“Oh no, not someone else talking about Bitcoin!” That is what you’re probably thinking right now.
I know Bitcoin and other cryptocurrencies have been a hot topic of late. And there are more than enough “wanna-be” experts out there.
When looking through SurvivalBlog.com, I realized that it’s been quite a while since there was a dedicated piece on cryptocurrencies. Since the technology (and the economy) is changing so rapidly, I wanted to do a primer on Bitcoin for Preppers. I’ll include Use Cases and some How-To.
In this article, I’m going to make the case for Bitcoin, not as an investment (which I believe it is), nor a great store of value (which I also believe it is becoming), but instead, I’m going to simply state that having some Bitcoin in offline storage should be an essential part of any prepper’s toolkit.
Recently, a former JPMorgan cross-asset strategist said about Bitcoin,
“If..one’s risk scenario is of the Thunderdome variant characterized by the simultaneous collapse of a currency and its payments system, then there is no better hedge than private, digital money.”
If JPMorgan sees it as a prepping tool, maybe you should as well.
And I don’t claim to be a Bitcoin expert. I’m not a developer or a software programmer, but over the past four years, I’ve dug pretty deep down the crypto rabbit hole and I’ve become convinced that at least a little Bitcoin should be part of your preparations for an unpredictable future.
Let me tell you why…
What a Bitcoin Is
Before we jump down the Bitcoin rabbit hole, let’s first talk about what Bitcoin is. If you’re familiar with Bitcoin, you can skip this part. If you’re unfamiliar, I’m going to give a hyper-abbreviated intro to Bitcoin.
Simply put, Bitcoin is the first digital bearer instrument with provable scarcity.
Before Bitcoin, if you had a file on a flash drive, there was nothing stopping you or anyone else from making a virtually infinite number of copies of that file. The technical terms for this problem are “digital scarcity” or “the double-spend problem”. For that reason, we could never make true “digital money”. The only way society found to resolve this before cryptocurrencies was to have a trusted third party (a bank or credit card company) sit in the middle and control each transaction from a centralized database.
Bitcoin solves this problem in a super creative way. The two core principles are: 1. Any person at any time can get a copy of the ledger and help verify transactions. 2. Miners contribute computing power to the network to keep it secure and get paid in Bitcoin (via new coins issued and transaction fees).
Every individual who runs a copy of a “full node” (a computer with a copy of the Bitcoin software running) can validate transactions and keeps a copy of this ledger. In that way, Bitcoin is fully transparent.
Miners contribute computing power to the network to help keep it secure. They do this because they earn Bitcoin (make money) by doing this.
In other words, Bitcoin is a decentralized (no single controlling entity) bearer instrument (allowing you to take physical possession of it).
Oh, and one more thing: There will only be 21 million Bitcoin ever created. So unlike the US Dollar, it’s deflationary.
In fact, the deflationary aspects of Bitcoin are part of its origin story. In the very first block ever mined, the founder put in this message: The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
Bitcoin was founded precisely because governments were printing so much money.
For now, let’s hold off on digging any deeper into the technical aspects of Bitcoin (You can visit Hope.com if you’d like to learn more), but let’s instead move onto the Use Cases.
Use Cases For Preppers
For preppers, this is potentially the most valuable aspect of Bitcoin. Bitcoin allows you to take custody of a digital asset. That might not seem like much, but it’s a huge innovation.
When you have a bank account or use some of the popular payment apps (like PayPal or Square Cash), you don’t have possession of your money. It’s the same with the stock in your 401k or retirement accounts.
All you have are IOUs for the assets that you “own”. If the app closes your account, the bank goes under, or you get blacklisted, you’ll never actually get access to that money.
Bitcoin is the first digital asset that you can truly take custody of. You buy it on an exchange then transfer it to your own wallet. It’s not an IOU. It’s a bearer instrument. As long as the network stays active, you’ll maintain ownership of that Bitcoin.
In that way, Bitcoin is much more like gold or cash than a bank account.
Here’s another benefit: No one needs to know you’re even carrying Bitcoin. In an SHTF scenario, you can memorize your seed phrase (a fancy password) and you can keep the Bitcoin with you wherever you go. Since it’s just information, you can literally keep it in your head.
Don’t get me wrong, I think gold certainly has a place. But good luck trying to get past a checkpoint (domestic or otherwise) with $40,000 of gold on your person.
What are you going to do? Hide it in a body cavity? Yuck.
With Bitcoin, you can memorize a single passphrase and you can walk through virtually any checkpoint or customs station without broadcasting or advertising that you have any crypto. And you could do that with millions or billions of dollars of Bitcoin. Good luck trying to do that with gold or cash.
Thus, if you think you’ll end up in a hostile bug-out situation but will have internet access where you end up, Bitcoin can make a ton of sense. You could escape with nothing (literally) except your body and your bitcoin – and no one will ever know.
Likewise, Bitcoin held offline in a secure wallet is virtually impossible to confiscate. Unless you give up your seed phrase, no one will be able to take it from you.
In that way, Bitcoin is very much unlike gold or cash. Once someone finds your stash of cash, all they have to do is take it.
With Bitcoin, even if they find your wallet, they will not be able to open it without you giving them the passphrase. It’s protected by math.
Of course, you’ll still need to protect yourself and keep yourself out of duress where you might be forced or “persuaded” to give away your passphrase – which is why the second amendment continues to matter.
But compared to traditional stores of value, Bitcoin is much more difficult to confiscate.
Holding Value Across Time
We already discussed the power of being able to custody and move Bitcoin in physical space. But Bitcoin can also be a valuable asset to hold wealth across time.
There will only ever be 21 million bitcoin that exist. So as long as demand keeps growing (it is) prices will continue to be pushed higher. Bitcoin is naturally deflationary.
But unlike land (which is currently taxed), food (which can go bad), dollars (which are losing their value hand over fist), Bitcoin can hold value into the future. It doesn’t rot or corrode. And it doesn’t require constant upkeep on the individual level.
Of course, you are counting on the network to remain strong. That is a risk (and we’ll talk more about it later), but so long as the network remains secure, your Bitcoin will continue to be yours well into the future.
Bitcoin for Transactions
Bitcoin can also be used for transactions. For large transactions (buying a house or a car), you conduct transactions on the Bitcoin blockchain itself. But these transactions can get expensive ($5-$50) for small, everyday purchases.
For these small purchases, you can use the Lightning Network. Think of this as a decentralized, uncensorable Cash or Venmo app. You can transact with virtually anyone else for fractions of a penny in fees – and you can do it from any device anywhere in the world.
And back to the custody point above, you’re not sending “IOUs” around the network. You’re sending real assets that you custody.
If the grid goes down, it makes sense to have barter assets (bullion, bullets, and beans), but there are many possible scenarios where the currency collapses (or you are banned from using it), but the grid stays up. In those situations, having access to a Bitcoin allocation makes a ton of sense.
Bitcoin is already becoming a store of value in places like El Salvador and Venezuela. It’s even seeing massive growth in places where it’s banned or may become banned (like Pakistan and India).
Here’s the point: There are many possible scenarios in the future where cryptocurrencies in general and Bitcoin in particular continue to play a role. As the US Dollar and other national currencies collapse, having a digital, bearer instrument with which to trade and store value is a powerful tool.
So if I’ve got you thinking about actually buying some Bitcoin and holding it in offline storage, let me give you a quick rundown on what you need to do.
By the way, when you take personal custody of Bitcoin in cold storage, it’s all on you. There is no support line to help you get access if you lose your password or other info. There’s no “oops” button. But since we both believe in personal responsibility, I know you can take the precautions you need to do this successfully.
Step 1: Acquire Bitcoin
First, you need to get some Bitcoin. The easiest way is to create an account on one of the main Bitcoin exchanges (Coinbase, Gemini, Binance, and Kraken are some of the most common – and generally considered the most secure).
From there you can use an ACH transfer or a credit/debit card to buy Bitcoin.
This is the easiest way to acquire Bitcoin, but most exchanges in the US are now required to fill out Know Your Customer (KYC) information similar to a bank. If that doesn’t bother you, I highly recommend an exchange.
If you’d prefer this transaction to be anonymous, you can use a company like Azte.co to buy a Bitcoin voucher (basically a gift card) in cash and then deposit that coin into a new wallet. I’ve not used this service and they do charge a premium, but it looks like a good option if you’re looking to legally avoid KYC requests.
You can also use a service like Bisq to buy Bitcoin peer-to-peer – directly from another user. Again, use it at your own risk.
Finally, you can have people pay you for your products or services in Bitcoin. This is perhaps the simplest way to avoid KYC.
Step 2: Set Up Your Wallet
Now that you have your Bitcoin purchased, you need to prepare your wallet to receive the Bitcoin.
When it comes to long-term coin storage, you have a lot of options. Here are the most common:
1. On the Exchange – Once you buy the Bitcoin, you can leave it on the exchange to just sit there. The good news is that the exchange is now responsible for its custody. The bad news is you’re trusting them. In a situation when you really need it, you may not be able to get it. If you’re treating Bitcoin purely as an investment, this can work. If you’re preparing for an SHTF scenario, this is the worst option.
2. Get a Custodian – Most of the common exchanges also offer custodial services. This is basically a more secure version of leaving it on the exchange. Custody services are what most large institutions use when they buy Bitcoin. It’s super handy if you’re interested in some of the strongest protection from outside attacks. But you’re still not in real possession of your Bitcoin.
3. Online “hot” wallet – If you’re actively buying and selling with Bitcoin, you’re likely to keep some of it in an online “hot” wallet. This is a wallet that you have true custody of, but it’s connected to the internet and potentially vulnerable to some outside attacks. Normally you only want to keep a small amount of Bitcoin in a “hot” wallet at any given time, as it can dramatically increase your risk.
4. Offline “cold storage” wallet – The most secure type of Bitcoin storage is an offline, cold storage wallet. There are a variety of offline hardware wallets. The Trezor, Coldcard, Ledger wallets are most common. Feel free to do a bit of research to find the wallet that best suits your needs. But the important point is that it’s not connected to the internet and keeps your Bitcoin safe. And that you take full possession of the coins – especially if you’re following the true prepper mindset.
If you’re serious about storing at least some bitcoin offline, I recommend starting with this tutorial. It will give you a good rundown of options, costs, and risks.
Step 3: Transfer Your Bitcoin to Your Wallet
Finally, you need to get your Bitcoin off your exchange (or voucher) and put it in your wallet. This is as simple as finding the public key for your wallet and copying that into the “send to” address on the exchange.
But be extra careful at this step. Be sure you’re using the right cryptocurrency (BTC or Bitcoin, not any others or Bitcoin knockoffs). You also want to ensure that you get the full address, not just a section of it.
Take a bit of time here because if you send the Bitcoin to the wrong address, it could be gone forever – so it’s worth it to take a few extra seconds to do it right.
Some wallets and exchanges allow you to scan a QR code for this as well. That can help you avoid any copy/paste mistakes.
Finally, anytime you transfer to a wallet, you do pay a small fee. So you’re likely going to want to transfer at a minimum a couple of hundred dollars worth of BTC at a time. Ideally, you can just do this once unless you’re regularly adding to your Bitcoin pile.
Now let me take a moment and address some common objections – and reiterate that you may want to include some offline storage of Bitcoin as at least a fraction of your reserves.
Objection: You can’t use it if the power and electrical grid go offline.
This is true. If we lost the electrical grid across the globe, Bitcoin (and all cryptocurrencies) would be useless.
Likewise, if there’s no way for you to get any internet access at all, then it also becomes useless.
So no, Bitcoin is not the perfect asset to store in a “grid down” situation.
But you already read this blog, so you have a nice store of beans, bullion, bullets, and band-aids, right? I’m suggesting adding Bitcoin as the fifth “B” in that list, not replacing anything with it. Bitcoin is a preparation tool for a more techno-dystopian future.
Objection: Governments may ban it.
You bet. But they may ban gold bullion (which they did with Executive Order 6102), bullets, guns, gasoline, and lots of other things. Do you still keep those?
Do you think gold will become more or less valuable if it’s banned? Do you think Bitcoin will become more or less valuable when it’s banned? I don’t know. But to borrow from Nassim Taleb, what we’re looking for is optionality. A small allocation of Bitcoin gives us options that we don’t have with cash, gold, or other forms of currency.
I’m not giving any legal advice, but it’s about looking at all the options and weighing the costs and benefits.
(For any government officials that follow this blog, my advice is: you should always DO WITHOUT QUESTION EVERYTHING EXACTLY AS THE GOVERNMENT TELLS YOU). 😉
Objection: It might get hacked.
Yes, and we might all die in a nuclear holocaust. It’s a possibility. But Bitcoin has been and continues to be *the* most secure computer network in the world. It’s far more likely your bank account, the Federal government, this blog, or virtually any other network would get hacked before Bitcoin.
Bitcoin is currently backed by math. Until we get better math, it’s going to remain virtually indestructible. Plus it has a loyal following of devotees who are willing to protect it and are financially incentivized to do so.
Objection: “X” might cause Bitcoin to fail. (Fill in X with your own reason)
That is probably true. But every day that the network operates, it gets stronger. You don’t have to have an extremely high conviction in Bitcoin to put a small allocation of your capital into it.
Worst case scenario, Bitcoin goes to zero and you lose it all.
Best case scenario, you never need it, the price goes up, and you make a lot of money off that investment.
And there’s a whole host of other possibilities in between those two options.
Will you invest?
So if you’ve been sitting on the fence, it’s at least worth the question: “Does Bitcoin fit into my economic, political, and practical preparations for the future?”
If you have not at least asked that question, then I don’t think you can say you’re fully prepared.
And should you choose to add a meaningful amount of Bitcoin to your portfolio, you might get more than just prepared…you might get fairly wealthy in the process.
To Your Success!
Disclaimer: This is not financial advice. Do your own research before investing in anything, especially cryptocurrencies. The author currently holds many investments including Bitcoin.