How does GiveBitcoin work for recipients?

I just received a Bitcoin gift from GiveBitcoin. What’s going on here?

First off, congrats! You’re now part of an exciting revolution in the world of finance and technology. We know Bitcoin can be intimidating to newbies so we’re here to guide you through the process.

First off, a little background on us: GiveBitcoin allows people to gift Bitcoins to friends and family quickly and easily, timelocking their gifts so recipients become hodlers right out of the gate. Plus, GiveBitcoin delivers carefully crafted education and training so recipients become real Bitcoiners by the time their gift unlocks.

HODL is an intentional misspelling of “hold” that has come to stand for “Hold On for Dear Life.” A person who does this is known as a “HODLer” or “HODLER.” Hodlers believe in the long-term value of their coins and aren’t looking to sell anytime soon. 

Below, GiveBitcoin founder Cory Klippsten answers some common questions that recipients have about their gifts and Bitcoin in general.


Giftee: Why did you send Bitcoin to me? Why not just send me a gift card or cash?

CK: I gave you some money, but this money is special. This is, in my opinion and the opinion of a growing number of damn smart people around the world, the best money that’s ever existed. You can think of it as digital gold, but it’s even better in important ways. My hope in giving you this gift and the education that comes with it, is that you’ll get interested in it and learn more about it. Hopefully, you’ll become a big fan of Bitcoin. It looks like it’s going to become more and more important to the global financial system, to the savings of individuals around the world, and it has some really amazing potential effects for humanity. Imagine everyone around the world using the same kind of money and thinking about value in a way that allows for coordination on a global scale the likes of which we’ve never seen before.

[Bitcoin] is going to become more and more important to the global financial system, to the savings of individuals around the world, and it has some really amazing potential effects for humanity.

Cory Klippsten

Giftee: Okay. But I know what to do with cash. Why is this going to be better for me?

CK: Because if you get cash, you’ll just spend it. For the next 10 to 20 years, if history is any guide, Bitcoin should continue to appreciate significantly against fiat currencies like the dollar. 

Fiat currency is legal tender whose value is backed by the government that issued it. The U.S. dollar is fiat money, as are the euro and all other major world currencies. (source)

On average, since 2011, Bitcoin has appreciated 200% per year against the dollar. Basically it triples every year, on average. Now, that happens in volatile cycles; it goes way up and then way down. That’s why it’s timelocked

A timelock restricts the spending of bitcoins until a specified future time.

It’s fun and somewhat addictive to pay a lot of attention to the price of Bitcoin, but the more important thing is actually understanding it and starting to think about what it means for you moving forward. It’s looking increasingly likely most people will eventually hold Bitcoin and you’ll gain an advantage by holding it (and learning about it) sooner rather than later.

Giftee: That all sounds good. But how come you won’t just let me have some now?

CK: You’re more than welcome to buy some Bitcoin for yourself. And I hope you do. In fact, you can buy it right through the same place where where your gift Bitcoin is being held, with just a couple of clicks. However, I gave you Bitcoin that’s timelocked because the best use case for it is holding, not trading. That’s really what it’s for at this stage: a store of value. Think of it like buying gold and sticking it in a vault for a long time.

Think of it like buying gold and sticking it in a vault for a long time.

Cory Klippsten

Giftee: The timelocked part makes me think of it like a trust fund. Is it like that?

CK: I’d say it’s more like a CD (a certificate of deposit), a bond, or gold. There are a lot of cultures where you give away a little bit of gold as a gift. The recipient might say, “I’d rather have cash.” But the giver is thinking, “I want you to hold on to this for awhile.”

Giftee: So who’s holding my money? How do I know it’s going to be there once the timelock is up?

CK: It’s stored with a very reputable third-party custodian (PrimeTrust) who’s holding on to it for you in a user-segregated account. So, it’s your account and you’ll have view access to that account during the holding period. As soon as your holding period is up, you’ll have full access and you can either leave it there or move it to your own non-custodial wallet (i.e. you control the keys to it) or you can sell it right there from the app.

A custodial wallet is a wallet in which your private keys are stored by a third party that you are trusting to keep your funds secure. Non-custodial wallets give you full control over your funds, but you are personally responsible for keeping them secure.

Giftee: So I can cash out when the timelock is up?

CK: You’ll have the option to leave it there, to sell it for cash, or to transfer the Bitcoin wherever you want it to go. You can transfer it to your own wallet. Maybe you’ll be a super Bitcoiner by then and you’ll have your own node

A node is a computer that is running the Bitcoin program. More importantly, it is connected to other computers (running the same program) to create a network. (source)

Maybe you’ll have cold storage, maybe you’ll have a hot wallet. Maybe you’ll just prefer to put it on an exchange because you want to experiment with trading. It’ll be yours to do whatever you want. Along the way, we’re going to equip you with knowledge so you can make the best decisions for your Bitcoin.

Hot wallets are connected to the internet, while cold wallets are not. Many cryptocurrency enthusiasts hold multiple wallets, some of them hot and some of them cold. The biggest advantage to a hot wallet is that it can be used to help facilitate basic transactions. Individuals looking to actually make purchases with their cryptocurrency assets might choose to use a hot wallet, for instance, as the holdings in that wallet will be transferable across the internet. On the other hand, hot wallets are somewhat more likely than cold storage techniques to face issues of security and hacks. That's not to say that a hot wallet is necessarily an unsafe way of storing your cryptocurrencies. Rather, it's more about the comparison between a hot wallet, which can access (and theoretically be accessed by) other parts of the internet, and a form of cold storage, which is entirely removed from the internet ecosystem. (source)

Giftee: You mentioned coordination on a global scale and the potential positive effects for humanity which sounds lovely, but I’m not really sure what that means. Any details?

CK: It’s less important to people in the West where we have fairly well-functioning markets and financial system. Our politicians and government are at least semi-trustworthy. But around the world, there are less rosy scenarios going on and having another currency that’s available that governments can’t stop people from owning and using provides a massive benefit to humanity. Bitcoin can be sent almost instantly, without a third party intermediary, to anyone in the world for either no cost or very minimal fees. So that’s also an interesting thing for global commerce.

Around the world, having another currency that’s available that governments can’t stop people from owning and using provides a massive benefit to humanity.

Cory Klippsten

Giftee: So someone in San Francisco can give money to someone in Rwanda and it doesn’t have to go through a bank wire transfer or anything like that?

CK: No banking systems, no permissions, no nothing. Nobody’s eating all that money through commissions or fees. Think about the remittance market and people paying 20% to get money from Western Union. That’s all gone with Bitcoin.

Giftee: What about other cryptocurrencies?

CK: Bitcoin was the first cryptocurrency and it’s by far the dominant one. It’s the one you want to be spending time on over Ethereum, Ripple, or any of the other altcoins. Bitcoin has by far the largest community, the most liquidity, the highest market capitalization, and, most importantly, the strongest security. All of this, plus a bunch of network effects, guarantee that none of these other coins will ever approach Bitcoin and overtake it.

Giftee: Why is Bitcoin so superior to these other coins?

CK: Bitcoin did so many things right when designing the system and the incentives. It’s just a really, really strong system for digital transfer of value. The building blocks of Bitcoin involved combinatorial creativity on top of a lot of different things that had already been around for a long time. For example, Blockchain has been around since the 80’s. Proof of work had been developed and theorized for a long time.. A lot of these things already existed but they were never pieced together in a cogent way until Bitcoin. 

Bitcoin is a digital currency that is underpinned by a kind of distributed ledger known as a blockchain. This ledger contains a record of all bitcoin transactions, arranged in sequential "blocks," so that no user is allowed to spend any of their holdings twice. In order to prevent tampering, the ledger is public, or "distributed"; an altered version would quickly be rejected by other users. (source)
A proof of work is a piece of data which is difficult (costly, time-consuming) to produce but easy for others to verify and which satisfies certain requirements. Producing a proof of work can be a random process with low probability so that a lot of trial and error is required on average before a valid proof of work is generated. Bitcoin uses the Hashcash proof of work system. (source)

Giftee: That sounds a bit like how the Internet was around for decades but it wasn’t until TCP/IP, HTML, and browser technology came together in a way that made it accessible to the masses.

CK: Yeah, I think that’s right. I mean a good way to think about Bitcoin is as the natural development of the Internet. The Internet as we’ve known it so far has been the Internet of information. And now it’s turning into the Internet of value or the Internet of money. Before the Internet, being able to send information around the world instantly and for free was a fantasy. But now, essentially, we’ve turned money into information and it’s traveling over the same pipes. There’s a good chance that in 100 years we’ll look back at the Internet from 1992 to 2012 and think of it as a super strange 20 year period where we had an internet with no money on it.

The Internet as we’ve known it so far has been the Internet of information. And now it’s turning into the Internet of value or the Internet of money.

Cory Klippsten

Giftee: Interesting. I heard that Bitcoin had a huge drop in value last year. Would you say that’s similar, in a way, to the dot com bust of the early 2000s? I mention it because although things like pets.com and Ask Jeeves turned out to be bad investments, that didn’t mean it was a good idea to give up on the Internet as a concept.

CK: Yeah, I think that’s right. This isn’t an individual stock, you’re betting on the protocol. This is basically like if, back in the day, you could have invested in, you know, HTTP or IP creating a lot of value in the future. That would have been a helluva bet. But there was no way to own part of that protocol. With Bitcoin, you actually own part of the network, you own part of the protocol.

Giftee: Bitcoin still sounds pretty volatile though.  

CK: Well, none of us have ever watched the monetization of an asset in real time and it is bound to be very volatile. The best analog we have for it is probably gold in the 70’s when people could own it again. Essentially the dollar was no longer backed by gold and they unlocked the vaults and said you can buy and hold gold yourself now. There were crazy swings. Not quite as crazy as Bitcoin, but it would be up 150% and then down 60% in back to back years. The scale of what’s happening with Bitcoin is a lot greater, but the shape of the graphs actually look very similar to what happened with gold in the 70’s and 80’s. Experts generally expect Bitcoin’s market cap, when it stops being volatile and it’s just kind of widely held and steady, to be somewhere between $10-200 trillion USD. The reason it’s so volatile on the way up is because when it starts to rise in value and a bunch of people learn about it and speculate it’s going to be worth a lot, they essentially front run it. You simply can’t take something from a value of zero up to being in the tens of trillions of dollars, without it being volatile. If it actually grew in a straight line, 20 or 30% every year, automatically a bunch of people expecting those 30% annual returns would bid it up a ton right now. And that’s what’s happened in the past with Bitcoin. It’s gone way, way up and then come crashing down. But these are waves, not bubbles.

Giftee: Alright. So as I’m waiting for my timelock to expire, do I have any relationship with GiveBitcoin?

CK: GiveBitcoin hopes you’ll use this time to start learning about Bitcoin. We’ll send you emails every month to help educate you. And you can get on the website and start learning at your own pace. There are tons of books, podcasts, and other resources that will help too.

Giftee:  If I’m being honest, I still think it sounds risky. This is a new world to me.

CK:  Keep in mind: I gave you a little bit of Bitcoin, but I did not replace your entire portfolio, all of your assets, with Bitcoin. You already have everything else you own; your house, car, savings, etc. I’m just adding a little bit of Bitcoin to the mix. The addition of a really volatile asset to a fairly steady portfolio has a lot of benefits; you’re still managing your risk but you’re getting some exposure to a potentially huge reward. And the younger you are, the more it makes sense to incorporate a little bit of risk into your portfolio.

Giftee: Got it. So where should I go to learn more?

CK: Check out The Bullish Case for Bitcoin by Vijay Boyapati. Also, sign up at GiveBitcoin and you’ll start getting access to our curriculum/educational resources. And finally, the GiveBitcoin blog will keep you updated on all the latest goings on here at GB.


GiveBitcoin makes it easy for you to buy Bitcoin for others, knowing that GiveBitcoin will help them understand it. Give them their first taste of Bitcoin, timelock it so they can’t spend it right away, and educate them on why it’s the best form of money we’ve ever had so they “hodl” for the long term. For more information or to join our email list, visit GiveBitcoin.io.

Leave a Reply

Your email address will not be published. Required fields are marked *