Module 2 of 9
Acquiring and Securing Bitcoin
The three ways to acquire bitcoin — buy, earn, or trade peer-to-peer — and the custody practices that make it actually yours: wallets, seed phrases, and the rules that prevent loss.
Film · Three ways in · 1:33
Block ———A short film for module 2 of Bitcoin Essentials: the three ways to get bitcoin, and the honest trade-off of each. Buying on an exchange or broker means identity checks, and coins left there are the exchange's promise, not yours, so withdraw promptly to keys you hold: spending money in a phone wallet, savings in multisig, which has its own risks. Earning it, priced in sats, needs no exchange, though few prices are set in bitcoin yet. Buying from a person, peer to peer, means no company holds your coins, but you must judge who you trade with. Buying a fixed amount on a schedule is described as a method, not advice; buying isn't usually taxed, but selling or spending can be, so check your local rules; and running your own node lets your wallet check the rules itself rather than trust someone else's server. Fiat asks you to trust; bitcoin lets you verify. It loops while on screen; use Pause to stop it. Turn on Narration to hear it explained aloud. A transcript follows.
Read the film, with its sources
- Bitcoin Essentials · Module 2 of 9Acquiring and Securing Bitcoin. How do you get some bitcoin, and how do you make it truly yours?
- Three ways inFiat currency reaches you through a bank: your pay lands in an account the bank keeps for you. Bitcoin has three ways in. You can buy it from a business, an exchange or broker; you can earn it, for work or for things you sell; or you can buy it directly from another person, peer to peer.
- 1 · Buy on an exchange or brokerThe usual way in is to buy from an exchange or broker, a business that swaps fiat currency for bitcoin. Expect identity checks: in the UK, for example, exchanges must register with the FCA under the Money Laundering Regulations, which require them to verify who their customers are. And while your coins sit there, they are the exchange’s promise to you, not coins you hold: an exchange can freeze withdrawals, fail, or misuse what it holds, as a US court found of one large exchange in 2024.FCA, Cryptoassets: AML / CTF regime (last updated 12 February 2026)The Money Laundering Regulations 2017 (SI 2017/692), reg. 28: Customer due diligence measuresCFTC, Release 8938-24, 8 August 2024 (consent order, US District Court, SDNY)
- Withdraw promptlyBuying on an exchange is fine; leaving coins there is the risk. So withdraw promptly to keys you hold. Spending money can sit in a wallet on your phone. Savings belong in cold storage, which on this site means multisig: no single lost or stolen key can cost you the coins, though it has risks of its own, and the Self-Custody course shows how.
- 2 · Earn itOr earn it: price your work, or what you sell, in sats, the smallest unit (100,000,000 to one bitcoin). Earned bitcoin needs no exchange in between and no conversion: it arrives as payment. The catch is adoption: few prices are set in bitcoin yet, so you need people willing to pay in it.Bitcoin Core, src/consensus/amount.h, COIN (read 16 Oct 2026)
- 3 · Peer to peerOr buy directly from another person, peer to peer, by bank transfer or in cash. No company holds your coins, so there is no exchange to fail. The trade-off: amounts are smaller, there is more to learn, and the risk moves to the other side of the trade, so you must judge who you are dealing with. Whether and how it is allowed depends on where you live.
- A fixed amount, on a scheduleOne method people use is to buy the same fiat amount on a fixed schedule, every week or every month, rather than choosing a moment. It is described here as a method, not a recommendation: this film never says whether, when or how much to buy. The bars are an illustration, not data.
- TaxBuying bitcoin with fiat currency isn’t usually taxed; selling or spending it can be. Britain’s tax office lists selling tokens and using them to pay for goods or services as disposals, and buying is not on the list; America’s lets you answer “No” if you only bought. This is general education, not advice: check your local rules.HMRC Cryptoassets Manual, CRYPTO22100: Capital Gains Tax: what is a disposal (last updated 28 November 2025)IRS, Digital assets (last reviewed or updated 2 September 2026)
- Verify for yourselfLast, verify for yourself. A wallet that relies on someone else’s server believes what that server tells it. Run your own node, and your machine downloads the chain and checks every block against the rules itself; the white paper says “network nodes can verify transactions for themselves”. It isn’t needed on day one. It is where the journey leads.Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System (2008), §8 Simplified Payment Verification
- The Bitcoin TransitionHow do you make bitcoin yours? Fiat asks you to trust. Bitcoin lets you verify.
Bitcoin is unlike any money you have used, in one specific way: there is no password reset, no fraud hotline, and no manager to call. You are the bank. That is the trade-off and the point — full control, full responsibility. This module covers how to acquire bitcoin and how to hold it so that no exchange failure, bank freeze, or lost phone can take it from you.
The three ways to acquire bitcoin
Every path into bitcoin is one of three: you buy it, you earn it, or you trade for it privately.
1. Buying through an exchange
The most common on-ramp is a centralised exchange — a regulated business that converts fiat to bitcoin. The process is standard: sign up, complete identity verification (KYC), deposit fiat by bank transfer, buy bitcoin. Prefer bitcoin-only platforms where available; they tend to take custody, security, and withdrawal seriously, and they will not spend their interface trying to sell you speculative tokens.
Then the step that matters: withdraw the bitcoin to your own wallet, immediately. Buying on an exchange is fine. Storing on an exchange is how people lose everything. Mt. Gox held roughly 850,000 bitcoin of customer funds when it collapsed in 2014. FTX was an eight-figure-customer exchange in November 2022 and a bankruptcy the same month. The rule that survives every cycle: not your keys, not your coins.
2. Earning bitcoin
Earning is the most underrated acquisition path, because it requires no fiat conversion at all. Freelancers can invoice in bitcoin through payroll and payment services. Businesses can accept it directly. Any service you already sell — code, writing, design, consulting — can be priced in sats. Earned bitcoin also has the cleanest possible history: it arrives as payment, not as an exchange withdrawal tied to your identity documents.
How to earn your first bitcoin without buying it →
3. Peer-to-peer
Peer-to-peer platforms match buyers and sellers directly — bank transfer or cash in person — with escrow handled by the protocol rather than a custodian. The benefit is privacy and independence from exchange risk; the cost is smaller volumes and a learning curve. Where this fits legally depends on your jurisdiction; Module 4 covers the obligations that still apply.
Custody: hot wallets and cold wallets
A wallet does not store bitcoin. It stores keys — the cryptographic proof that lets you spend bitcoin recorded on the chain. Wallets divide into two classes:
- Hot wallets are connected to the internet: wallet apps on a phone or computer. Fast and convenient. Correct for spending money — small amounts you can afford to carry in a wallet on a network-connected device.
- Cold storage keeps keys offline permanently, on dedicated signing devices: signing happens on the device, and the keys never touch an internet-connected computer. For savings, that means a multi-signature wallet: keys on bitcoin-only devices from unrelated vendors, running open-source firmware, kept in different places, each seeded with entropy you generate yourself.
The rule: hot wallets are your pocket, cold storage is your vault. Never hold meaningful savings on a hot wallet, and never hold them on an exchange at all.
How to choose a hardware wallet →
The seed phrase is the money
When you create a wallet it generates a seed phrase — usually 12 or 24 words. Those words are the master key. Anyone who has them has your bitcoin; anyone who loses them, with the device destroyed, has lost it permanently. The handling rules are absolute:
- Write the words on paper or stamp them into metal. Never type them into anything: no photos, no screenshots, no password managers, no cloud notes.
- Store copies in separate secure locations — a safe, a bank deposit box — so that one fire or flood cannot take both the device and the backup.
- Never share the phrase with anyone. No legitimate service, developer, or support agent will ever ask for it. Everyone who asks is stealing.
- For savings, use multi-signature: two-of-three keys in separate places, so no single loss or theft is fatal. It has its own risks: back up the wallet descriptor with the seeds (the seeds alone will not recover it), never let fewer than two keys survive, and practise a recovery with a small amount first. Module 6 builds on this for inheritance.
What is a seed phrase (and how to secure it) →
Verify for yourself: run a node
The final step in self-sovereignty is running your own Bitcoin node. A node downloads and independently verifies the entire chain, so when your wallet reports a payment, the confirmation comes from your machine applying the rules — not from someone's server telling you what to believe. It is not required on day one. It is where the journey leads: don't trust, verify.
Action steps
- Install a reputable hot wallet and receive a small amount of bitcoin — from a purchase, a friend, or earnings.
- Order signing devices from unrelated vendors, initialise each offline with entropy you generate yourself, back up every seed phrase and the wallet descriptor on paper or metal, and practise a recovery with a small amount before moving savings.
- Move your savings off any exchange today. Not this month. Today.