Plate 10 · Field guide

Bitcoin, explained slowly.

A field guide for readers who want the mechanics before the opinions. Each section stands on its own, so read in any order. Unfamiliar words are defined in the glossary at the end.

This guide teaches and describes. It does not advise. Nothing here is financial, legal, or medical advice, and nothing here tells you what to buy.

Plate 11 · Contents

What bitcoin is

Bitcoin is a digital money network and the asset that moves across it. Transfers are recorded in a shared ledger called a blockchain, a chain of blocks in which each block refers to the one before it.

No single company or government runs that ledger. Independent computers around the world check transfers and add new blocks, using a design called proof of work. Adding a block requires a large amount of computing effort, which makes rewriting past history expensive.

A useful question to ask early is who would have to agree before a rule could change. In bitcoin, changes need broad agreement among participants, and that slowness is part of the design.

Section 02

A supply you can count

The protocol sets a maximum of 21 million bitcoin. That ceiling is part of the software's rules, and it is one of the most discussed features of the network.

New coins are created as rewards for the participants who add blocks. That reward is cut in half at roughly four-year intervals, an event called a halving. New issuance therefore slows over time rather than stopping suddenly.

Bitcoin can be divided into smaller units. The smallest, a satoshi, is one hundred millionth of a bitcoin. You will see the term in wallets and in fee settings.

Section 03

Volatility and time

Bitcoin's price has moved sharply in both directions, and it has fallen by large amounts more than once. Some of those declines lasted years. A person who needed the money during one of those periods could have been forced to sell at a loss.

Time horizon is the first safeguard. Money you will need for rent, tuition, or an emergency does not belong in a volatile asset, however confident you feel about the long term.

Before you commit, answer three questions. When will I need this money? How much of my total savings does it represent? What would I do if its value fell by half and stayed there for a long time?

Section 04

Spreading purchases over time

Dollar-cost averaging, usually shortened to DCA, means buying a fixed amount at regular intervals instead of making one large purchase. The average price you pay depends on how the price moved across the whole period, not on a single entry point.

DCA does not guarantee a profit and does not prevent losses. It reduces the stress of timing, and it works best when each amount is one you could keep investing through a downturn.

Test the idea in the growth calculator by setting a monthly contribution and a conservative assumed rate, then compare the outcome with a single larger sum.

Section 05

Custody: who holds the keys

Holding bitcoin means controlling the private keys that authorize transfers. There are two broad approaches, and each carries its own risks.

Third-party custody. A company holds the keys on your behalf. This is convenient, but you depend on that company's security, solvency, and rules.
Self-custody. You hold the keys yourself, usually through a wallet. You control access, and you also carry full responsibility for backups and security.

A seed phrase is an ordered list of words from which a wallet's keys can be rebuilt. Anyone who sees it can take the funds, and if you lose it, no support team can restore access. Write it on paper, store it somewhere safe, and never type it into a website, a message, or a form.

Be suspicious of anyone who contacts you first with an offer of help, a giveaway, or a quick fix. Legitimate services do not ask for your seed phrase, private keys, or passwords.

Section 06

Before you commit

Write your time horizon down in one sentence.
Confirm the money is money you can leave alone for that whole horizon.
Decide how you will hold it, and rehearse the process with a small amount first.
Keep your backup in two safe places, and check that you can read it.
Set a date to review the decision, not a price to react to.

This checklist teaches a process. It is not a recommendation to buy anything.

Section 07

Glossary

Block: A batch of transfers added to the ledger together, linked to the block before it.
Blockchain: The chain of blocks that forms bitcoin's shared ledger.
Custody: Who controls the keys that authorize a transfer.
Halving: The scheduled cut in newly issued bitcoin per block, roughly every four years.
Private key: A secret value that proves control of funds and authorizes spending. Never share it.
Proof of work: The design that makes adding blocks costly, so the ledger is hard to rewrite.
Satoshi: The smallest unit of bitcoin, one hundred millionth of a bitcoin.
Seed phrase: An ordered list of words from which a wallet's keys can be rebuilt. Treat it as the keys themselves.
Self-custody: Holding your own keys rather than relying on a third party to hold them.
Volatility: How widely and how quickly a price moves over time.
Wallet: Software or a device that stores keys and creates transfers. The ledger holds the coins, not the wallet.