle keys or wallets yourself.
Useful for people who just want investment exposure, not to use bitcoin directly.

Disadvantages:

You don't actually own your bitcoin; the custodian does. If they go down, so might your funds (just ask Mt. Gox or FTX users).
Potentially higher fees and less privacy.
Dependence on a trusted third party, which means giving up sovereignty, one of Bitcoin's main benefits;
You don't get all the benefits of Bitcoin in terms of privacy and financial sovereignty.

Rule of thumb: Not your keys, not your coins.

We don't recommend custodial services even for beginners. It's much better to take the time to learn how to secure your bitcoin properly than to risk losing it all because someone else failed. But if you're here, reading about wallets and key management, you've probably already understood why that principle matters.

The choice of wallet and security method depends on how much you're storing, your level of expertise, and the potential risks you perceive. However, a hybrid approach can be a smart option:

Use a Hot Wallet on phone or a Lightning wallet for daily transactions;
Use a hardware wallet for securing the majority of your bitcoins, which are intended for long-term savings.

If your hot wallet accumulates too many bitcoins, you can transfer some to your cold storage. On the other hand, if you need more bitcoins for daily spending, you can withdraw from your cold wallet.

In the end, security largely depends on how you use the tools. A hardware wallet won't do you much good if you lose, expose, or compromise the mnemonic phrase. Caution and discipline are your best protection against losing bitcoins. For more on this, I highly recommend reading this article:

Back up your mnemonic phraseDiscover best practices for safeguarding your Bitcoin wallet

Methods of Acquisition and Transaction Volumes

There are various ways to acquire bitcoins, depending on how much privacy you need, the regulations in your country, and the amount you want to acquire. There are two main approaches:

Acquisition with Identity Verification (KYC)

Regulated platforms typically require you to verify your identity before buying bitcoin. This means you'll need to provide official documents (passport, ID, proof of address, etc.) to create an account and access buying and selling services.

Advantages:

Simple purchasing process, often suitable for beginners;
Possibility of purchasing large amounts at once;
Access to additional services (DCA, automatic conversion, easy fiat withdrawal);
High liquidity with a little difference between the buying and selling prices.

Disadvantages:

High fees for conversions and withdrawals;
Some platforms are complicated and may overwhelm you with advanced trading features or altcoins;
Major privacy issues.

The biggest downside of KYC exchanges is the privacy risk, which can also affect your personal security. KYC allows exchanges to link your real identity to your Bitcoin withdrawal addresses. This info becomes an ideal starting point for blockchain analysis. Once an address is identified, it's possible to track all associated transactions, which compromises your on-chain privacy. Without extra protective measures, all your Bitcoin activity can be traced back to you.

Another big risk is that the government, with access to regulated platforms' databases, can easily identify individuals who have bought BTC. While this may seem harmless today, it could become an issue if economic or political restrictions are imposed. Moreover, regulated platforms must report any suspicious transactions, increasing the chances of targeted surveillance by public authorities.

Also, KYC platforms store a lot of sensitive data, including IDs and proof of address. This data is often outsourced to third-party providers who handle identity verification. If a platform gets hacked or fails, this information can be exposed and used for phishing, extortion attempts, or even physical theft. Unlike other data breaches, Bitcoin-related leaks are especially risky because they might reveal that you own valuable assets.

So, it's important to understand that going through KYC isn't just a minor step; it affects your personal security. Governments requiring these identity checks are not only violating your natural rights but also exposing you to risks. While using these platforms can help you get started with Bitcoin, you should be aware of the risks involved and consider exploring non-KYC methods to acquire Bitcoin later.

Acquisition Without Identity Verification (No-KYC)

Buying Bitcoin without disclosing your identity is an option for those who prioritize privacy. This method can involve several approaches:

Peer-to-peer (P2P) between private individuals: Buying directly in cash from a person you trust (friends, family, local network, meetups...) avoids any official transaction records and keeps you out of the banking system. While this is likely the best way to acquire or sell Bitcoin, it comes with the risk of physical assault since it's a face-to-face exchange.
P2P Platforms: Platforms such as Bisq, RoboSats and Peach facilitate exchanges between private individuals without the need for identity verification, using escrow systems to secure transactions. These platforms still carry the risk of theft if the other party doesn't cooperate, but the risk is minimized by escrow services.
Bitcoin Automated Teller Machines (ATMs): Some ATMs (kiosks) allow you to buy Bitcoin with cash, though fees tend to be high, and some require ID verification for larger transactions.
KYC-free exchange platforms: Some platforms, particularly in Switzerland, let you buy small amounts of Bitcoin without requiring ID verification.
Mining: Individuals can mine Bitcoin. Older or smaller machines are accessible, providing a non-traditional way to acquire Bitcoin without KYC. By joining a mining pool, you can earn regular payouts, even with basic equipment. For more info, check out our mining tutorials.
Payments / Salary in bitcoins: If you run a business, you can accept Bitcoin as payment. If you're employed, depending on your jurisdiction, you may be able to ask to be paid in Bitcoin. These methods allow you to acquire Bitcoin without KYC.

Advantages:

Depending on the method, it helps preserve your privacy by limiting links between your identity and your Bitcoin activity;
Reduces the risk of censorship, fund freezing, or state interference.
Allows access to Bitcoin even in highly regulated environments.

Disadvantages:

Usually more complicated than KYC platforms;
Lower liquidity and fewer transactions;
P2P buying often comes with a premium;
Greater counterparty risk in exchanges between private individuals (scams, fraud, assault, etc.).

The 4 Types of Bitcoin Users

Based on the criteria we've discussed, we can identify several typical Bitcoin user profiles. These profiles are flexible and can evolve, but they help clarify the strategies suited for each type and guide you in choosing the right tools.

1. The Hodler

The hodler is an investor who buys Bitcoin with a long-term vision and doesn't plan on touching it for several years. Unlike the Stacker, who buys regularly over time, the Hodler typically makes larger, occasional purchases and then simply holds onto their Bitcoin.

Preferred strategy:

Purchase via a KYC or non-KYC platform depending on their privacy needs;
Storage on a Hardware Wallet or using a multisignature solution for extra security;
rare transactions, minimizing interaction with the Bitcoin ecosystem.

The Hodler sees Bitcoin as a store of value, similar to an investor in physical gold. Their main challenge is securely storing their Bitcoin and ensuring they can pass it on to heirs.

2. The stacker

The Stacker is someone who takes a more gradual, consistent approach. They buy Bitcoin regularly, often through a Dollar-Cost Averaging (DCA) strategy. Their goal is to spread out their purchase price over time and reduce the impact of Bitcoin's volatility.

Preferred strategy:

Use automated purchasing through a KYC platform offering DCA;
Regular transfer of funds to a Hardware Wallet for secure storage;
Moderately sensitive to privacy but prioritizes security and ease of accumulation.

The Stacker doesn't focus on short-term speculation or using their Bitcoin frequently. They view Bitcoin as a long-term savings plan, spanning years or even decades. What sets the Stacker apart from the Hodler is their method of acquisition and transaction volume.

3. The active user

The Active User views Bitcoin mainly as a means of exchange rather than just a store of value. They use it regularly for transactions, payments, or as part of a circular economy.

Preferred strategy:

Use a hot wallet on mobile or desktop for daily transactions;
Utilize the Lightning Network for fast and cheap payments;
Maintain a hybrid approach, using a mobile wallet for spending and a hardware wallet for savings;
Privacy sensitivity varies depending on specific needs.

The Active User might be an entrepreneur, freelancer, or someone living in a Bitcoin-friendly environment where using Bitcoin for everyday payments is common. Their main priority is convenience, aiming to strike a balance between security and accessibility.

4. The paranoid

The Paranoid User is an advanced individual who prioritizes privacy and security. They see Bitcoin as a tool for personal freedom and want to minimize exposure to third-party trust and regulation.

Preferred strategy:

Acquire Bitcoin only through non-KYC channels;
Use wallets enhanced with BIP39 passphrases and multisignature setups;
Store Bitcoin across multiple physical devices in different locations;
Avoid centralized services that could compromise privacy.

This profile is particularly suited to people living in environments hostile to Bitcoin, where possession or use of BTC could result in sanctions. It's a more complex approach, requiring a degree of technical expertise and strict discipline to avoid any loss of access to funds.

Which profile is right for you?

Keep in mind that these profiles aren't mutually exclusive. You might identify with more than one, and your approach could evolve over time. For example, you might start out as a stacker and gradually shift into a more active user or even adopt a paranoid security mindset. You could be a long-term hodler while still using Bitcoin in your day-to-day life.

What matters most is aligning your strategy with your current situation and long-term vision.

In the next chapters, we'll explore each of these profiles in detail so you can figure out which one fits you best; and apply the approach that makes the most sense for your goals. We'll also cover the tools that match each profile, giving you the foundation to build your own acquisition and security plan.

Quiz

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What is the main purpose of defining your user profile?