Beginner guides, explanations, and everything about Bitcoin

Bitcoin is for everyone

Unlike traditional forms of money, bitcoin isn’t backed by physical assets or government policies, instead, it’s backed by a novel system that uses decentralization, incentives, energy, and cryptography.

![](https://www.datocms-assets.com/99305/1734386385-learn-what-is-backing-bitcoin-state-hero.png)

To properly answer “What is backing bitcoin?,” we first need to establish what “backing” means.

In the context of money, “backing” historically meant a currency that was directly linked to a specific quantity of a commodity, like gold. This system, known as the “gold standard,” provided tangible assurances of the currency’s value as it could be exchanged for set quantities of a valuable metal.

In 1971, the US dollar’s gold-backing ended, along with that of all other major currencies. This marked the shift to “fiat” money (from the Latin word for “decree”), where the money’s value relies on government policies and public trust, rather than redeemability for gold. 

Neither gold nor fiat money are backed by redeemability for anything or by any ability to generate cash flows. They are “base-layer” monetary assets, meaning their value relies on their *inherent* properties and the assurances that those properties will persist into the future. People own gold or fiat because they’re useful for storing and/or exchanging value, made possible by their reliable [monetary properties](https://strike.me/learn/what-is-money):
* **Gold:** Gold’s value relies upon its resistance to corrosion, ease of verification, physical weight, measurable purity, and natural scarcity, which are established by the unchanging laws of physics. Additionally, gold’s superior scarcity is safeguarded by the economic barriers of production, since there is no other way to produce gold other than through energy-intensive work.
* **Fiat money:** Fiat’s value relies upon government-mandated acceptance for taxes, debts, and legal transactions, combined with public trust in the issuing authority’s ability to maintain its value. If policies change or the authorities print money excessively, the money’s value could drop and popular trust could be lost (see 1920’s Germany, 1990’s Yugoslavia, 2000’s Zimbabwe, or 2010’s Venezuela).

Base-layer monetary assets are backed by nothing other than themselves and the forces that assure their valuable properties will persist into the future. 

Bitcoin is the same. It’s a base-layer monetary asset, backed by the forces that assure its valuable properties will persist. 

## How is bitcoin backed?
[Bitcoin](https://strike.me/learn/what-is-bitcoin) is a peer-to-peer electronic cash system, letting people acquire, hold, and spend bitcoin in a similar way to traditional forms of money.

Bitcoin has valuable [monetary properties](https://strike.me/learn/what-is-money), including: 
* **Scarcity:** Bitcoin has a fixed supply limit of [21 million bitcoin](https://strike.me/learn/how-many-bitcoin-are-there)
* **Divisibility:** Each bitcoin can be effortlessly subdivided into [100 million satoshis](https://strike.me/learn/what-are-satoshis)
* **Portability:** Bitcoin can be moved digitally and securely transferred from one person to another without a 3rd party intermediary by authorizing the transaction using their unique [private key](https://strike.me/learn/what-are-private-keys-and-public-keys)

These valuable monetary properties are established through a novel system that combines decentralization, incentives, energy, and cryptography. 

Let’s examine.

![](https://www.datocms-assets.com/99305/1704930771-learn-better-ai-agents-state-default.png)

## Decentralization of rule-enforcing nodes
Bitcoin’s monetary properties are defined by its [rules](https://strike.me/learn/how-does-bitcoin-work), which are encoded in Bitcoin’s free and open-source software and run by a global network of independent computers, called “nodes.” The rules determine the operations of the Bitcoin network (uppercase “B”) and the characteristics of the bitcoin asset (lowercase “b”):
* **Network operation rules:** Transaction formatting, node connectivity processes, the block time interval, the mining difficulty adjustment, etc…
* **Asset characteristic rules:** The supply limit, the supply schedule, the divisibility of each bitcoin, the authorization requirements for initiating a transaction, etc…

When you operate a node, it connects to every other node in the network to share valid transaction information. Any transaction that violates the rules is easily detected and automatically rejected by each and every node. Although any node can change their *own* copy of the software, thereby altering *their* version of Bitcoin’s rules, no one can force *other* nodes to adopt those changes. The unchanging nature of the rules is what establishes the reliability of Bitcoin’s monetary properties. 

This network of countless independent nodes forms a globally decentralized system that collectively ensures the integrity of Bitcoin’s rules and operations. Each node operates equally and redundantly, meaning no single node holds unique authority or is critical to the network’s operation. This decentralization ensures that no individual or group can unilaterally change Bitcoin’s rules while safeguarding it from censorship or shutdown.

➔ **Assurance:** The rules that establish Bitcoin’s monetary properties can’t be changed, blocked, or banned by any individual or group.

## Incentives
Although nodes are free to adopt new rules, such as increasing the supply limit, any transactions they process under incompatible rules would conflict with all other nodes’ rules and be instantly rejected. This makes the effort pointless, as their time and resources would be wasted. The same principle applies to [Bitcoin mining:](https://strike.me/learn/what-is-bitcoin-mining) producing a valid block is resource-intensive, and if any transaction within that block violates Bitcoin’s rules, the block will be rejected, the miner’s energy wasted, and no rewards issued.

Nodes and miners are not only incentivized to avoid rule changes, they’re incentivized to strictly enforce established rules. The unchanging nature of Bitcoin’s rules assures its monetary properties are reliable and its operations are stable, giving rise to Bitcoin’s value. Node operators want their own valuable transactions accepted, while miners want to earn valuable bitcoin rewards. This incentive alignment creates a system where:
* **Adopting incompatible rules is costly:** Breaking consensus leads to rejected transactions and wasted resources.
* **Enforcing existing rules is profitable:** Stability in Bitcoin’s rules secures its value, protecting nodes’ transactions and miners’ rewards.

➔ **Assurance:** All network participants are financially incentivized to uphold the existing rules and avoid any rule changes, ensuring the reliability of Bitcoin’s monetary properties and continued operations.

## Energy and computational power (aka “hashpower”)
[Bitcoin mining](https://strike.me/learn/what-is-bitcoin-mining) involves computers performing computational work, called “hashing”, to earn a set reward paid in bitcoin for each block of transactions they add. This is how new bitcoin are issued, new transactions are added, all previous transactions are re-asserted, and the entire network is secured against attack.

The only known way to produce a [valid hash](https://strike.me/learn/what-is-a-hash-function) is by using energy in a computationally-intensive process of trial and error. However, once a valid hash has been found, it’s trivially quick and easy for each node to mathematically verify that it’s correct. This asymmetry between the difficulty of mining and the ease of verification means only miners who have mathematically proven to have expended real world resources can add blocks, while verifying validity remains simple, efficient, and widespread.

A key rule in Bitcoin is the **mining difficulty adjustment**, which ensures blocks are mined roughly every 10 minutes, regardless of the total computational power (hashpower) of all miners. Every 2,016 blocks (roughly 2 weeks), mining difficulty automatically adjusts to maintain this pace, making mining harder if hashpower increases and easier if hashpower decreases. This dynamic scaling keeps block times and the supply schedule consistent, while ensuring mining remains efficient and profitable, incentivizing ongoing participation.

The combination of mining with the difficulty adjustment creates a global, decentralized, scalable, and open competition that ties real-world resources (energy and compute hardware) to the supply and operations of Bitcoin. This system ensures:
* **Predictable supply schedule:** Block intervals and the [supply schedule](https://strike.me/learn/what-is-the-bitcoin-supply-schedule) are maintained by the difficulty adjustment, regardless of the total hashpower deployed by miners. 
* **Transaction processing:** Transactions can’t be blocked by mining bans or miners colluding to produce empty blocks, as mining is an open, global competition where miners can join or relocate freely and empty blocks miss out on [transaction fees](https://strike.me/learn/what-are-bitcoin-fees).
* **Miner incentives:** The difficulty adjustment ensures global mining remains profitable for the most efficient miners by dynamically scaling with network hashpower, keeping revenues above expenses and sustaining or increasing miner participation.
* **Transaction permanence:** Reversing a transaction requires re-mining all subsequent blocks and exceeding the network’s total computational power.

➔ **Assurance:** Bitcoin’s monetary properties and operations are secured by energy, as new bitcoin can only be issued through energy-intensive work, while attacks on its supply consistency and transaction security are deterred by a globally distributed network of incentivized energy resources.

## Cryptography and mathematical principles
Bitcoin relies on cryptographic hash functions and the use of immense numerical spaces to create computational barriers against attacks. [Hash functions](https://strike.me/learn/what-is-a-hash-function), like the industry-standard SHA-256 used in Bitcoin, generate unique outputs from input data. Even the slightest change to the input completely alters the output, and there’s no known way to reverse the process. 

Alongside hash functions, Bitcoin’s use of extremely large numbers ensures the security of private keys, transaction authorization, and mining rewards.
* **Private keys:** Bitcoin [private keys](https://strike.me/learn/what-are-private-keys-and-public-keys/) come from a numerical space with approximately 115 quattuorvigintillion possible combinations (a number with 78 digits). This immense scale ensures it’s computationally impossible for anyone to guess your private key, even with all the computing power on earth.
* **Transaction authorization:** To authorize a transaction, your private key generates a unique [digital signature](https://strike.me/learn/what-is-a-digital-signature/). The strong reliability of hash functions means there is no known method to reverse engineer your private key from the signature or the hash output of a transaction.
* **Bitcoin mining:** To add a block and be rewarded, miners must produce a [valid hash](https://strike.me/learn/what-is-a-hash-function/) that meets the network’s required output and difficulty. There is no known way to produce valid hashes other than completing the energy-intensive proof-of-work. 

➔ **Assurance:** The security of bitcoin ownership and mining operations is assured by industry-standard cryptography and mathematical principles.

## Summary
Bitcoin is a base-layer monetary asset, designed to store and exchange value–a fundamental human need.

Its value relies on its robust monetary properties, which are assured through a novel combination of decentralization, financial incentives, energy resources, and cryptography. 

This assurance isn’t abstract, it’s tangible. Real nodes enforce Bitcoin’s rules globally, real miners use computational resources and energy to secure the network, and industry-standard cryptography underpins its security – the same cryptography that secures global financial and communications networks. The entire system is self-sustaining as *all* participants are aligned through transparent financial incentives to promote Bitcoin’s continuation and defend against attacks.

Dismissing Bitcoin as “unbacked” because it lacks physical presence or government oversight is to miss its revolutionary innovation. Bitcoin is the first successful peer-to-peer electronic cash system – something entirely new – and its innovative design to link real-world resources and established cryptography to let people hold and exchange value is worth your attention.

Decentralization, incentives, energy, and cryptography

What is backing bitcoin?

## Protocols are standardized rules
Bitcoin works as a set of standardized rules. 

In computer terms, standardized rules are known as "protocols", and they enable devices and apps worldwide to communicate with each other. These rules govern how Bitcoin functions as a peer-to-peer electronic cash system. The rules are encoded within the Bitcoin software, so when someone downloads and runs the software on their computer (aka node), they become an enforcer of the rules and an active participant in Bitcoin’s operations. 

![](https://www.datocms-assets.com/99305/1704930859-learn-what-is-a-protocol-state-hero.png)

What this means is that Bitcoin operates as a worldwide network of independent nodes, each running the software containing the standardized rules for adding valid transactions to their own copy of the transaction database (called the blockchain). 

To better understand how this works, it’s helpful to define some terms:
* **The Bitcoin protocol:** The set of standardized rules within the Bitcoin software that determines how Bitcoin works
* **The Bitcoin software:** The software program (aka Bitcoin Core), which can be downloaded and run on computers, thereby making them a node in Bitcoin’s network
* **The Bitcoin network:** The global web of connections between nodes that are running the Bitcoin software, through which transaction information can be shared
* **The bitcoin asset** (lowercase “b”): The amounts that are specified within each transaction
* **The Bitcoin blockchain:** The entire history of all bitcoin transactions, structured as a sequential “chain” of blocks of transactions and which is held and maintained by each node independently 

You can think of it like this: bitcoin is an *asset*, that's transacted through a *network*, which is built on a *protocol*. 

Each node can start or stop running the software (join or leave the network), without any problem since they’re each redundant to the system as a whole. Whenever a node joins or rejoins the network, they simply follow the rules to check the validity of the transactions that took place in their absence.

Alongside the nodes are the Bitcoin miners – the computers that confirm bitcoin transactions by grouping them into blocks and adding them to the blockchain. Miners perform computational work in a lottery-style competition to win the right to add the next block and earn a reward for doing so – a system known as “proof-of-work.” Miners also follow the rules of the Bitcoin protocol, because if they don’t, any block they *attempt* to add risks being rejected as invalid by the nodes, which means their time and efforts will be wasted.

Bitcoin works because nodes and miners follow the same set of rules.

## What are the rules of Bitcoin?
The standardized rules of Bitcoin’s that are encoded within the Bitcoin software define the different aspects of Bitcoin’s operations:

### Supply rules:
* The total possible [supply of bitcoin](https://strike.me/learn/how-many-bitcoin-are-there/) is capped at 21 million. 
* New bitcoin are to be issued with each block, according to a strict [supply schedule](https://strike.me/learn/what-is-the-bitcoin-supply-schedule/) that decreases the issuance amount by half (aka a "[halving](https://strike.me/learn/what-is-the-bitcoin-halving/)") every 210,000 blocks (roughly 4 years) until the 21 million limit is reached.
### Mining rules:
* New blocks are to be created on average every 10 minutes.
* Miners must perform computational work to win the cryptographic “lottery” to add a new block of transactions to the blockchain, thereby confirming that block’s transactions and re-confirming all preceding blocks upon which it is built.
* The difficulty of winning the lottery automatically adjusts every 2,016 blocks (roughly 2 weeks), to maintain the 10 minute block time regardless of the total mining power (aka hashpower) being deployed.
### Transaction rules:
* Transactions require the digital signature that corresponds to the sender’s address, ensuring that only the owner of the bitcoin can send it.
* All transactions must have inputs and outputs to specify the sender, recipient, and amount of bitcoin being sent, except for “coinbase” transactions (the newly issued bitcoin in each block), which lack input details.
* The amount of bitcoin in the inputs must equal the amount in the outputs, less the fee amount to be paid to the miner for the service of confirming the transaction.
* Invalid transactions (e.g., invalid signature, invalid bitcoin amount, or double-spending of the same bitcoin) are to be automatically rejected.
### Consensus rules:
* Nodes accept the longest valid chain with the most cumulative proof-of-work as the correct version of the blockchain (aka the “heaviest chain”) and discard any other version of the blockchain
* To undo a transaction that has been added to the blockchain requires performing a greater amount of proof-of-work than the total accumulated work since the transaction was made, an effort which exponentially increases with time and makes bitcoin transactions effectively unchangeable after a few blocks.
### Scripting language rules:
* Any scripts included in a transaction, which can define bitcoin transaction conditions, must  follow certain rules regarding their size and complexity.
### Connectivity rules:
* Nodes must follow specific rules for how to communicate with each other, such as how data is to be formatted and transmitted.
### Blocksize rules:
* Blocks of transactions have a maximum size of 1 megabyte (with some additional space allowed for other data), which indirectly limits the number of transactions that can be included in a block.

Collectively, these rules define how to form the network, make transactions, and establish the attributes of the bitcoin asset, namely its scarcity and peer-to-peer transactability. When nodes run the software, a network is formed through which bitcoin transactions can be sent.

![](https://www.datocms-assets.com/99305/1702580888-is-bitcoin-money-02.png)

## Incentive-alignment of Bitcoin
As more nodes run the software, the rules become more difficult to change. Changing the rules entails creating a new version of the Bitcoin software and getting nodes to download and run that new version. Unlike mandatory smartphone software updates, the Bitcoin software can’t be forced on nodes, as they’re free to download and run whatever version of software they want. Nodes will only download and run software if it’s in their best interest, and will avoid any software that doesn’t.

Additionally, since any block or transaction that violates the rules is automatically rejected by all other nodes, both miners and nodes are incentivized to avoid adopting incompatible rule changes, lest their time and efforts be wasted. Furthermore, bitcoin’s value as an asset is intrinsically linked to the unchanging nature of the rules, as they establish its scarcity, transactability, and reliability. Since miners are rewarded in bitcoin and nodes process bitcoin transactions that they want added to the blockchain, everybody has a vested interest in maintaining the rules that support the value of bitcoin and the network’s consistent operations.

In this way, Bitcoin benefits from network effects – people run nodes, mine bitcoin, or buy bitcoin because it offers them a way to acquire, transact, and secure an immutable digital asset with desirable and robust attributes. Through their activities, the bitcoin asset is made more robust, immutable, and scarce, further incentivizing others to do the same. It’s a self-reinforcing cycle of network strengthening, rule solidifying, and price appreciation. 

The openness of the Bitcoin protocol stands in contrast to legacy financial systems, which are closed and opaque. There aren’t clear and transparent rules governing the supply of dollars, or who is to receive newly issued dollars and in what quantities and for what reasons. Also, entrepreneurs can’t simply build their own dollar app, capable of holding or transacting dollars independently – that’s a privileged service performed by financial institutions within predetermined limits and jurisdictions. 

What this means is that Bitcoin is structurally different from legacy finance. It’s an open, transparent, and rules-based system, with specific built-in incentives that people can opt-into, rather than being forced into. It’s fair, radically transparent, and therefore opens new possibilities for building products and services, unconstrained by arbitrary rules, privileges, and limits. Those possibilities are set to transform how money can work.

Ultimately, Bitcoin works because well-aligned incentives lead all participants to follow Bitcoin’s rules.

Understanding how standardized rules lead to a global network for transactions

How does Bitcoin work?

## Getting started
The [Strike app](http://strike.me/download) is a fast and easy way to get into Bitcoin. 

Strike is one of the world’s most licensed Bitcoin-focused companies and the Strike app is available in [tons of countries](https://strike.me/faq/where-is-strike-available-wr/) globally. It supports a variety of different payment methods, so you can use your cash to buy bitcoin, starting as little as $0.01.

![](https://www.datocms-assets.com/99305/1704930819-learn-how-to-buy-bitcoin-on-strike-state-hero.png)

Buying bitcoin with Strike is as easy as three steps:
1. Create your free account
2. Connect your cash payment method
3. Buy bitcoin

Let’s get started!

## Create your account
To get started, visit the [App store](https://apps.apple.com/app/apple-store/id1488724463) or [Google Play store](https://play.google.com/store/apps/details?id=zapsolutions.strike) to download the Strike app and complete the signup process. 

Signup is free and can take less than a minute to verify your identity and create your account. Depending on your country, some features such as higher account limits and additional payment methods may only be available after completing the additional verification steps.

Once your signup is complete, you can explore the app and make transactions.

## Connect your cash payment method
Cash payment methods enable you to buy bitcoin, by letting you deposit cash to your Strike account or charge the payment method for your bitcoin purchase. Depending on your country, there are different methods available, such as bank accounts, debit cards, wire transfers, direct deposits, or mobile money accounts. 

To link a payment method, follow these steps:
1. Go to your <UserIcon> Account screen
2. Tap "Payment methods"
3. Tap "Add method"
4. Follow the instructions, which may include retrieving a verification code from your bank account

Wire transfers and direct deposits are available in select countries and can be accessed by going to your Account screen, then tapping on <TransferIcon> Wire transfer or <BankIcon> Direct deposit. Your transfer details will be generated, which can be used to initiate the deposit from either your or your employer’s bank.

![](https://www.datocms-assets.com/99305/1705011631-learn-how-to-buy-bitcoin-support.png)

## Buy bitcoin
With a payment method connected or cash deposited into your account, you can now buy bitcoin.

To buy bitcoin, visit your Bitcoin screen and follow these steps:
1. Tap “Buy”
2. Enter the cash amount to purchase
3. Tap “Next”
4. Confirm the purchase

When the purchase is complete, the bitcoin will be added to your bitcoin balance and you’re done!

You can buy as much bitcoin as you want from your cash balance or up to your payment method’s deposit limit. You can view your limits for adding cash and sending bitcoin by going to your <UserIcon> Account screen and tapping <LimitsIcon> Limits. The cash for your bitcoin purchase needs to settle before you can send your bitcoin, which can take a few business days depending on your bank or method.
	
Strike also lets you buy bitcoin via recurring purchase or target orders:
* **Recurring purchases:** Set up [automatic purchases](https://strike.me/learn/how-to-dollar-cost-average-into-bitcoin/) on an hourly, daily, weekly, or monthly basis to help smooth out price fluctuation. At Strike, recurring purchases incur no trading fees after the first week.
* **Target orders:** Set specific [target prices](https://strike.me/learn/what-is-a-bitcoin-target-order/) to buy or sell bitcoin, and your trade will only execute if your desired price is reached.
	
With bitcoin in your account, you can:
* Make borderless peer-to-peer transactions
* Pay for goods and services with bitcoin
* Send your bitcoin to your own custody
* Sell your bitcoin for cash
* Hold your bitcoin

Let’s go!

It has never been easier to buy bitcoin through Strike

How to buy bitcoin

## Lightning as a payments network
The Lightning Network was proposed in 2015 as a payments network for transacting bitcoin *outside* the Bitcoin blockchain.

Essentially, the Lightning Network is a way to transact bitcoin faster, cheaper, and more privately than on the Bitcoin blockchain. 

![](https://www.datocms-assets.com/99305/1702580934-what-is-the-lightning-network-01.png)

Unlike legacy networks for inter-bank cash transfers or credit and debit card payments, the Lightning Network offers instant settlement, no chargebacks, and uses bitcoin as the underlying asset. 

It helps solve a key obstacle for Bitcoin, mainly the ability to scale to lots of users making lots of payments. Whereas the Bitcoin blockchain is designed first and foremost for security and decentralization, the Lightning Network is designed for speed, cost, and volume of payments. 

Lightning is a new kind of payments network, one that’s borderless, open, low-cost, and instant.

## How does the Lightning Network work?
The Lightning Network is kinda like the Bitcoin Network, in that it’s made up of computers (nodes) all running the Lightning Network software. Unlike Bitcoin, Lightning transactions aren’t publicly broadcast on the blockchain; instead they’re made privately and directly between nodes. 

Also like Bitcoin, the Lightning software is a standardized set of rules (aka protocol) that’s open and free to use for anyone or any company who wants to join.

So how does it work?

It all starts with bitcoin. Every bitcoin on Lightning begins with a transaction on the Bitcoin blockchain. That on-chain transaction is shared between two parties and serves as the reference point to start transacting *outside* the blockchain. 

With that on-chain bitcoin secured, the two nodes can then open a payment “channel” – a peer-to-peer connection through which bitcoin can be transacted. It’s like a direct link between two computers that update their own mini, private bitcoin ledger, with the start of their ledger being that first on-chain transaction. 

In their channel, they can transact as fast and often as they want by simply updating their private record, and when they’re done, they can close the channel by settling the original on-chain transaction. 

It’s like opening a tab at a bar, so that you don’t have to pay the bartender each time you buy a drink. Once you open the tab, you can order lots of drinks and just have the tab updated each time. At the end of the night, you make one single payment to settle up. 

It’s the same with Lightning. One on-chain transaction to start, countless off-chain transactions, and one on-chain transaction to close. 

What’s more, each node can open as many channels with as many nodes as they want, forming a global web of connections. Through this web, nodes can “route” payments to other nodes, even if they’re not directly connected. This means person A can send to person C, via their shared connections with person B. These *indirect* payments open a global network of payment possibilities, since each node can be indirectly connected with every other node in the network.

Lightning is a peer-to-peer payments network that helps scale the Bitcoin blockchain, without making tons of on-chain transactions.

![](https://www.datocms-assets.com/99305/1702580946-what-is-the-lightning-network-03.png)

## Lightning and global money transfers
Lightning helps deliver instant, low-cost, and interoperable payments for the world.

Payments routed via Lightning move at lightspeed. When they arrive, they’re final. Instant plus final is what legacy networks can’t do. Legacy cash payments sit in “pending” status for days, with the risk of failing or reversing, adding to merchants’ costs and headaches. 

On top of that is Lightning’s extreme low cost. Lightning payments are just information sent between computers, which costs little to nothing. When indirect payments are routed, a routing fee is paid to any in-between nodes, and those fees are typically a couple satoshis (a fraction of a penny). Payments themselves can be that small, unlocking new possibilities for micro-payments. Compare that to card payment processors, who take a couple percent per transaction in fees and can’t practically process penny transactions (let alone sub-penny amounts).

What’s more is Lightning’s interoperability. Like Bitcoin, Lightning is an open protocol, which means any person, any company, or any app can join and start making Lightning payments themselves. It’s the opposite of how bank or card networks operate, which are closed and don’t allow people to hold electronic money themselves.

With Lightning, you can make payments across apps, for less than a penny, and the payment will be instantly spendable. 

To really get it, you have to see a Lightning app in action. 

People send payments from Miami to Mumbai, via Manila, Mexico City, and Munich. Each person uses a different app, each transaction is sent for fractions of a penny, each payment is finalized and immediately spendable. No 1-5 business days, no bank holidays, no manual approvals, no opaque fees. Secure global payments that just work. 

And since bitcoin is traded 24/7/365 across all major currencies, you can use cash to buy bitcoin, send via Lightning, and sell back into cash. That’s exactly what the Strike app and Strike API do. 

The Lightning Network is a new standard for payments. 
It’s fair — nobody has privileged access.
It’s global — across the street as across the world.
It’s interoperable — across apps, across companies, across borders.
It’s secure — it all begins and ends with Bitcoin, verifiably secure and scarce.

The global bitcoin payments network that’s instant, private, and low-to-no cost 

What is the Lightning Network?

## Bitcoin ETFs
First of all, what’s an ETF?

ETF stands for Exchange Traded Fund, which is a type of investment product that can be traded on stock exchanges. ETFs hold assets, such as stocks, bonds, or commodities, and then issue shares, which investors can buy to get investment exposure to those underlying assets. 

![](https://www.datocms-assets.com/99305/1705929799-learn-what-is-a-bitcoin-etf-state-hero.png)

The idea is that the shares of the ETF *track* the price of the underlying assets, which means that as the assets go up or down in price, the shares in the ETF go up or down in a similar way. For example, if you buy shares in a Gold ETF, your investment would go up or down alongside the price of gold. It's a way of getting investment exposure to gold, without having to buy physical gold coins yourself. 

For the service of operating the ETF, the company that manages it (aka ETF Provider) charges a fee, typically a percentage of the total value of the fund’s assets.

So what’s a Bitcoin ETF?

A Bitcoin ETF is simply an ETF that holds bitcoin. It holds no other underlying asset – no other crypto, coin, or token… just [bitcoin](https://strike.me/learn/what-is-bitcoin). 

When the price of bitcoin goes up or down, the share price of the Bitcoin ETF goes up or down too. It’s a way to get investment exposure to bitcoin, without actually buying and owning the bitcoin *directly*.

Bitcoin ETFs differ from direct ownership of bitcoin, most notably in that ETFs incur ongoing management fees and don’t let you send, withdraw, and control your bitcoin yourself. The [Strike app](https://strike.me/download) is a way to buy, sell, hold, send, and receive bitcoin, as well as withdraw it to your own custody, without incurring any management fees.

![](https://www.datocms-assets.com/99305/1705598787-engineering_06-blended-bitcoin-fee-estimations-default.png)

## How does a Bitcoin ETF work?
From a high-level perspective, all you really need to know is that you can buy shares of a Bitcoin ETF in a brokerage account, and then as bitcoin’s price goes up or down, so too does your investment. 

Under the hood, the operations of a Bitcoin ETF are a bit more technical and involve creating and redeeming shares. Before digging in, there are a few terms you might need to know:

* **Net Asset Value (NAV):** The value of the ETF’s holdings
* **Authorized Participants (AP’s):** Special designated partners (usually large financial institutions) that can participate in creating or redeeming shares of the ETF
* **Custodian:** The company that actually holds the bitcoin, which could be the ETF Provider itself or a 3rd party company

So how does a Bitcoin ETF work?

1. Bitcoin ETF shares each represent a certain portion of the fund’s underlying bitcoin holdings (for example, 1 bitcoin per 1,000 shares), and are traded on a stock exchange.
2. The share price rises and falls according to supply and demand.
3. When there’s increased demand, the ETF share price rises, leading to a *premium to NAV*, meaning the ETF shares are higher in price than the underlying bitcoin they represent.
4. This premium to NAV acts as a signal to the APs to create new ETF shares, which they do by delivering cash to the ETF Provider who buys bitcoin and deposits it to the fund’s custodian.
5. The NAV of the Bitcoin ETF is updated to reflect the fund’s newly acquired bitcoin and the APs receive newly created ETF shares.
6. The APs can then trade the shares in the open market, thereby collecting and closing any premium to NAV.

The reverse can also occur when there’s a *discount to NAV*, meaning the ETF shares are lower in price than the underlying bitcoin they represent. This leads APs to gather shares and return them to the ETF Provider, *redeeming* them in exchange for the cash value of the bitcoin they represent. The ETF Provider delivers the cash to the APs by selling the underlying bitcoin.

This whole system is designed so that the ETF tracks the market price of bitcoin. Whenever there’s a premium or discount to NAV, either due to trading of ETF shares or price fluctuations of the underlying bitcoin, the APs are able to bring the share price back in line with the value of the bitcoin they represent. This system also provides liquidity, as the APs are able to participate in trading of shares, even when regular investors may be reluctant or illiquid.

The above scenario describes cash-create type ETFs, where the APs create or redeem shares by exchanging cash with the ETF Provider, rather than bitcoin. Different Bitcoin ETFs around the world may operate with different creation/redemption processes, bitcoin-per-share ratios, management fee amounts or schedules, or settlement times for when the bitcoin or cash need to be exchanged. You can read about each ETF’s details on their website.

Overall, APs and ETF Providers work to keep deviations from NAV to a minimum, so that the share price tracks the price movements of bitcoin. A 5% move in bitcoin’s market price should result in a corresponding 5% price move in the Bitcoin ETF share price. 

![](https://www.datocms-assets.com/99305/1705011631-learn-how-to-buy-bitcoin-support.png)

## Should you buy into a Bitcoin ETF?
If you’re getting into bitcoin, the question arises: should you buy shares of a Bitcoin ETF or buy bitcoin directly?

Ultimately, it’s up to you. 

For some, the convenience and familiarity of buying within their brokerage account is a big plus. For others, they might be swayed by “unit bias” – feeling better about owning *whole* shares of an ETF rather than owning *fractions* of a bitcoin, despite the fact that shares themselves represent a fraction of a bitcoin. 

Before deciding what’s best for you, there are some factors to consider:

### Management fees:
Bitcoin ETFs incur management fees, typically as a percentage of the total value of the fund’s holdings, while direct ownership has no ongoing management fees. From a long-term perspective, fees add up and are compounding, which steadily erodes the value of your holdings.

### Control of funds:
Owning bitcoin directly gives you the freedom to move your assets where, when, and how you want, while ETF shares can only be held via a brokerage service and have limited or no ability to be transferred to an alternate brokerage or custodian.

### Trading access:
Bitcoin ETFs can only be traded during market hours on business days, whereas owning bitcoin directly affords you the ability to buy and sell, any time, any day. During periods of high volatility, ETF-holders have to wait until markets open to be able to trade, while direct bitcoin-holders are free to trade and transfer when they please.

### Counterparty risk:
Bitcoin ETFs require trust in certain 3rd parties: the ETF Provider and custodian must securely manage the bitcoin, the Authorized Participants must ensure liquidity and limit deviations from NAV, and your brokerage service must provide reliable trading and access to your holdings. With direct ownership, you can decide where your bitcoin is held and by who, including self-custodying where you are the holder and sole authority over your assets.

### Future opportunities:
As the Bitcoin ecosystem grows, new use cases may arise for bitcoin holders, including using bitcoin to collect routing fees within the [Lightning Network](https://strike.me/learn/what-is-the-lightning-network) or posting bitcoin as collateral into escrow accounts to borrow against. Although these use cases are nascent and come with their own set of risks and complexities, they’re simply unavailable if your holdings are locked inside an ETF.

When considering whether to buy shares of an ETF, it’s important to consider the tradeoffs compared to buying bitcoin directly. 

The [Strike app](https://strike.me/download) offers a way to get into Bitcoin that’s simple and secure. You can sign up and buy bitcoin in minutes using regular cash payment methods, with little as $0.01 or as much as you want. Strike Private (private@strike.me) also provides OTC-desk bitcoin buying and selling for large orders from individuals, businesses, or institutions. 

With Strike, you control how you trade, hold, transact, or withdraw your bitcoin – and never pay any ongoing “management fee”. 

*Please note: this content is for educational purposes only. Strike does not provide financial advice.*

Bitcoin Exchange Traded Funds – what they are and how they work

What is a Bitcoin ETF?

Taking self-custody of your bitcoin is a process involving setting up a self-custodial wallet then sending your bitcoin to one of your addresses.

![](https://www.datocms-assets.com/99305/1704930777-learn-better-ai-agents-state-hero.png)

[Private keys](https://strike.me/learn/what-are-private-keys-and-public-keys) are central to bitcoin ownership.

Every bitcoin transaction must be authorized using the correct private key, meaning if you exclusively hold the private key, then you alone can spend the bitcoin associated with that key. The control of private keys– their creation, security, and management – is how you own bitcoin without relying on any 3rd party.

Custodial wallets, like [Strike](https://strike.me/download), handle private keys on behalf of their users. The process of taking [self-custody](https://strike.me/learn/what-is-self-custody) of your bitcoin involves setting up a new self-custodial wallet, then sending your bitcoin to an address created from that wallet. 

There are two basic types of self-custodial wallets:
* **Hardware wallet:** A physical device, usually with a screen, that runs its own wallet app to generate a [seed phrase](https://strike.me/learn/what-is-a-seed-phrase) and manage private keys directly on the device.
* **Software wallet:** A mobile or desktop app that you download, which generates a seed phrase and manages private keys within the app.

One of the major threats to your private keys is malicious or faulty software. If bad software infiltrates your wallet app, it could compromise your bitcoin. For this reason, it’s crucial to be cautious about your wallet’s connection to the Internet. 

Wallets can be further categorized based on their Internet connection:
* **Hot wallet:** A wallet that’s connected to the Internet
* **Cold wallet:** A wallet that’s disconnected from the Internet
* **Air-gapped wallet:** A wallet that is never connected to the Internet, and which passes transaction information via physical SD card or some other means.

## When should I take self-custody
Many people start their Bitcoin journey using a custodial app, like Strike, since it offers convenience, simplicity, and security. However, as you gain a deeper understanding of Bitcoin or allocate an increasingly significant portion of your wealth into it, self-custody should become an essential part of your financial plan.

Before proceeding with self-custody of your bitcoin, it’s best to understand key concepts:
* **Private and public keys:** Learn how bitcoin transactions are created and authorized via [private and public keys](https://strike.me/learn/what-are-private-keys-and-public-keys).
* **Seed phrases:** Understand how your private keys are generated from a [seed phrase](https://strike.me/learn/what-is-a-seed-phrase) and how to recover them in case your wallet is lost, damaged, or destroyed.
* **Private key security best practices:** Know the best practices to [properly safeguard](https://strike.me/learn/how-do-i-protect-my-private-keys) your private keys and seed phrase to prevent loss or theft.
* **Mult-signature setups:** Especially for large amounts of bitcoin, consider multi-signature (multi-sig) wallets that require multiple, geographically distributed private keys to authorize transactions.
* **Cold vs. hot vs. air gapped wallets:** Understand the differences between cold wallets (offline storage), hot wallets (online storage) and air-gapped wallets (never-connected storage), and how to use each safely.
* **The UTXO system:** Learn how [UTXOs](https://strike.me/learn/what-is-a-utxo) (Unspent Transaction Outputs) work to avoid issues that could make your bitcoin uneconomical or unspendable and protect your privacy.

Once you have a strong grasp of these concepts, research and choose the right self-custodial wallet that suits your needs. Many people opt for a hardware wallet, which can cost around $100 or more. Whether you choose a hardware or software wallet, be prepared to stay updated on the latest software or firmware to protect against security vulnerabilities.

Online tutorials, videos, and step-by-step walkthroughs are great resources for researching wallets and how to use them.

## How to take self custody
Here’s how to take self-custody of your bitcoin using a hardware wallet:

1. **Buy a hardware wallet:** Research and choose a reputable hardware wallet and follow the setup instructions provided in the package. For security reasons, it’s best to purchase the wallet from the manufacturer, rather than from a reseller.
2. **Set up your wallet:** Turn on the device, follow the on-screen instructions to begin creating your new wallet.
3. **Record your seed phrase:** As part of the setup process you’ll be prompted to write down a 12, 18, or 24-word [seed phrase](https://strike.me/learn/what-is-a-seed-phrase), which can be used to recover your wallet if it’s lost or damaged. It’s vital to record the words accurately and in the correct order, and to follow [best practices](https://strike.me/learn/how-do-i-protect-my-private-keys) when storing them for safekeeping.
4. **Generate a Bitcoin address:** Initiate a “receive” transaction in your wallet to generate a new Bitcoin address.
5. **Copy and paste the address:** Copy the address and paste it into the service you’re using to send bitcoin (like [Strike](https://strike.me/faq/how-do-i-send-bitcoin/)). This can be done either by having your wallet generate a QR-code, or by sharing the address to yourself, preferably using a secure and encrypted message app. Double check that the address’s characters are correct.
6. **Set your fee and amount:** Choose a transaction fee and enter the amount of bitcoin you want to send, making sure it aligns with [UTXO best practices](https://strike.me/learn/what-is-a-utxo).
7. **Send a test transaction:** As an optional step, you can send a small “test” transaction to your Bitcoin address to be absolutely sure that the address is correct. 
8. **Initiate the transaction:** After reviewing all details, initiate the transaction to your address.
9. **View the transaction on the blockchain:** Once your transaction has been initiated, it will typically appear as a pending transaction. As a final step, you can monitor your transaction’s progress on a [blockchain explorer](https://mempool.space) by searching for your Bitcoin address.

Once your transaction has six confirmations (~60 minutes), it is generally considered complete. 

At this point, you exclusively own the bitcoin because you control the wallet with your private keys, and you have securely stored your seed phrase.

Sending your bitcoin to an address where you control the private keys

How do I take self-custody of my bitcoin?

## Cash –> Bitcoin –> Cash
Send Globally is a feature in the Strike app that lets you send cash through the [Bitcoin Lightning Network](https://strike.me/learn/what-is-the-lightning-network) and have it delivered as local currency to bank or mobile money accounts. It’s a way of sending money globally or locally that can cut out unnecessary middlemen, achieve lower costs, and deliver at faster speeds.

It’s cash, sent through Bitcoin, delivered as local currency.

![](https://www.datocms-assets.com/99305/1702407736-learn-what-is-send-globally-state-title.png)

To understand how it works, let’s take a look at Bitcoin.

[Bitcoin](https://strike.me/learn/what-is-bitcoin) is a digital asset that trades 24/7/365, uninterrupted. People worldwide buy and sell bitcoin across all major currencies. This means you can buy bitcoin with your local currency, send the bitcoin to someone else, who can then sell that bitcoin for a different currency. Cash to bitcoin to cash.

On top of Bitcoin is the Lightning Network, a second-layer scaling solution that lets people securely send real bitcoin faster and cheaper. With Lightning, people can now send and receive bitcoin, anywhere in the world at lightspeed, for low-to-no cost. 

With Bitcoin and Lightning, all you need are cash on/off ramps to make global cash transfers… which is where Strike comes in.

The [Strike app](https://strike.me/download) has full functionality for Bitcoin, Lightning, and cash. Strike has also built a global network of partnerships with bitcoin-powered companies. These global partners can receive bitcoin, convert it to their local currency, and deposit it directly to bank or mobile money accounts. 

So, how does it work?

With cash in your Strike account, you add your recipient’s bank or mobile account details, enter an amount to send, and hit “Confirm”. Immediately, your cash is converted to bitcoin, bitcoin is sent via Lightning to the global partner, the global partner sells the bitcoin for local currency, and the local currency is deposited into your recipient’s account.

The entire operation is automated, and can be done in seconds. Neither you, nor your recipient, ever owns bitcoin. It’s a cash to foreign currency transaction, made possible through Bitcoin.

![](https://www.datocms-assets.com/99305/1702580906-using-bitcoin-to-send-money-abroad-02.png)

## Bitcoin as public payments infrastructure
This is a new approach to using Bitcoin. 

It’s using Bitcoin, not as an asset, but as a network to transfer value. It’s Bitcoin as public payments infrastructure for the world – an alternative to traditional money transfers.

In traditional finance, sending money internationally to friends and family (aka remittances) is slow and expensive. The average cost to remit money globally is roughly [6.20%](https://remittanceprices.worldbank.org/sites/default/files/rpw_main_report_and_annex_q223.pdf) — as in you send $100 and $6.20 is lost to fees, exchange rates, and/or middlemen. 

There’s also delays. The money can take hours, days, or even weeks to arrive and be spendable. You’re also limited if you’re trying to send really small or really large amounts. It all depends on the country, currency, or companies involved.

But why is that?

Put simply, international banking processes.

To transfer local cash in a local bank to foreign cash in a foreign bank involves payment batching, net clearance schedules, chargeback risks, business hours, bank holidays, and of course fees for all middlemen involved. If the countries or currency-pairs are small or uncommon, then the rates, delivery times, and limitations are going to be worse. 

It’s an inefficient system, not designed for speed and savings.

![](https://www.datocms-assets.com/99305/1702580912-using-bitcoin-to-send-money-abroad-03.png)


## Lightning delivers real savings and real value
Send Globally is for saving time and money.

By using Bitcoin as the network to send value, Strike can deliver even better cross-currency exchange rates. That’s because the transfer is able to bypass a lot of the processes and middlemen that drive up costs. And since the money is sent through Lightning, it can arrive much faster than traditional money transfers.

Strike has already launched in a [number of countries](https://strike.me/faq/which-countries-are-available-for-send-globally/) (with more to come), each with super low minimums. All you need is your recipient’s bank or mobile account details, and then you can send to them in their local currency, typically in seconds. 

It’s as easy as texting.

You can also use it for travel. Airport money changers charge crazy high fees and bad rates, so why not use the cash in your Strike app while traveling abroad? On your next trip to the Philippines, just use your cash to pay people in pesos, by Sending Globally right to their mobile money account.

If your recipient doesn’t live in one of the supported countries, that’s okay. The Strike app is available in [countries worldwide](https://strike.me/faq/where-is-strike-available-wr), so you can send them cash or bitcoin instantly to their Strike account. Or they can use any other Lightning-enabled wallet app to receive payments. Bitcoin is interoperable, and is traded across all major currencies. It just works.

You can use Send Globally the Strike app today, or check out this [step-by-step walkthrough](https://strike.me/learn/how-to-use-send-globally) to learn more.

Happy sending.


Bitcoin's Lightning Network makes global money transfers faster and cheaper

Using Bitcoin to send money abroad

UTXO stands for Unspent Transaction Output, and is the technical term for a discrete portion of bitcoin. Put simply, your UTXOs are your bitcoin that you’ve received, but not yet spent.

![](https://www.datocms-assets.com/99305/1721348184-learn-what-is-a-utxo-state-hero.png)

Amounts of bitcoin exist as records of transactions on the Bitcoin [blockchain](/learn/what-is-a-blockchain). Owning bitcoin means that there’s a transaction on the blockchain to an address for which you control the private keys. That record of an amount of bitcoin is called a UTXO.

The way Bitcoin works is that transactions have inputs and outputs. When a transaction is made, the sender specifies one or more inputs and one or more outputs, which can be of any amount, ranging from fractions of a bitcoin to multiple whole bitcoin:
* **Input(s):** An input in a bitcoin transaction references a previous unspent transaction output (UTXO) and is used to fund the new transaction. It includes the previous transaction’s ID, the specific output being spent, and a signature to prove ownership.
* **Output(s):** An output in a bitcoin transaction specifies the recipient of the bitcoin and the amount to be transferred, which can be an address controlled by the sender.

When a UTXO is spent as an input, it’s destroyed, and one or more UTXOs are created as the output. The one exception to this input-output system is the first transaction in each block, called the “coinbase.” The coinbase transaction has no input since it is newly issued bitcoin entering circulation as a reward to the miner, according to the strict [supply schedule](/learn/what-is-the-bitcoin-supply-schedule).

You can look at any given block on the [blockchain](https://mempool.space) for yourself and find the assorted transactions, each with one or more inputs and outputs, alongside the inputless coinbase. The network of nodes running Bitcoin’s software maintains a record of all UTXOs, known as the “UTXO set,” which represents all valid coins in the system. 

## Comparison with the account model
This UTXO model is different from the “Account model” used by banks. In the Account model, balances are tracked as single figures that are adjusted with each transaction, while the UTXO model treats each transaction output as a discrete, spendable unit.
* **Account model:** Balances are updated by debiting and crediting accounts, similar to how banks manage cash balances. When you deposit or withdraw any amount, your balance will adjust accordingly.
* **UTXO model:** Each transaction output is like a separate piece of physical cash (paper notes and metal coins). When you make a payment, you must select specific notes or coins to use. As part of the transaction, you might receive change in return, which are new notes or coins in your wallet.

A key difference to this physical cash analogy is that the recipient of a bitcoin payment receives it as a unified UTXO, not as an assortment that matches the inputs. Overall, what this means is that your bitcoin holdings are simply a collection of outputs from previous transactions that you haven’t yet spent, hence “Unspent Transaction Outputs” or UTXOs.

## Understanding UTXOs and fees
When you make a transaction on the Bitcoin blockchain, you need to pay a [transaction fee](/learn/what-are-bitcoin-fees) (aka on-chain fee) to get it added to a block and be “confirmed.” Transaction fees are paid to the [miner](/learn/what-is-bitcoin-mining) who adds the block and offers an incentive to get transactions confirmed sooner.

In any given transaction, the fee amount is simply the difference in amounts between the inputs and outputs. If the total amount of the inputs is 1 bitcoin, and the total amount of the outputs is 0.99 bitcoin, then the fee payable to the miner is 0.01 bitcoin.

Bitcoin blocks have a limited amount of space and are only added on average every 10 minutes. This ensures the entire blockchain remains small enough to be downloaded and verified on an average laptop computer, helping Bitcoin stay decentralized by keeping participation open to all. Fees are therefore based on the *amount of data* a transaction requires, rather than its *financial value*. Transactions that occupy more bytes of data, such as those with many inputs and outputs, pay more in fees, since they’re using more of the scarce resource of block space. 

![](https://www.datocms-assets.com/99305/1702407727-learn-how-to-buy-bitcoin-state-title.png)

## Fees and UTXO sizes
Fees are measured in [satoshis](/learn/what-are-satoshis/) per virtual byte (aka “sats/vbyte”). Since the market for fees is free and open, anyone can include any amount of fee for their transaction, and miners can select which transactions to include in a block. Fees can be competitively bid up, especially during periods of high network traffic. Higher fees means it’s more expensive to have your transaction added to the blockchain, even for transactions with a single input and output, since each input and output incur a cost based on the bytes of data they require.

This becomes a problem for low-value UTXOs. 

When fees are high, using a low-value UTXO as an input can become uneconomical, since the fee cost to include that UTXO could be a significant percentage of its value – as in you might end up spending half of the UTXO’s value just on fees. What’s more, if the cost of including a specific UTXO as an input surpasses its value, it effectively becomes unspendable. Such low-value UTXOs, which cost more in fees to spend than they’re worth, are often referred to as “dust” – they’re lost.

For example, a [single input](https://bitcoinops.org/en/tools/calc-size/) could require between 57.5 vbytes for a Taproot transaction to 148 vbytes for standard P2PKH transaction (or more for complex transactions like multi-sig), so if fee rates were to reach [200 sats/vbyte](https://mempool.space/graphs/mining/block-fee-rates#1y), the following UTXO sizes or smaller would become unspendable, depending on the transaction type:
* 57.5 vbytes * 200 sats/vbyte = 11,500 satoshis UTXO 
* 148 vbytes * 200 sats/vbyte = 29,600 satoshis UTXO

What this means is that as fees rise, smaller UTXOs can become uneconomical or even unspendable. UTXOs worth thouands, tens of thouands, or even low hundreds of thouands of sats might cost a third, half, or even their entire value in fees to add to the blockchain. In the long term, fees are expected to rise with increased Bitcoin adoption, as more individuals, businesses, apps, and even governments begin to transact on-chain. When self-custodying your bitcoin, you need to plan accordingly to manage your UTXOs effectively.

## How to manage your UTXOs
Using an app like [Strike](https://strike.me/download) to custody your bitcoin is a way to delegate UTXO management, including the selection of inputs and the setting of fee rates to process your transactions economically. With Strike, you can buy as little as $0.01 of bitcoin either as a one-time purchase or through dollar cost averaging (DCA) via recurring purchase, without affecting UTXOs, since the purchases aren't recorded on the blockchain. However, when you make an on-chain transaction, like sending bitcoin to your own custody, you'll need to manage your UTXOs, as your bitcoin purchases on Strike will be combined into a single UTXO sent to your chosen Bitcoin address.

When you’re ready to take self-custody of your bitcoin, managing your UTXOs becomes crucial and requires that you consider a number of factors, suchas fee rates, privacy, and the economic viability of your future transactions. 

Below are some UTXO management best practices to follow: 
* **Not too small:** Keep your UTXO’s at least around 1 million satoshis (0.01 bitcoin), to ensure they remain economically viable, even as fees rise. UTXOs as low as 10,000’s or even 100,000’s satoshis may become uneconomical or unspendable in high-fee environments.
* **Not too big:** Avoid having all your bitcoin in a single large UTXO. Using a large UTXO as an input in a future transaction can reveal your holdings to your recipient, as they can see which UTXO was used as an input and where the change was sent, potentially affecting your privacy.
* **Diversify your UTXO sizes:** If possible, maintain a mix of UTXO sizes, to give yourself options when selecting appropriately sized inputs for future transactions. 
* **Segregate UTXOs:** Keep UTXOs from different sources separate, including any non-kyc sources, to maintain privacy and prevent traceability by transaction recipients.
* **Time your sends:** Monitor [fee rates](https://mempool.space/graphs/mining/block-fee-rates#1y) and aim to send transactions when fees are relatively low, but avoid waiting too long as your desired fee rate may not materialize.
* **Avoid reusing addresses:** To promote privacy and avoid traceability by your recipients, use a new Bitcoin address each time you transact on-chain.
* **Consolidate when fees are low:** Use periods of low fees to combine smaller UTXOs as inputs into larger outputs to ensure future economic viability.
* **Be wary of fee spikes:** Sudden increases in fees may be temporary and could subside within hours or days. For non-urgent transactions, waiting might be wise, though long-term fees are expected to rise with increased Bitcoin adoption.
* **Use Lightning:** For small transactions, use the [Lightning Network](/learn/what-is-the-lightning-network). Lightning enables real bitcoin transactions, without recording each one on the blockchain, avoiding on-chain fees and wait times. Transactions on Lightning are instant and low-to-no cost, allowing you to send even single satoshis to friends or your own Lightning wallet.

For a more in-depth explanation of UTXO management and best practices, read [this article](https://strike.me/learn/how-to-manage-utxos/).

By carefully managing your UTXOs, you can optimize your transaction costs, maintain privacy, and ensure you’re able to spend your bitcoin in the future the way you want, regardless of future fee market conditions. 

Unspent transaction outputs are discrete portions of bitcoin

What is a UTXO?

Make your move into bitcoin.

Learn

Send Globally is a way to send cash to bank or mobile accounts – via the Bitcoin Lightning Network – and have it delivered as local currency to your recipient (or yourself). It uses Bitcoin as a payments network, rather than just an asset. Check out [this article](https://strike.me/learn/what-is-the-lightning-network) to learn more about Lightning and how it works.

![](https://www.datocms-assets.com/99305/1702580862-how-to-use-send-globally-01.png)

Send Globally is a way to transfer cash value through Bitcoin's Lightning Network. It’s made possible through Strike’s global network of partners and Bitcoin’s 24/7 operations.

How does it work?

When you send cash from your Strike account to your recipient…
1. Your cash is converted to bitcoin
2. Bitcoin is sent to the third-party partner operating in the destination country
3. The partner converts the bitcoin to local currency
4. Local currency is deposited into your recipient’s account

It’s a cash-bitcoin-cash transaction, made programmatically. It uses Bitcoin not as an asset, but as a borderless value transfer network.

The whole process is automated and can be finalized in seconds. Neither you nor your recipient ever owns bitcoin, which lets you avoid any price volatility or tax headaches. It’s just a cash to local currency transaction, made through Bitcoin.

If you happen to live in one of the [supported countries](https://strike.me/faq/which-countries-are-available-for-send-globally/), then you can use Send Globally to send funds to yourself. Simply enter your own details as the recipient and initiate your own transaction.

## How to use Send Globally
Before you get started, make sure you get your [recipient’s details](https://strike.me/faq/what-information-is-needed-from-the-recipient/). Depending on which country they live in and how they want to get paid, you’ll need their phone number, and perhaps their bank name, account number, or mobile provider.

Next, you’ll need to have cash in your Strike account. If you don’t have Strike, you can [download](https://strike.me/download/) it, sign up in seconds, and add cash via bank account, debit card or wire transfer, depending on funding availability in your country. Once you have cash in your Strike account and your recipient’s details in hand, you’re good to go.

To use Send Globally in the Strike app, visit your Cash screen and follow these steps:
1. Tap <WithdrawIcon> Send
2. Select <GlobalPaymentIcon> Send Globally
3. Select your recipient’s country
4. Enter your recipient’s phone number and any other receiving details
5. Enter the amount you wish to send or tap the <IconSwitchUSD> Switch Currency button to enter the amount in the recipient’s currency
6. Confirm the send

Before you confirm the send, you’ll see the all-in exchange rate of how much your recipient will get, plus the estimated delivery time (which depends on their receiving method).

If your recipient already has an account with Strike’s local 3rd-party partner, then their phone number will be enough to send them cash. If they don’t, then you’ll also need to add their full legal name and their preferred receiving method (bank name and account number, or mobile money network provider).

You can also review and manage your list of Send Globally recipients by tapping on your <UserIcon> Account screen, and selecting Contacts. If you want to remove one of your Send Globally contacts, simply swipe left and tap the trash icon to remove.
		
## Let’s go!
Send Globally has super low minimums, which means you can start small and grow from there. You can also send as often as you like and whenever you like. So you can send $5 an hour or $1,000 a week, you choose.

If your recipient doesn’t live in a [supported country](https://strike.me/faq/which-countries-are-available-for-send-globally/), you can still send them money. The Strike app is available in [countries worldwide](http://strike.me/faq/where-is-strike-available-wr), so you can send them cash or bitcoin directly to their Strike account. If Strike isn’t yet in their country, they can use any other Lightning-enabled wallet app to receive payments, as Strike lets you send from your cash balance to any Bitcoin or Lightning wallet.

If you have any troubles or questions, check out these [FAQs](https://strike.me/faq/what-should-i-do-if-i-encounter-a-problem-with-send-globally/) or feel free to reach out to <SupportEmail>.

Strike is always looking to add more countries and more ways to send globally. Follow Strike on [social media](https://twitter.com/strike) for the latest updates on country availability. 

Happy sending. 

Send cash to bank or mobile accounts – via Bitcoin – delivered as local currency

How to use Send Globally

Scams are becoming more creative and widespread, targeting everything from your money and bitcoin to your personal information. These scams can take many forms, including phishing emails, fake investment scams and impersonation fraud.

![](https://www.datocms-assets.com/99305/1730233790-learn-how-to-avoid-being-scammed-state-hero.png)

Scammers can target anyone, however, they known to focus on older individuals or people who are unfamiliar with technology, making it especially important for seniors and their families to stay vigilant and take extra precautions to avoid falling victim to these schemes.

Bitcoin can be particularly attractive to scammers because it's global, easily tradable, and irreversible. Once a bitcoin transaction is made, it can’t be undone, meaning there’s no simple way to recover your funds if you’ve sent them to a scammer. This makes it crucial to be aware of common scams and know how to protect yourself.

A key step towards protecting yourself is knowing what to look for. Before getting into Bitcoin and making transactions, you should ask yourself the following questions:
* Are you being pressured to act quickly?
* Are you being promised some benefit, like investment returns?
* Are you sending funds to an external wallet or service that you didn’t set up yourself?
* Have you searched for *negative* reviews of where you’re sending funds?
* If sending to someone, have you met them in person?

Scammers often use tactics such as time pressure, lucrative promises, or the victim's lack of technical knowledge to trick them. By asking yourself these questions, you can help filter-out likely scams before you get involved. Remember, if you’re in doubt, it’s best to wait and do more research.

Let’s explore some common scams and how to avoid them.

## Investment and “Pig butchering” scams
Investment and “pig-butchering” scams involve scammers requesting money (often bitcoin) with a promise that they’ll deliver some benefit, such as investment returns, interest on your bitcoin, or some crypto token or asset. The scammers cultivate long-term relationships with their victims to build trust, often on popular apps such as Facebook, Whatsapp, Telegram, X (Twitter) or via direct messages. Over time, they persuade you to send money as an investment, and may even show that you have an account balance or investment returns on their platform, when in fact the funds are not there.

The term “pig-butchering” refers to “fattening up” the victim with promises of high returns before “slaughtering” them by stealing their investments, either in incremental amounts or in one large theft. Once they’ve taken money from their victim, the scammers cease communication or continue asking for more money to unlock the victim’s previous “investment” before disappearing altogether. Remember, since bitcoin transactions are irreversible, Strike cannot recover or reimburse you after you authorize sending funds externally.

### How to protect yourself from investment or pig-butchering scams
* **If it’s too good to be true, it probably is:** Nobody can guarantee investment returns, and if someone promises high gains, there’s either high risk involved or it’s an outright scam.
* **Be wary of online relationships:** If you haven’t met the person in real life,stay skeptical and avoid trusting them with financial advice or investments.
* **Don’t invest if you don’t understand:** Before investing in anything, especially in crypto projects or funds, do your research including searching for any negative reviews.
* **Only send bitcoin to people you know:** Always double-check wallet addresses, and if you’re unfamiliar with the person or service, it’s best to wait or reconsider.

## Crypto, token, and “dApp” scams
Crypto, token, and dApp (decentralized application) scams involve deceptive projects that lure in investors with the promise of high returns, but are in fact worthless digital assets or simply outright frauds. Typically, these scams follow a pattern: promoters hype up the project through aggressive ads, videos, podcasts, and social media, often without revealing their personal financial stakes. This drives up the project’s coin, token, or asset price, allowing the promoters and/or founders to sell at the peak, leaving investors holding highly illiquid assets.

Sometimes the price of a crypto asset is artificially inflated through fake trading activity, known as wash trading, where false transactions make it appear as if the value is rising, but this is done to lure new investors in before the scammers sell and exit. When retail investors try to sell, the price ultimately collapses, and the project never delivers on its stated promises or fails entirely. While the scammers walk away with profits, most investors are left with worthless tokens in a classic pump-and-dump scheme.

### How to protect yourself from crypto, token, or dApp scams
* **Do your research:** Before investing, always investigate the project thoroughly, including the team, technology, financial disclosures, and history, and be cautious of projects with unclear or overly ambitious promises.
* **Beware of hype:** Avoid projects that rely heavily on influencers, aggressive marketing, or promises of quick, massive gains, especially when the promoters’ financial interests aren’t disclosed.
* **Check for liquidity:** Always check whether the asset has sufficient and legitimate trading volume and liquidity, ensuring you can sell without crashing the price. Be aware that many crypto prices can be artificially inflated via wash trading.
* **Understand the difference between Bitcoin and crypto:** Bitcoin is a decentralized, transparent, and secure digital asset with a fixed supply, while many crypto projects are centralized, speculative ventures that often lack security, transparency, regulatory standing, or long-term value.

## Relationship or romance scams
Relationship or romance scams typically involve scammers creating fake online profiles to build emotional relationships with their victims, often through popular apps like Facebook, WhatsApp, Telegram, X (Twitter), or other social media platforms. Once a relationship is established, they often request money under false pretenses, usually for fabricated emergencies, travel expenses, or investment opportunities. Scammers can also use AI to create realistic photos, videos, or even voices, tricking victims into believing they’re interacting with a real person, when in fact they’re not.

### How to protect yourself from relationship scams
* **Be cautious with online relationships:** Never send money to someone you haven’t met in person.
* **Don’t trust too easily:** Scammers are skilled at creating emotional connections to manipulate their victims.
* **Verify any story they tell you:** If someone claims they need money for an emergency, cross-check their story with reliable sources.
* **Don’t give in to false urgency:** Be skeptical of any claims of emergencies or time pressure when an online contact asks for assistance.

## Phishing scams
Phishing scams involve deceptive messages, emails, or websites that *look* like they’re from a trusted source, such as your bank, a government authority, or even Strike, but are in fact fake. These messages or websites may ask for sensitive information like your passwords, or invite you to click on a malicious link to download software, leading to the theft of personal data or funds. If you’ve ever received an unsolicited email or text message that almost looks like it’s legitimate, but asks for personal information or prompts you to click a suspicious link, then you’ve likely encountered a phishing scam.

### How to avoid phishing scams
* **Check URLs and email addresses carefully:** Scammers often use websites or email addresses with slightly altered spellings to trick users.
* **Never share passwords or codes:** Legitimate companies will never ask for these details via email or text.
* **Avoid unknown links:** If you receive an email or text message with a link from an unknown source, don’t click it.
* **Use unique emails for services:** Keeping different email addresses for services can limit the damage if one gets compromised
* **Avoid disclosing personal information:** By keeping your financial activity and holdings private, you may be less likely to be targeted by scammers.
* **Communicate via official channels:** Whenever you communicate with your bank or Strike, do so via in-app customer support or via official email channels only.

## Impersonation scams
Impersonation scams involve scammers pretending to be someone you know or trust, like a friend, family member, or even a celebrity, to try and trick you into sending them money. These scammers often reach out via popular apps such as Facebook, Whatsapp, Telegram, X (Twitter), or text message apps and change their user profile or photo to look the same as a friend or trusted person. 

Scammers can impersonate friends, family members, public figures, tax authorities, law enforcement agents, bank representatives, or even Strike employees, and then use a false sense of urgency to get you to pay them or give up sensitive information.

Remember, you should only communicate with Strike via official channels, such as in-app customer support or by email at support@strike.me. When you connect with Strike support, they will never ask you for your PIN, account email, or confirmation codes and will never ask for a payment from you.

### How to protect yourself from impersonation scams
* **Verify identities:** If someone contacts you unexpectedly, verify their identity through another means of communication.
* **Be skeptical of urgent requests:** Scammers often use urgency to prevent you from thinking clearly.
* **Report and block suspicious accounts:** If you receive messages asking for money from someone you don’t know or from a strange account, block them immediately.

## Prize or refund scams
Prize and refund scams involve scammers contacting their victim to falsely inform them that they’ve won a prize or are entitled to a special refund or bonus. To claim the non-existent money, the scammers instruct the victim to click a link, download malicious software, provide some personal information, or even send some “deposit money” to claim their reward.  

### How to protect yourself from prize or refund scams
* **Ignore or block offers of free money:** Legitimate services won’t randomly offer free cryptocurrency or large prizes.
* **Be cautious about refunds:** Only engage via official channels when dealing with refunds or any account-related queries.

## Job or task scams
Job or task scams involve fraudulent job postings, job training, work tasks, or work opportunities that lure victims into sending money or personal information. Scammers might advertise these fake jobs online, through social media posts, or even directly to their victims via text or direct message, then promise to pay money, remote work, or quick training to entice potential victims. Once they’ve collected their victim’s payment or sensitive information, the scammer fails to deliver on their promises or disappears entirely.

### How to protect yourself from job or task scams
* **Be cautious of unsolicited offers:** If jobs or tasks come to you without you actively searching for work, there is an increased likelihood that it may be a scam.
* **Research the company or job recruiter:** Before sending any information or money, verify the company or person’s authenticity, including searching for any negative reviews.
* **Apply through official channels:** Only use trusted job boards or company websites to apply for jobs.
* **Don’t pay for job opportunities:** Any job or task that requires upfront fees, especially in bitcoin, is likely a scam.

## Tax or fee scams
Tax or fee scams involve scammers convincing victims that they owe taxes, fees, penalties, or withholding amounts, and then demanding payment, often in bitcoin or cryptocurrency. These scammers may operate a fraudulent investment or trading platform, displaying account balances or gains, which may or may not exist, and then require their victim to pay a tax or fee to access their funds or to continue investing. In some cases, scammers may also impersonate tax authorities, pressuring victims to send money to avoid fake penalties or fines. It’s important to remember that legitimate tax authorities only communicate through official channels and never demand payments in bitcoin or cryptocurrencies.

### How to protect yourself from tax or fee scams
* **Do your research:** Thoroughly research any trading, investment, or crypto platform before signing up or sending funds, including searching for the negative reviews.
* **Be wary of cryptocurrency tax payments:** Be skeptical of anyone asking for taxes, fees, penalties, or fines to be paid in bitcoin or cryptocurrency.
* **Communicate via *official* channels:** Always contact government or tax authorities through their official communication channels.
* **Take your time:** Don’t rush decisions, especially when it involves sending irreversible bitcoin transactions.

Be vigilant, be patient, and do your research

How to avoid bitcoin or crypto scams

## What is DCA?

DCA stands for Dollar Cost Average, which is an established strategy for investing, including buying bitcoin.

Rather than investing an amount all at once, a DCA strategy divides that investment into multiple smaller amounts to be invested at regular intervals. For example, instead of buying $500 of bitcoin all at once, you could set a purchase of $50 to repeat every day for 10 days. 

![](https://www.datocms-assets.com/99305/1705615422-learn-how-do-i-dca-into-bitcoin-state-hero.png)

A DCA strategy is a way some users choose to help mitigate price volatility, by buying set amounts at predetermined time intervals, regardless of the price. Whether the price goes up or down, buying regularly can help smooth-out the average purchase price that you get. 

Bitcoin trading apps often have a feature that lets you dollar cost average, including with different payment amounts, frequency intervals, and payment methods. The Strike app lets you dollar cost average into bitcoin using the “Recurring purchase” feature.

## How to DCA with Strike
With the [Strike app](https://strike.me/download) you can dollar cost average into bitcoin using the “recurring purchase” feature. Recurring purchases let you automatically buy bitcoin hourly, daily, weekly or monthly. 

Additionally, Strike charges no bitcoin trading fees for recurring purchases after the first week for hourly and daily buys, and starting with the 2nd purchase for weekly and monthly buys. This means dollar cost averaging with Strike can help you mitigate price volatility as well as let you save on fees.

For select countries, you can set your recurring purchase to source directly from a linked payment method, otherwise you’ll need to add cash to your balance before proceeding. The Strike app has no minimums for recurring purchases, so you can set your DCA to buy  $0.01 worth of bitcoin on the hour, every hour… or tens of thousands of dollars a week. You choose.

To set up your recurring purchase, visit your Bitcoin screen and follow these steps:
1. Tap “Set a recurring purchase”
2. Set the frequency for your recurring purchase
3. Enter an amount to purchase
4. Tap “Next”
5. Select your desired payment method, if applicable
6. Tap “Confirm”

Your initial bitcoin purchase will execute immediately and the recurring purchase will be set to repeat automatically at the same approximate time according to your selected frequency. If you set an hourly or daily purchase, there will be no trading fees after the first week cycles, whereas for weekly or monthly purchases there are no fees starting with the 2nd purchase. 

Once set, you can view your recurring purchase on your Bitcoin screen by scrolling down. You can cancel at any time or check out the details and limits for setting a recurring purchase [here](https://strike.me/faq).

That’s it!
Set it and forget it.

Buying bitcoin on a set schedule to mitigate volatility

How to dollar cost average into bitcoin

Keeping your private keys and seed phrase secret and secure are essential when you self-custody your bitcoin.

![](https://www.datocms-assets.com/99305/1724875212-learn-protect-private-keys-and-seed-phrase-state-hero.png)

[Private keys](https://strike.me/learn/what-are-private-keys-and-public-keys) are used to spend bitcoin and seed phrases are used to generate private keys. 

If you exclusively control your private keys, and the seed phrase from which they’re generated, then you exclusively can spend your bitcoin – you alone control your money.

Even though bitcoin is a digital asset that exists as transaction records on a public [blockchain](https://strike.me/learn/what-is-a-blockchain), you can think of your private keys and [seed phrase](https://strike.me/learn/what-is-a-seed-phrase) as manifestations of your bitcoin, which can be held in your possession.

The power of controlling your own private keys comes with added responsibility. If your keys are compromised or lost, then your bitcoin can be stolen or permanently lost. Proper custody of your private keys (and your seed phrase) is therefore crucial.

If you use a custodial wallet app, like [Strike](https://strike.me/download), then the app will safeguard the private keys on your behalf. When you’re ready, you can take [self-custody](https://strike.me/learn/what-is-self-custody) of your bitcoin by setting up a self-custodial wallet and then sending it to a Bitcoin address where you control the private keys. 

## Threats to your private keys and seed phrase
To protect your private keys and seed phrase, it’s essential to understand the common threats to their security. If someone gains access to your private keys or seed phrase, they can steal your bitcoin by sending it to an address they control.

Threats to your private keys:
* **Theft:** If someone physically steals your hardware wallet, paper backup, or any device that stores your private keys or seed phrase, then they could steal your bitcoin. 
* **Loss:** Losing your hardware wallet or the paper/steel where your seed phrase is written can result in permanent loss of your bitcoin. 
* **Hacking:** Hackers use malware, key-strike recording software, or phishing attacks to steal your private keys or seed phrase from your computer or phone. They might target unsecure wallet apps or trick you into installing fake software that compromises your security.
* **Scams and phishing:** Scammers may pose as legitimate services or support teams, tricking you into revealing your private keys or seed phrase through fake websites, emails, or messages.
* **Inheritance issues:** Without a proper plan, your bitcoin could be lost if your seed phrase isn’t securely passed on to your loved ones. If mishandled, it might fall into the wrong hands or become irretrievable after you die.

Understanding these threats is essential to taking the necessary precautions to secure your bitcoin and ensure it remains accessible only to you.

## Best practices for keeping your private keys and seed phrase safe
To effectively protect your private keys and ensure the security of your bitcoin, it’s important to follow best practices and avoid common mistakes.

### What you should do:
* **Use a hardware wallet:** When you own an amount of bitcoin that is significant to you, and it’s economical to do so, buy a hardware wallet to store your private keys offline to protect against online threats.
* **Password protect your wallet:** Hardware and software wallets often let you protect access using passwords, PINs, biometric, or 2-factor authentication.
* **Record your seed phrase on steel:** In addition to writing down your seed phrase, record it by imprinting the words on a steel plate to protect it from physical damage like water or fire.
* **Store backups in separate secure locations:** Keep backups of your seed phrase in different, secure locations to prevent loss from theft or disasters. This may include avoiding keeping your seed phrase at your home, so that nobody simply comes across your seed phrase by happenstance.
* **Opt for Bitcoin-only wallets:** Use wallets dedicated to bitcoin to minimize risks associated with multi-cryptocurrency wallets.
* **Consider multi-signature wallets:** Use multi-signature (multi-sig) setups that require multiple keys to authorize transactions, then geographically distribute those keys and seed phrases to avoid single points of failure.
* **Consider a passphrase for added security:** A passphrase functions like an extra word added to your seed phrase, creating a unique wallet accessible only with both the seed phrase and passphrase. This enhances security of your hardware wallet by requiring the passphrase to be entered each time you access your funds, providing additional defense if the device is stolen or compromised.
* **Consider passphrase for fund segregation and decoys:** You can use a seed phrase alone to create a “decoy” wallet with a small amount of funds, while the combination of seed phrase + passphrase secures your main holdings. 
* **Stay updated, cautiously:** Review and research before installing updates to your wallet’s software or firmware to protect against security vulnerabilities. 
* **Set up an inheritance plan:** Ensure your seed phrase is passed on securely to your loved ones after you die, so that it’s not easily accessible to just anyone, like a lawyer, who could take all the funds.

### What you should avoid:
* **Avoid digital exposure:** Never photograph, email, upload, or share your private keys or seed phrase online (or over the phone). If someone hacks into your email, phone, or computer, they could easily take your private keys or seed phrase.
* **Avoid sharing your seed phrase:** Never share your seed phrase with anyone, including over the phone or with someone claiming to be customer service. Always assume that if someone wants to know your seed phrase or private keys, they are trying to steal your bitcoin.
* **Avoid buying hardware from 3rd party resellers:** To ensure your wallet hasn’t been tampered with, it’s best to purchase directly from the manufacturer’s website. Some manufacturers also have stated policies of deleting your purchase history and shipping details after a period of time for added security.
* **Avoid encrypting your seed phrase with excess complexity:** It may be tempting to store your seed phrase with additional encryption, including different word orders, patterns or dividing up the seed phrase, but this isn’t recommended as it is more likely to result in you locking yourself or your family out of your wallet forever, rather than mitigating theft.
* **Avoid storing your seed phrase in unsecure locations:** It goes without saying that your seed phrase should not be readily accessible so that no one simply discovers it haphazardly.
* **Avoid downloading untrusted software:** Only use trusted wallet software and browser extensions to reduce the risk of malware or faulty software stealing your keys.
* **Avoid discussing bitcoin holdings:** Don’t tell other people how much bitcoin you own or your self-custody arrangements.

Protect your keys to protect your bitcoin

How do I protect my private keys?

Following best practices for managing your Bitcoin addresses can improve your financial security, privacy, and efficiency.

![](https://www.datocms-assets.com/99305/1731351996-learn-how-to-manage-bitcoin-addresses-state-hero.png)

Bitcoin addresses are a key part of how you interact with the Bitcoin network. They work like a digital destination for sending and receiving bitcoin.

Every Bitcoin address is derived from a [public key](https://strike.me/learn/what-are-private-keys-and-public-keys/), which itself comes from a[ private key](https://strike.me/learn/what-are-private-keys-and-public-keys/)–the secret key that is required to spend your bitcoin. Although bitcoin transactions are recorded on a *public* [blockchain](https://strike.me/learn/what-is-a-blockchain), ownership of bitcoin is secured because only the holder of the private key associated with the Bitcoin address can authorize transactions. 

If you control your private keys, you have the sole ability to spend your bitcoin. you alone can spend your bitcoin.

When you use a custodial bitcoin service like [Strike](https://strike.me/download), address creation and management are handled for you. The process of taking [self-custody](https://strike.me/learn/how-do-i-take-self-custody-of-my-bitcoin/) of your bitcoin, is when you take direct control and responsibility of your bitcoin, which involves setting up your own wallet, generating your private and public keys and managing your Bitcoin addresses. Depending on which wallet you choose, you can have

To properly manage your Bitcoin addresses, it’s important to follow best practices.

## What are Bitcoin address management best practices?
When you set up a Bitcoin wallet, whether it’s a mobile app or a hardware device, you gain control over your Bitcoin addresses and how to use them. Most wallet providers offer tutorials and user guides to help you get started.

Below are some best practices to follow when managing your addresses in your Bitcoin wallet:

## 1. Don’t reuse addresses
Each time you receive bitcoin, generate a new address. This is important for two reasons:
* **Privacy:** Bitcoin transactions are recorded on a public blockchain. If you reuse the same address, anyone can look up the history of that address and potentially track your financial activity. By using a new address for every transaction, you make it much harder for someone to monitor your bitcoin activity.
* **UTXO management:** Bitcoin uses the [UTXO](https://strike.me/learn/what-is-a-utxo/) (Unspent Transaction Output) model, meaning each peer-to-peer transaction has inputs (the source) and outputs (the destination), with each input being the output of a previous transaction. Using different addresses makes it easier to manage your UTXOs when spending bitcoin in the future, reducing the risk of exposing your transaction history. 

Generating new addresses is simple and trivial, and there’s no limit to how many you can create, so it’s best to always use a new one.

## 2. Double-check the address
Before sending or receiving bitcoin, always verify the address:
* **Typos can lead to loss:** Bitcoin transactions are irreversible, so if you send to the wrong address, your bitcoin could be lost forever. A single incorrect character in a Bitcoin address could send your bitcoin to the wrong address. 
* **Checksum protection:** A Bitcoin address checksum is a few characters at the end of the address, generated from the preceding characters to help detect errors. If any part of the address is mistyped or altered, the checksum will no longer match, causing the address to be flagged as invalid. Most wallets will block transactions to addresses with invalid checksums, but it’s still a good idea to double-check the first and last few characters to be safe.
* **Lightning vs. Bitcoin:** Be aware that Bitcoin addresses and Lightning invoices are not interchangeable. If you mistype a Lightning invoice, the payment will simply fail, whereas with Bitcoin addresses, a mistyped character could send your bitcoin to the wrong address and the funds can be unrecoverable.

## 3. Use QR codes or copy-paste for accuracy
To minimize mistakes when entering a Bitcoin address, use QR codes or the copy-paste function on your device:
* **QR codes:** Many wallets support the use of QR codes, which offer a way to present machine-readable versions of a Bitcoin address. They also allow you to quickly scan an address instead of typing it out manually.
* **Copy-paste:** If scanning isn’t an option, copy and paste the address to avoid mistakes. This reduces the risk of errors, though you should still double-check that the full address has been copied correctly.

## 4. Start with a small test transaction
When sending large amounts of bitcoin, it’s a good idea to first send a small “test” transaction:
* **Test the address:** Before transferring any significant amount, send a small test transaction to confirm the address works, and that the receiving wallet’s balance shows the funds have arrived.
* **Confirm it’s spendable:** After the test transaction is confirmed on the blockchain (you can check [here](http://mempool.space) by searching for your address), try spending a small portion of that bitcoin to ensure your setup works as expected. Once you’ve confirmed everything is in order, you can proceed with the larger transaction.

## 5. Follow UTXO management best practices
Understanding Bitcoin’s [UTXO model](https://strike.me/learn/what-is-a-utxo/) and [best practices](https://strike.me/learn/how-to-manage-utxos/) is key to managing your bitcoin efficiently. Keep these tips in mind:
* **UTXO size optimization:** [Bitcoin fees](https://strike.me/learn/what-are-bitcoin-fees) are based on transaction data size (in vbytes), not the value being sent. Having too many small UTXOs can lead to higher transaction fees when you want to spend, as many small UTXOs occupy more data than a single large UTXO. It’s recommended to consolidate smaller UTXOs into larger ones and only send amounts over 1 million satoshis (₿0.01) to long-term storage to avoid high fees in the future.
* **Timing of sends:** If the market rate for fees is high and your transaction is not time-sensitive, then it may be best to wait until fees subside. However, be aware that over time Bitcoin’s fees are expected to rise as adoption and usage rise.
* **Address type selection:** Depending on your Bitcoin wallet, you can select which type of Bitcoin address to generate for receiving. The different address types can support different transactions as well as improve the overall transaction size and fees you’ll need to pay when spending from that address.
* **Usage of Lightning:** For smaller bitcoin transactions or when fee rates are high, it may be best to simply avoid sending on-chain transactions to Bitcoin addresses and opt for using [Lightning](https://strike.me/learn/what-is-the-lightning-network). Lightning transactions let you transact real amounts of bitcoin via direct peer-to-peer channels for low-to-no cost.

## 6. Opt for multi-signature addresses for added security
For larger amounts of bitcoin or for long-term cold storage, consider using multi-signature (multi-sig) addresses. Multi-sig wallets require multiple private keys (usually 2 out of 3, or 3 out of 5) to authorize a transaction. 
* **Reduces single point of failure:** Multi-sig wallets add a layer of security by ensuring that no single keyholder can unilaterally access the funds. It also ensures that if one private key is lost or compromised, you can still recover your funds using the other two keys.
* **Collaborative custody:** You can also use multi-sig in combination with a third party service. In this case, you hold two keys and a trusted third party holds the third. While they can’t spend your bitcoin, their participation can help you recover your funds in case of an emergency.

## 7. Secure your private keys
Bitcoin addresses are generated using [private keys](https://strike.me/learn/what-are-private-keys-and-public-keys/), and only using those private keys are you able to spend the bitcoin that has been received to the addresses. Proper management of private keys is critical to financial security.
* **Secure your private keys:** When taking [self-custody](https://strike.me/learn/how-do-i-take-self-custody-of-my-bitcoin/) of your bitcoin, it’s important to follow best practices to [secure your private keys](https://strike.me/learn/how-do-i-protect-my-private-keys/) or [seed phrase](https://strike.me/learn/what-is-a-seed-phrase/) (the set of 12-24 words used to back up your wallet). If someone discovers or steals your keys or seed phrase, then they are able to spend your bitcoin to one of their own addresses, and your funds will be lost forever. 
* **Cold storage:** For long-term bitcoin holding, use cold-storage to keep your private keys offline, away from potential hackers or malware. 

## 8. Be aware of scams and security threats
Scammers and malicious software are always a risk. To secure your bitcoin, it’s important to be aware of common scams and to follow best security practices.
* **Common scams:** Learn about the most [common scam types](https://strike.me/learn/how-to-avoid-bitcoin-or-crypto-scams) and how to avoid them. 
* **Address replacement malware:** Be aware that some malware can detect when you’re copying or typing a Bitcoin address and then replace it with the scammer’s address. As always, it’s important to double-check before sending bitcoin or sharing an address.
* **Fake wallets:** As a best practice, it’s best to stick to well-known, reputable wallets and avoid downloading wallets from untrusted sources.

## 9. Choose a reliable wallet for your needs
When taking self-custody of your bitcoin, it’s important to select a software or hardware wallet that best suits your needs. A Bitcoin wallet manages your private keys, generates your Bitcoin addresses and lets you make transactions.

When choosing a wallet, it’s best to be patient and do your research. Read both positive and negative reviews of the wallet as well as instructions on how to use it before making your choice. Some wallets hide the complexity of address management for ease of use, while others provide detailed control, including the ability to select specific UTXOs as inputs, customizing fee rates, or “tagging” addresses for better organization.

* **Hardware wallets:** These wallets are ideal for long-term storage, since they are able to keep your private keys in an offline or even air-gapped configuration, mitigating the threat of malicious software. If you’re storing a large amount of bitcoin, hardware wallets are usually your best choice.
* **Software wallets:** These wallets are more accessible and can be useful for smaller amounts of bitcoin that you plan to spend in the immediate or near future. Software wallets are available for any device, including phones and desktop computers, and offer a greater degree of flexibility and accessibility, particularly for transacting with bitcoin.

Managing your Bitcoin addresses properly is key to staying secure and maintaining privacy. Whether you’re sending, receiving, or simply storing bitcoin, following these best practices will help ensure that you’re using the Bitcoin securely and efficiently.


Best practices for ensuring privacy, security, and economical transactions

How to manage Bitcoin addresses

## What is “Over the Counter” bitcoin?
First things first, what is Over-the-Counter?

Over the Counter (aka OTC) is a way to trade assets, usually in large amounts, outside of regular markets or exchanges. You can think of it as making *private deals*, where assets are traded without putting them up for sale on a public market.

![](https://www.datocms-assets.com/99305/1705615433-learn-how-do-i-buy-a-lot-of-bitcoin-state-hero.png)

When it comes to bitcoin, OTC is a way to buy or sell large amounts privately, as opposed to using a bitcoin trading app. OTC trading is used by individuals, family offices, [Bitcoin ETFs](https://strike.me/learn/what-is-a-bitcoin-etf), institutions, and trading platforms themselves to buy and sell large amounts of bitcoin.

So why do people use bitcoin OTC services?

Put simply, trading bitcoin OTC is often better for larger orders. When buying or selling bitcoin in increments of $100,000’s, $1,000,000’s, or more, regular trading platforms can pose certain challenges, especially relating to limits and liquidity. Trading platforms often have purchase size limits for security, fraud, or regulatory reasons, or simply due to liquidity constraints – having sufficient bitcoin and/or cash available to fulfill large orders.

A significant part of liquidity constraints is price slippage. Slippage is the difference between the *expected* price of a trade and the *realized* price that you end up getting once the trade is completed.

But why is that?

## What is price slippage?
To understand price slippage, you need to understand the market price.

Bitcoin’s market price is determined by the balance of buy and sell orders. The highest price at which buyers are willing to buy is called the “bid,” while the lowest price at which sellers are willing to sell is called the “ask.” When buyers and sellers converge on a price, a trade is made and the market price is established.

But what happens if a trader places a *large* buy order for more bitcoin than is immediately available for sale by the sellers on a given platform? 

What ends up happening is that when the buy order is initiated part of that order is fulfilled by available sellers at the current ask price, but once all those sellers’ bitcoin are bought-up the only way to complete the rest of the purchase is to increase the price to the next available ask price.

What this means is that part of the order will execute near the initial market price, while the rest of the order will execute above that price, resulting in an overall purchase price that’s higher than initially expected. This difference between the initial and realized price is called slippage, and it can significantly impact trades of large sizes, especially on platforms with low liquidity.

Using OTC for large bitcoin trades can let you avoid slippage through the arranging of private deals with single all-in prices. In this way, large amounts of bitcoin can be traded between parties without really impacting the market price of bitcoin.

![](https://www.datocms-assets.com/99305/1705011631-learn-how-to-buy-bitcoin-support.png)

## How does OTC bitcoin trading work?
OTC bitcoin trading begins with an OTC service (aka OTC desk). The OTC desk is composed of traders, who are in contact with other large market participants, including large holders of bitcoin, investors, other OTC desks, or institutions.

How OTC bitcoin trading works:

1. The customer contacts the OTC desk via email or secure messaging service.
2. They discuss key details, including desired trade size, timing, and payment methods.
3. The customer then deposits cash via wire transfer for buying, or sends bitcoin to a specified on-chain address for selling.
4. Once the funds are delivered, the customer requests a quote from the OTC desk.
5. The OTC desk offers a quoted price, which is valid for a limited time due to market fluctuations.
6. The customer either *confirms* the trade at the quoted price, or *passes* on the quote, waiting for a more favorable price.
7. Upon customer confirmation, the OTC desk locks in the trade and proceeds with execution.
8. Finally, the OTC desk arranges the cash and bitcoin exchange, sending funds to the pre-arranged destination.

Depending on the size of the order, the OTC desk may need to engage with multiple parties to facilitate the exchange. For the service of arranging the trade, the OTC desk earns a fee.

## How to buy bitcoin over the counter
Strike Private is an OTC bitcoin trading service that is open to people, businesses, family offices and institutions looking to buy or sell large amounts of bitcoin. It supports buying and selling bitcoin while offering deep liquidity, custom pricing, personalized service and the option to trade in USDT stablecoins.

Strike Private is connected to your Strike account, which means you can transfer your cash and/or bitcoin in and out of your Strike account as well as view all settled and pending transactions. If you don’t already have a Strike account, you can [sign up in minutes](https://strike.me/download).

To buy or sell bitcoin OTC using Strike Private, contact private@strike.me for a no-obligation conversation. The Private team will be able to answer your questions regarding your desired trade size, timing, and payment methods. 

Strike Private has no limit on the amount or frequency of bitcoin trading. You can also contact private@strike.me to request a custom account limit increase, so that you can trade larger volumes of bitcoin on your own within the Strike app. By default, Strike users can deposit unlimited cash via wire transfer and direct deposit to buy bitcoin, provided they’re in a region where those Strike app features are supported. 

OTC trading is for buying large amounts of bitcoin

How to buy a lot of bitcoin using Over-the-Counter

When you take self-custody of your bitcoin, you gain full control over your funds—but with that comes the responsibility of managing UTXOs (Unspent Transaction Outputs).

![](https://www.datocms-assets.com/99305/1731351997-learn-how-to-manage-utxos-state-hero.png)

A [UTXO](https://strike.me/learn/what-is-a-utxo) represents a specific, discreet amount of bitcoin that you’ve received, but have not yet spent. 

Each time you receive a bitcoin payment, a new UTXO is created, and when you make a transaction, one or more UTXOs are selected as inputs and are consumed. Effectively managing your UTXOs can help you optimize transaction fees, preserve privacy, and maintain the flexibility to spend your bitcoin when you need it.

If you use a custodial service like [Strike](https://strike.me/download), UTXO management is handled for you behind the scenes. Strike lets you buy or sell bitcoin without recording those transactions on Bitcoin’s public blockchain. When you decide to send bitcoin off-platform, such as to a [self-custody](https://strike.me/learn/what-is-self-custody) wallet, your accumulated purchases are combined into a single UTXO and delivered to your specified [Bitcoin address](https://strike.me/learn/what-is-a-bitcoin-address).

In the future, when it comes time to spend that bitcoin, your new transaction will use that UTXO as its input. Understanding how to handle UTXOs can affect fee costs, transaction efficiency, and privacy can help you avoid common mistakes. 

If you’re unfamiliar with UTXOs or how they work, read this [explanation](https://strike.me/learn/what-is-a-utxo) before proceeding.

## UTXO management best practices
When you’re ready to take self-custody of your bitcoin, it’s important to follow best practices regarding the timing, sizing, frequency, and location for your transactions.

### 1. Avoid UTXOs that are too small
Small UTXOs can become uneconomical to spend when [transaction fees](https://strike.me/learn/what-are-bitcoin-fees) rise. For example, if you have a UTXO of only 10,000 satoshis, the fee required to use that UTXO as an input could exceed its value during a period of high fees. To avoid this, it’s recommended to keep your UTXOs above 1 million satoshis (₿0.01), particularly for long-term or cold storage. This ensures that even in high-fee environments, your UTXOs remain spendable without eating into their value.

### 2. Avoid UTXOs that are too large
Holding all your bitcoin in a single large UTXO can compromise privacy. When you use a large UTXO for a transaction, the recipient can see the input amount and the excess change sent back to one of your addresses, potentially revealing your total holdings. By breaking down large UTXOs into smaller and varied sizes, you can enhance your privacy and give you more flexibility when selecting inputs for future transactions.

### 3. Diversify your UTXO sizes
Maintaining a mix of UTXO sizes in your wallet gives you more flexibility. For example, having a few UTXOs of ₿0.01, some of ₿0.1, and others of ₿0.5 gives you flexibility to choose appropriately sized inputs for different transactions. This helps minimize the amount of change that’s sent back to your wallet and can reduce transaction size, ultimately saving on fees. It also allows you to better match the input size to the amount you need to send, avoiding unnecessary complexities.

### 4. Use separate UTXOs for different sources
Keeping UTXOs from different sources separate can help protect your privacy. For example, if you have some bitcoin from non-KYC (Know Your Customer) sources, it's best to avoid mixing those with UTXOs from KYC services. This makes it harder for someone to trace the origin of your funds when you spend them, maintaining a clearer distinction between different sources. This practice prevents linking your transactions in a way that could expose more of your financial history.

### 5. Consolidate UTXOs when fees are low
During periods of low transaction fees, it’s a good idea to consolidate smaller UTXOs into larger ones. This involves creating a transaction that uses multiple small UTXOs as inputs and combines them into a single larger UTXO as the output. Many wallets allow you to choose which inputs to use, along with setting a custom fee rate. Consolidating when fees are low prevents you from ending up with too many small UTXOs, which can be costly to spend during high-fee periods.

Remember, sending multiple transactions to a single Bitcoin address does not combine them into a single UTXO; instead, each payment creates a separate UTXO that’s linked to that address. Consolidating UTXOs means selecting multiple UTXOs as inputs for a single transaction, which can have one or more outputs, resulting in fewer, larger UTXOs for easier future management.

### 6. Time your transactions
Bitcoin transaction fees can vary significantly based on network activity. If your transaction isn’t time-sensitive, it can be beneficial to wait for periods when fees are lower to avoid overpaying on fees. However, it’s important to strike a balance, as waiting too long could lead to missed opportunities if fees rise further. 

You can monitor fee rates [here](https://mempool.space/graphs/mining/block-fees#all), but be aware that fee rates are expected to rise over the long-term as Bitcoin adoption grows.

### 7. Use Lightning for smaller transactions
For small, everyday transactions, consider using the [Lightning Network](https://strike.me/learn/what-is-the-lightning-network) instead of regular “on-chain” transactions. Lightning allows you to make bitcoin payments instantly and with minimal fees by using off-chain channels, avoiding the need to manage UTXOs directly. It’s a great way to keep your on-chain transactions to a minimum, which can help reduce the complexity of managing UTXOs in your wallet.

### 8. Avoid reusing addresses
Reusing addresses can make it easier for others to trace your UTXOs and see your financial history. Each time you use an address, it links any UTXOs received at that address, making your activities more traceable on the blockchain. Using a new address for each transaction helps maintain privacy by making it harder for observers to follow the flow of your funds. Many wallets allow you to automatically generate a new address for each incoming transaction, making this best practice easy to follow.

For Bitcoin address creation and management, follow these [best practices](https://strike.me/learn/how-to-manage-bitcoin-addresses). 

### 9. Select the right address format for fee optimization
Choosing the appropriate [address format](https://strike.me/learn/what-is-a-bitcoin-address/) can help you reduce fees when managing UTXOs. Using Bech32/SegWit addresses (which start with “bc1”) or Taproot addresses (which start with “bc1p”) can lower your transaction costs compared to older formats like P2PKH (which start with “1”) or P2SH (which start with “3”). 

Bech32 and Taproot addresses use more efficient encoding and have smaller transaction sizes, which means they require less blockspace and thus pay lower fees. When setting up a new wallet, opting for a SegWit or Taproot-compatible address can help you optimize costs when it comes time to spend in the future.

## The Importance of UTXO Management
Effectively managing your UTXOs allows you to spend your bitcoin more economically, no matter what happens with future fee rates. When fees are high, having well-sized UTXOs can save you money, while consolidating smaller UTXOs when fees are low helps keep your wallet efficient. Good UTXO management also enhances privacy by making your on-chain activities harder to trace, preserving our financial privacy.

Remember, Bitcoin transactions are irreversible, so mistakes–like using the wrong UTXO in your transaction or sending to the wrong address–cannot be undone. It’s important to understand how UTXOs work and plan your transaction carefully.