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Bitcoin vs Looting and Counterfeiting

Photo by CMDR Shane on Unsplash

“It is easier to seize wealth than to produce it, and as long as the State makes the seizure of wealth a matter of legalized privilege, so long will the squabble for that privilege go on.” – Albert J. Nock

Bitcoin Fixes This. It’s a meme within the Bitcoin world, but how can it really fix these problems of looting and counterfeiting? This post is inspired by Nick Szabo:

The average person would find it difficult to use these tools in November 2019, but it is becoming easier over time.

What can be done

With Bitcoin, we have a ‘game changer’ technology in that it is cheap to validate the entire transaction history of Bitcoin with a full node. Your Bitcoin full node will not accept ‘fake’ bitcoins, dealing with the counterfeit problem very nicely.

Bitcoin hardware wallets are a good technology for individuals to keep their bitcoin private keys separate from online connected computers. If you’re an advanced user, multi signature technology is another game changer. Users can distribute multi sig keys across multiple locations, dramatically raising the cost for someone to steal your bitcoins.

Breaking down the tools required

Putting these into practice, you can look into using the following tools:

  • Bitcoin Core as your underlying consensus. This detects and rejects counterfeit bitcoins.
  • Electrum Server software to act as the server that feeds information to your laptop or PC.
  • Electrum Wallet to provides a Graphical User Interface that you use on your laptop or PC.
  • Hardware wallets, such as the Coldcard (Use code: LIVERA at the CoinKite store for discount), Trezor, Ledger – to store your private keys.

If you wanted to use Bitcoin Core with your own hardware wallet, this was difficult to do up until recently without command line. Even for developers and technical users, setup and configuration can be time consuming.

Putting it into practice

You can easily get your own Electrum Server (electrs) with myNode’s free community edition. myNode also has a premium version offering one click upgrades, and pre made myNode options are available also. Listen to my interview with Taylor Helsper, creator of myNode, here in SLP116. If you’re more advanced or willing to learn command line, look at my co founder Ketan’s Ubuntu nodebox guide here.

High level steps:

  • Once you’ve set up Electrum Server, you can then install Electrum Wallet from electrum.org.
  • For a bitcoin beginner or intermediate, a Coldcard single signature wallet is recommended. This is best done with microSD card air gapping. i.e. Initialise the Coldcard device connected only to power, not a computer.
  • Using a microSD card, transfer the Electrum skeleton wallet over to your ‘hot’ (internet connected) laptop or PC which has Electrum wallet.
  • Electrum wallet can be pointed to your own Electrum Server. Use it to view your balances and transactions.
  • From here, you can use Electrum wallet to initiate and build transactions. Then, transfer the unsigned transaction over to your Coldcard using microSD card, and sign the transaction.
  • Once signed on the Coldcard, you then bring that signed transaction back to Electrum Wallet and broadcast it to the network.
  • Advanced users using multi sig will have to sign with multiple hardware devices. They will experience reduced usability but achieve higher security for this.

Conclusion

Bitcoin is an extremely powerful tool to protect your value from counterfeiters and looters. You should become comfortable with it now to reap the rewards both financially and professionally in the years to come.

Remember, if you need further guidance on this, see our Ministry of Nodes webinars on the Webinars page. We have shorter sessions and are also offering private consulting delivered over a video call.