"I've been thinking about what's the best strategy for you if you're going to be saving in Bitcoin little by little and I think you need to download a new wallet."

Back in Christmas I gave my nephew his first sats and set him up with a Mutiny wallet to receive them. Today, I had him migrate from Mutiny to Phoenix, with all the troubles associated, so that he can buy extra liquidity, at least for a year.

The problem

Last December I sent my nephew his first 100,000 sats. He setup a Mutiny wallet and after the channel setup fee, he ended up with around 95,000 sats.

He is curious about Bitcoin and yesterday he asked me if I could help him turn into Bitcoin some cash that his grandparents had sent him. The idea seemed simple, my sister gives me the cash and I send him the equivalent amount in sats.

But...he only had 64,000 sats of inbound liquidity. I tried sending him 60,000 sats with no luck.

He had an inbound liquidity problem. It's already hard to find people who will pay you in Bitcoin for mowing the lawn. Let's not make it even more difficult with Lightning channel management.

So I decided to move him over to Phoenix so that he could buy liquidity.

The move

The move was cumbersome and I hope he doesn't need to do something similar again:

1. Close the Lightning channel on Mutiny and pay the closing fees
   • The 95,000 sats now sit on-chain and can't be sent to Phoenix
2. Download Phoenix
3. Send me a Lightning invoice from Phoenix
4. I send him a lump sum of sats from my Mutiny wallet to his new Phoenix wallet
   • The money from the grandparents
   • 95,000 sats to match what he has on-chain at his Mutiny wallet
   • Some extra to cover for the Lightning channel setup fee and to buy extra inbound liquidity
5. He then pays approximately around 15,000 sats to add 1 million sats of inbound liquidity
6. He sends me the 95,000 sats from his Mutiny wallet to an on-chain address on my Mutiny wallet
   • I'm not thrilled, but this is the price of orange pilling a relative

The silver lining

The silver lining is that my nephew now wants to learn about on-chain and Lightning, how they work and how they're different.

I see a Bitcoiner in the making 😁

In summary:

Mutiny is a good wallet for established Bitcoiners and Nostr users. For a new Bitcoiner getting started, Phoenix is the way to go.

Notable notes

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Recommendations

Karnage

Karnage is the #1 Nostr UI designer. If you're using Nostr today, you're using his (or her) designs.

You can follow Karnage here.

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— Alejandro

This newsletter is for educational purposes. It does not represent financial advice. Do your own research before buying Bitcoin.

"Ordinals are fiat. And inscriptions aren’t rare"

— Southern Hands

Spending an outrageous amount of Bitcoin to own an specific satoshi is stupid and initially I just thought that if others want to do it, that's on them.

But with ordinals and inscriptions clogging the network and driving Bitcoin transaction fees through the roof, I came across this fantastic read by Guy Swann of a Medium post by Southern Hands titled Ordinals are Fiat. And Inscriptions aren’t Rare and I finally made my mind about them.

https://www.fountain.fm/episode/RRvB5Te4a1P8eXOO3LY6

Inscriptions and Ordinals are absolute crap. A fool's errand.

Ordinals

Ordinal theory numbers satoshi in a certain order as they get mined. Block #0 created satoshis 1 through 5,000,000,000; block #1 created satoshis 5,000,000,001 through 10,000,000,000 and so on.

You then track satoshis through UTXOs considering a First-In-First-Out logic.

When the UTXO becomes an input to a transaction, you count satoshis starting with Input 1, then Input 2 and transfer them to the outputs starting with Output 1, then Output 2, and so on.

Ordinals count from bottom to top. But what if I want to count from top to bottom?

I hereby create SuperOrdinals. The SuperOrdinals theory goes as follows:

• The last satoshi of the last input becomes the first satoshi of the first output.
• We count satoshis using Last-In-First-Out.
• Now an specific satoshi used in an input will land in a different output compared to regular Ordinal theory.

"Ordinals are a method of, first, pretending that it makes sense for satoshis to have serial numbers, and second, stipulating a set of rules to put them in order so that we can count and assign those serial numbers. In other words, we number the satoshis by fiat."

If you're thinking that this is bogus, it's because it is. Ordinals are arbitrary and subjective. Some people have agreed to follow certain logic and apply it to the Bitcoin blockchain and that's it.

Inscriptions

Inscriptions store JPGs in one of the fields of a transaction and are associated with an specific ordinal (numbered satoshi) of that transaction. Storing a JPG takes a lot of bytes and that is why fees are going up.

If you want to sell the inscription to somebody else, you just need to create a new transaction that is structured following the Ordinal theory so that the specific ordinal lands in an UTXO that is controlled by the buyer.

The inscription remains in the original transaction where it was stored. No one can change that.

The buyer gains no control of the inscription because the buyer has no control over the original transaction. The buyer is mentally assigning herself ownership of the inscription because she used the Ordinal theory to count satoshis.

This is not different than Johnny selling me the the star Polaris. I know have a piece of paper that says that I'm the rightful owner of the star Polaris.

Anyone can see every inscription that is on the Bitcoin blockchain. As a matter of fact, the owner has as much control over the inscription as any of us: zero.

There is no real ownership of inscriptions. Just an arbitrary logic that some people have decided to follow and pay for.

My verdict

Ordinals and inscriptions are a fool's errand. They are useless and they are harming the Bitcoin network by unnecessarily raising transaction fees.

I do hope that they fade soon.

At the same time, and following Jocko's philosophy, experiencing the impact of inscriptions now is good for Bitcoin.

We, and I definitely include myself here, have been complacent with UTXO management. We could get away with it while fees were low. But now we can't.

High transaction fees and full mempools are here to stay. Today it is inscriptions, tomorrow it will be the new wave of adopters coming in.

As a result, I can't setup a friend anymore with a non-custodial Lightning wallet and then send him 50,000 satoshi as a welcome gift. High fees make this impossible.

Bitcoin needs to continue evolving to support onboarding and adoption by new users even in a high fee environment and inscriptions are giving us the opportunity to build the solution before massive amounts of people come onboard.

Notable notes

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You can follow him here.

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Please leave a comment and checkout comments from other subscribers and readers. I love hearing from the Bitcoin For Families community ❤️ 🙏🏻

See you again next week!
— Alejandro

This newsletter is for educational purposes. It does not represent financial advice. Do your own research before buying Bitcoin.

"We don’t want to buy Bitcoin on our own. We will wait until we’re there with you."

— My parents

Welcome to the latest issue of the Bitcoin For Families newsletter. This issue covers the cold storage setup I’ve planned for my parents.

Setting up cold storage for my parents

My parents have finally decided to buy some bitcoin.

They’ve heard me talking about the demise of the US dollar and the Euro but I doubt that they have decided to buy some bitcoin because of that.

They are saving in bitcoin because they know that I save in bitcoin and they think it is prudent to put a very small share of their net worth into the same asset that I use for my savings. And I’m ok with that.

My parents use laptops and are comfortable with technology at a user level but they are far away from feeling comfortable doing something totally new.

Therefore, I was not surprised when they said that they would like to buy some bitcoin but, that they didn’t want to do it on their own, that they would wait instead until they are with me so that I can hold their hand throughout the process.

They will be visiting the beautiful Pacific Northwest in a few weeks and in preparation for their visit I have ordered everything that they’ll need to securely hold some bitcoin:

• Coldcard Mk 4
• Data only USB cable
• 16 GB microSD card x 2
• microSD reader
• Seed plate
• Plus the Sparrow wallet to be installed in their Macbook Air

I will be using my own seed plate puncher so no need to buy one for them.

The focus is on simplicity:

• They need to feel very comfortable with the requirements of self custody their money, buying more bitcoin and sending it to the Coldcard.
• They need to feel capable of sending bitcoin to another wallet if they need to.

Coldcard setup

• The Coldcard will be setup with a 12 words seed. 24 words is overwhelming and not necessary.
• The 12 words will unlock wallet #1 with a small amount of bitcoin.
• A simple word added as a passphrase will unlock wallet #2 with the rest of their bitcoin.

The passphrase will give them peace of mind. They will know that even if somebody steals their seed plate, they won’t lose their money. This would include:

• If a bad actor inspects or confiscates their seed plate while they are traveling back to Spain.
• If they need to disclose the seed under duress.

They can share this word with my sister and I without sharing the seed and know that if they pass away, only we will be able to access the funds once we get hold of the seed plate.

The Coldcard will have two pins: the real one and a pin setup to brick the device. The brick pin will be taped to the back of the device so that if someone steals the device, they will surely try that pin and render the Coldcard useless. My parents will know to NEVER use the pin taped on the back.

Seed backup

The Coldcard will be backed up to one of the microSD cards. The other one will be used for air gapped transactions.

The Coldcard, seed plate and back up microSD card will be stored together in the same place where they keep their passports.

Buying more Bitcoin

I’ll import the details of both wallets into the Sparrow application and show them how to generate a new bitcoin addresses if they buy more bitcoin and need to transfer it from the exchange and into cold storage.

They will buy KYC bitcoin. Trying to get them to buy non-KYC bitcoin at Robosats is just too much.

Selling Bitcoin

I will show them how to approve an air gapped transaction. I will also write down the steps in a document saved on their computer and record a video while executing the steps.

An air gapped transaction is more complex than receiving bitcoin but hopefully they won’t be selling bitcoin anytime soon so they just need to feel capable of doing it if needed.

Hot wallet

While they are here, I will also install the Phoenix lightning wallet in their phones so that we can settle bills easily back and forth once they’re back in Europe.

I can remotely do this with my sister as well so that the whole family can start sending bitcoin back and forth to each other.

Additional references

BTC Sessions has a fantastic tutorial on the Coldcard. It is a long video but very comprehensive.

And conveniently, Guy Swann just released an episode on Basics of key management (the trick about taping the brick pin to the back of the Coldcard is from this episode 😁).

And that’s it. Please let me know what you think about this setup as well as what you would do different in the comment sections below.

Notable notes

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Within a few hours of joining he had already discovered the power of being able to not only Like but actually reward other people with money (zaps) for notes they publish that you find valuable.

Follow him on [here](Ben Goggin) to get a fresh perspective from somebody who is not a bitcoiner on the first decentralized social network: Nostr.

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Buy Bitcoin with Swan

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See you again next week!
— Alejandro

This newsletter is for educational purposes. It does not represent financial advice. Do your own research before buying Bitcoin.