💸 Money Guide: Bitcoin

Understanding Bitcoin: A Beginner-Friendly Guide to Digital Currency, Inflation Protection, and Portfolio Diversification

Author

Brandon Smith
May 04, 2025

tl;dr: Bitcoin is the world’s most well-known cryptocurrency—and for good reason. With a fixed supply, decentralized structure, and growing adoption, it’s become more than just a tech experiment. This guide walks you through what Bitcoin is, why it matters, how to buy it safely, and whether it fits your long-term investment goals.

Curious what you could’ve made with Bitcoin? Try our calculator below.👇

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What to Know About Bitcoin

  • What is it? A decentralized digital currency that allows peer-to-peer transactions without banks or governments.

  • Why care? Bitcoin is scarce (only 21 million coins will ever exist), secure (via blockchain), and global.

  • Investment potential: Seen by some as a hedge against inflation and a bet on a decentralized future—but it’s volatile.

  • Start small: Use secure storage and only invest what you can afford to lose.

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What Is Bitcoin?

Bitcoin is a decentralized digital currency, launched in 2009 by an anonymous developer known as Satoshi Nakamoto. It allows people to send money across borders instantly and without traditional intermediaries like banks or payment processors.

Instead of relying on a central authority, Bitcoin transactions are verified by a network of computers using a public ledger known as the blockchain. This system makes Bitcoin transparent, resistant to fraud, and nearly impossible to counterfeit.

Key Features:

  • Scarcity: Only 21 million BTC will ever be mined

  • Decentralized: No central bank or government control

  • Secure: Protected by cryptography and a vast global network

  • Divisible: You can own a fraction of a Bitcoin (as little as $1 worth)

Why Do People Invest in Bitcoin?

1. Store of Value (Digital Gold)

Bitcoin is often called “digital gold” because of its limited supply and resistance to inflation. As central banks print money, some investors view BTC as a safer long-term bet.

2. Speculative Upside

Bitcoin’s price has seen exponential growth since 2009. Early adopters earned massive returns, but volatility remains high.

3. Financial Sovereignty

Owning Bitcoin means controlling your own money—no bank or government can freeze your funds.

4. Global Transactions

Bitcoin works the same in Charleston as it does in Tokyo. Send funds worldwide without traditional fees or delays.


Ready to buy Bitcoin? Explore the Lowcountry Ledger guide to the Best Crypto Platforms for 2025 to find the top places to buy Bitcoin safely and easily.

Bitcoin Risks You Should Know

  • Extreme Volatility: Bitcoin can swing 10–30% in a day. Don’t invest more than you can afford to lose.

  • Regulatory Uncertainty: Governments are still figuring out how to treat crypto. The IRS treats Bitcoin as property, not currency.

  • Security: If you lose your private keys or recovery phrase, your Bitcoin is gone forever.

  • Scams & Fraud: Crypto is full of fake giveaways, phishing sites, and shady coins. Stick to reputable platforms.

How Bitcoin Mining Works (Simplified)

Mining is how new Bitcoin is created and transactions are validated. Miners compete to solve cryptographic puzzles. The first to solve it adds a new block of transactions and earns a reward.

Why it matters:

  • Secures the network

  • Controls inflation by reducing issuance

  • Halves every 4 years (next halving: 2028)

Bitcoin vs. Other Cryptocurrencies

Crypto

Main Purpose

Notable Traits

Bitcoin

Store of value, digital cash

Most secure and widely adopted

Ethereum

Smart contracts, dApps

Enables NFTs and decentralized apps

Solana

High-speed blockchain

Fast, cheap, but less decentralized

Litecoin

Faster, lighter Bitcoin alternative

Lower fees, quicker settlement

How to Invest in Bitcoin Safely

Step 1: Choose a Platform

  • Beginner-friendly: Coinbase, Cash App, Strike

  • Advanced trading: Kraken, Binance, Gemini

  • DIY custody: Swan Bitcoin, River

Step 2: Create and Verify Your Account

  • Link your bank account or debit card

  • Complete identity verification (KYC)

Step 3: Make a Purchase

  • You can buy fractional Bitcoin, e.g. $10 worth

  • Watch for fees! Coinbase and Cash App charge a premium

How to Store Bitcoin

1. Hot Wallet (Software):

  • Easy access, internet-connected

  • Examples: Muun, BlueWallet, Exodus

  • Good for small balances

2. Cold Wallet (Hardware):

  • Offline storage = safest

  • Examples: Ledger, Trezor

  • Write down your seed phrase and store it safely (e.g. steel plate or fireproof safe)

3. Custodial Wallets:

  • Held by exchanges like Coinbase or Cash App

  • Risk: You don’t hold the private keys

📆 Long-Term Strategy Tip: Buy Bitcoin weekly or monthly using recurring buys, then withdraw to your wallet. This reduces emotional decision-making and exchange risk.

Is Bitcoin a Good Investment for You?

Bitcoin is a high-risk, high-reward asset. It’s not for everyone—but if you believe in:

  • Long-term inflation protection

  • A more open global financial system

  • The value of self-custody and decentralization

…then Bitcoin might make sense as a small part of your portfolio.

📚 Reminder: Nothing in this guide is financial advice. Do your own research and talk to a professional.

💡 Lowcountry Ledger’s Take: Bitcoin isn’t a get-rich-quick asset—it’s a hedge against inflation and systemic risk, more akin to digital gold than cash. For long-term investors, it may make sense to allocate 1–5% of your portfolio, balancing risk with diversification. While it doesn’t generate cash flow like stocks or real estate, Bitcoin’s scarcity and decentralization make it increasingly relevant in today’s financial landscape.

Bitcoin Glossary

  • Wallet: Where your Bitcoin is stored (software or hardware)

  • Seed Phrase: A 12- or 24-word backup that restores your wallet

  • HODL: Slang for “hold on for dear life” — long-term holding

  • FUD: Fear, uncertainty, doubt (usually from skeptics)

  • Satoshi: The smallest unit of Bitcoin (1 BTC = 100 million sats)

  • Halving: Every ~4 years, mining rewards get cut in half

  • Confirmation: Number of blocks added after your transaction (more = safer)

Bitcoin Frequently Asked Questions (FAQ)

Feature

Bitcoin

Traditional Money

Controlled by

No one (decentralized)

Governments and central banks

Supply

Fixed (21 million max)

Can be printed/inflated

Transactions

Pseudonymous, borderless

Linked to identity, restricted

Inflation

Predictable (declining)

Unpredictable/inflationary

Question: What is Bitcoin?
Answer: Bitcoin is a digital currency that allows people to send and receive money over the internet without relying on banks or governments.

Question: How does Bitcoin work?
Answer: Bitcoin uses a decentralized network of computers (blockchain) to verify and record transactions securely and publicly.

Question: Why was Bitcoin created?
Answer: Bitcoin was created as an alternative to traditional financial systems, aiming to give people more control over their money and protect against inflation.

Question: What is the blockchain?
Answer: The blockchain is a public, digital ledger where all bitcoin transactions are recorded and verified by a distributed network.

Question: How do I buy Bitcoin?
Answer: You can buy bitcoin through cryptocurrency exchanges, mobile apps like Cash App, Bitcoin ATMs, or peer-to-peer platforms.

Question: How do I store Bitcoin?
Answer: Bitcoin is stored in digital wallets, which can be hot (online) or cold (offline, like hardware wallets).

Question: Is Bitcoin safe?
Answer: The Bitcoin network is secure, but users must protect their wallets and backup phrases to avoid theft or loss.

Question: Can I lose money with Bitcoin?
Answer: Yes, Bitcoin’s price is volatile and can fluctuate rapidly, leading to potential gains or losses.

Question: How is Bitcoin different from regular money?
Answer: Bitcoin is decentralized, has a fixed supply, allows borderless payments, and isn’t controlled by any government.

Question: Is Bitcoin legal?
Answer: In most countries, Bitcoin is legal, but regulations vary; always check local laws.

Question: What can I do with Bitcoin?
Answer: You can hold it as an investment, send it globally, use it for purchases, or earn interest on it.

Question: Is Bitcoin anonymous?
Answer: Bitcoin is pseudonymous—wallet addresses are public, but not directly tied to names unless linked.

Question: How many bitcoins exist?
Answer: There will only ever be 21 million bitcoins; over 19 million have already been mined.

Question: What is mining?
Answer: Mining is the process of verifying transactions and adding them to the blockchain, rewarding miners with new bitcoin.

Question: What is the smallest unit of Bitcoin?
Answer: The smallest unit is a satoshi; 1 bitcoin = 100,000,000 satoshis.

Question: Do I need to buy a full bitcoin?
Answer: No, you can buy a fraction of a bitcoin—even as little as $1 worth.

Question: What is a seed phrase or recovery phrase?
Answer: It’s a 12- or 24-word phrase used to recover your wallet if lost; keep it private and safe.

Question: Can Bitcoin be hacked?
Answer: The Bitcoin network itself has never been hacked, but users and platforms can be compromised if not secured properly.

Question: What are the main risks of using Bitcoin?
Answer: Risks include price volatility, scams, loss of access, regulatory changes, and lack of customer support.

Question: What are the benefits of Bitcoin?
Answer: Benefits include decentralization, inflation resistance, fast global payments, low fees, and financial independence.

Question: How much will 1 Bitcoin be worth in 2030?
Answer: No one can predict exact prices, but some analysts speculate Bitcoin could be worth between $100,000 and $1 million depending on adoption and macroeconomic factors.

Question: Who owns 90% of Bitcoin?
Answer: No single entity owns 90% of Bitcoin; however, large holders (“whales”) including early adopters, institutions, and exchanges control a significant portion.

Question: How much would $100 dollars in Bitcoin be worth today?
Answer: It depends on when the $100 was invested; for example, $100 invested in Bitcoin in 2013 could be worth thousands today.

Question: How much will $1 Bitcoin be worth in 2025?
Answer: There is no definitive answer, but some believe it could be worth $100,000 or more, while others expect lower or similar prices due to volatility and regulatory factors.

Question: How do I learn more about Bitcoin?
Answer: Visit educational sites like Bitcoin.org, Swan Bitcoin, and River.com, listen to podcasts like "What Bitcoin Did," and read books like The Bitcoin Standard.

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This newsletter is intended for informational purposes only and should not be interpreted as investment, legal, or tax advice. The views and opinions expressed are those of the author alone and do not necessarily represent the views of any business, employer, or affiliated entity. Investing carries inherent risks, including the possible loss of principal. Past performance is not indicative of future results. Readers are encouraged to conduct their own research and seek advice from qualified professionals before making any investment, legal, or financial decisions. While the information provided is believed to be accurate, no guarantee is made as to its completeness or reliability. The author and publisher disclaim any liability for decisions made or actions taken based on the content of this newsletter. This publication does not constitute an offer to buy or sell any security. By subscribing to or continuing to read this newsletter, you acknowledge and agree to these terms and conditions.