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Arkade is a new protocol that enables programmers to build advanced financial applications on Bitcoin without any changes to the main chain. In this article we will dive into what Arkade is, its main aspects and how this technology will be leveraged on Hodl Hodl.

## Arkade vs. Ark

To avoid any confusion we will briefly touch upon a difference between [Ark](https://assets.arklabs.xyz/ark-protocol.pdf) and [Arkade](https://arkadeos.com/).

### What is Ark?

[Ark](https://assets.arklabs.xyz/ark-protocol.pdf) is a conceptual framework for scaling Bitcoin proposed in May 2023. It allows for consolidating many offchain Bitcoin transactions into a single mainnet transaction, enabling fast, cheap transactions while fully inheriting Bitcoin’s security guarantees.

Ark is not a protocol by the strictest definition, as it is neither interoperable nor standardized. It is best seen as a design pattern that anyone is free to implement as they see fit.

### What is Arkade?

[Arkade](https://arkadeos.com/) is an open-source platform created by [Ark Labs](https://arklabs.xyz/). It builds on top of the concepts introduced by Ark, with a focus on leveraging the enhanced programmability introduced by Bitcoin’s [2021 Taproot upgrade](https://river.com/learn/what-is-taproot/).

## What is a virtual output (VTXO)?

One of the fundamental building blocks of Bitcoin is the [Unspent Transaction Output](https://river.com/learn/terms/u/unspent-transaction-output-utxo/), or UTXO for short. Unspent outputs are discrete chunks of bitcoin that can be spent with a private key.

Arkade builds on top of this with the [Virtual Transaction Output (VTXO)](https://docs.arkadeos.com/learn/core-concepts/vtxos-and-ownership), which is essentially an offchain version of a UTXO. Virtual outputs can be transformed into mainnet Bitcoin outputs at any time, but they can also be spent offchain to create new virtual outputs.

### How do virtual outputs work?

A virtual output is a chain of unbroadcasted Bitcoin transactions leading up to a standard mainnet output. Virtual outputs are initially created by a special mainnet transaction called a [batch swap](https://docs.arkadeos.com/learn/core-concepts/settlement-and-finality#batch-swaps), and are then spent in offchain transactions that follow the same rules as Bitcoin.

### The benefits?

Because they are offchain, virtual outputs can be spent instantly and at a low cost. You don’t need to wait for the block confirmation or open a Lightning channel to receive them. In addition, transactions on Arkade remove pressure from the main chain and allow for a higher transaction throughput.

## What are the Arkade operators?

Arkade uses a client-server model, with a trusted operator coordinating offchain transactions.

### Is Arkade non-custodial?

Yes. Although the Arkade operators coordinate transactions and provide liquidity, it never touches your private keys. You can unilaterally exit to mainnet without involving the operator. To keep that exit path open, your outputs go through periodic renewals: a small, recurring fee debited from the liquidity backing your funds and paid to a trust-minimized [delegate](https://docs.arkadeos.com/learn/core-concepts/vtxo-lifecycle-and-liveness#delegation).

### What is Transaction Finality?

When you want to gain full Bitcoin finality, the Arkade operator collects together your outputs and those of other users and settles them into a single onchain commitment transaction. This settlement bundles everyone's outputs together, swapping UTXOs in and out to move you from expiring liquidity into fresh outputs — while splitting the cost across all participants.

### What is preconfirmation?

One of Arkade’s key innovations is [preconfirmation](https://docs.arkadeos.com/learn/core-concepts/transactions-and-execution#preconfirmation).

Normally on Bitcoin, users wait for a [block confirmation](https://river.com/learn/terms/c/confirmation/) before treating a payment as final. Arkade allows transactions to become usable immediately after the operator cosigns them, without waiting for an onchain confirmation.

From the user perspective, payments feel instant. Received [VTXOs](https://docs.arkadeos.com/learn/core-concepts/vtxos-and-ownership) can immediately be spent again inside the Arkade system, enabling fast and low-cost Bitcoin transactions. 

This creates two settlement states:

- **Preconfirmed** → instant execution with a[ trust assumption](https://docs.arkadeos.com/learn/core-concepts/security-and-trust-model#the-trust-model) around the operator
- **Settled** → full Bitcoin finality once batched onchain

Importantly, Arkade remains non-custodial. Users still retain a unilateral exit path that allows them to reclaim funds on Bitcoin mainnet if the operator disappears.

In practice, this gives users flexibility: keep funds preconfirmed for speed and convenience, or periodically settle onchain for maximum Bitcoin security and finality.

## What is a unilateral exit in Arkade?

The unilateral exit is a key feature of Arkade that makes it non-custodial by design. Arkade virtual outputs are always backed by a guaranteed, permissionless path to a Bitcoin output. If the Arkade operator disappears, you don't need their permission to leave. You have a [presigned exit path](https://docs.arkadeos.com/learn/core-concepts/security-and-trust-model#unilateral-exit) that allows you to claim the mainnet outputs backing your funds. Keep in mind that in the best case scenario there is never a need for a unilateral exit.

### What is a transaction tree?

A transaction tree is a [chain of several related Bitcoin transactions](https://docs.arkadeos.com/learn/core-concepts/vtxos-and-ownership#virtual-transaction-tree) that are prepared and signed in advance, but not yet broadcasted. It splits a larger onchain pool of funds into smaller chunks. It enables many users to share a single onchain transaction and prove which part belongs to them, while keeping their money separate.

It works by layering transactions: a single root transaction is confirmed on the main Bitcoin chain, which then branches out into multiple offchain transactions. Your specific balance sits at the very end of one of these branches. If you ever need to get your money out without the operator's help, you simply broadcast the specific transactions that lead from the root down your branch, effectively [unrolling](https://docs.arkadeos.com/learn/core-concepts/security-and-trust-model#unilateral-exit) your portion of the tree.

### How much does it cost to do a unilateral exit?

While exiting is a guarantee of coming back to the mainchain, it can be [expensive](https://docs.arkadeos.com/learn/core-concepts/security-and-trust-model#exit-costs). If you are deep in a branch, you will have to pay to broadcast every transaction leading up to your output. This is why users are encouraged to periodically [renew](https://docs.arkadeos.com/learn/core-concepts/vtxo-lifecycle-and-liveness#batch-expiry) their outputs to keep their exit costs low.

## How will Hodl Hodl leverage Arkade?

Since we are laser focused on bringing non-custodial solutions for P2P trading, it was essential for our team to find a way to integrate the Lightning Network in a non-custodial way.

The way we are working to solve the issue is by leveraging a Taproot-based escrow multisig on Arkade. From a user perspective it is a simple trade between Lightning and fiat.

What happens on the backend is a non-custodial atomic swap by Satora, from Lightning to Arkade when a seller deposits bitcoin. The BTC lands into a multisignature wallet with the keys distributed amongst 4 parties (buyer, seller, Hodl Hodl and the Arkade operator).

Similar to onchain 2/3 multisig wallets, bitcoin is held in a non-custodial way until the buyer completes their part of the trade and the seller confirms the receipt of the funds.

After the confirmation, bitcoin is released to the buyer and they can choose to receive it as BTC on Lightning. The complexity of a swap and key management will be obscured from the user making the flow seamless and non-custodial at the same time.

## TLDR

- **What is Ark?** a conceptual framework for scaling Bitcoin via consolidating many offchain transactions into a single mainnet transaction.
- **What is Arkade?** an open-source protocol that builds on top of the concepts introduced by Ark, enabling advanced financial applications and fast, non-custodial payments.
- **Virtual Outputs / VTXOs**: these are offchain bitcoin balances. They are cryptographically guaranteed promises of onchain BTC that can be spent instantly.
- **Non-Custodial**: You always hold your keys. If the operator disappears, you can reclaim your funds on Bitcoin mainnet without asking for permission.
- **Batch Swap**: To keep fees low, Arkade bundles hundreds of users into one batch swap. Users share the cost of a single onchain transaction while gaining mainnet finality.
- **Liveness**: To stay non-custodial, users must perform a renewal every other month. 
- **Hodl Hodl integration**: Hodl Hodl creates a non-custodial escrow by swapping Lightning Bitcoin into a secure 3/4 multisig wallet on Arkade by using atomic swaps from Satora.

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 Arkade

Privacy in crypto, as well in any other realm of our life, is a tricky matter: every day, we give away our personal data to use government services and financial platforms, book and buy things online, communicate, and pay our bills. All that information is stored in large databases owned by tech corporations and governmental agencies.

If you're wondering **how to send bitcoin anonymously** or whether **bitcoin transactions can be traced**, the answer is not as simple as many assume. 

The history of global cybercrime shows that any online database can be breached – [even one operated by the FBI](https://www.politico.com/news/2026/04/01/fbi-hack-surveillance-system-major-incident-00854237). And this means not only governments and corporations, but also criminals can compile and analyse huge databases of private data and use it for malicious purposes – and AI is making it easier than ever. 

If you’re a crypto user, the contents of your wallets and your transactions may also become a part of your detailed “digital portrait.” With the modern technology for blockchain analysis, making your coins completely untraceable is pretty hard. So how can you prevent strangers on the internet from seeing what you spend your bitcoin on? And more importantly, how to send bitcoin anonymously in practice? 

Let’s start with the hardcore way: never KYC. The only real way to keep your wallet not tied to your identity is to never touch any platforms and services that require KYC (know your customer) verification. This means only buying and selling bitcoin peer-to-peer and only spending it in places that don’t ask you to register your ID. 

But even when buying something with no KYC, you need to be mindful of what information about yourself you’re providing to a seller: if you leave your main email or order delivery to your actual address, your wallet address might still get connected to your identity. 

However, even if you can’t reach absolute anonymity, there are still ways to make tracing your bitcoin pretty hard.

## Custodial mixers

This is probably the easiest way technically to send bitcoin anonymously: custodial mixers take your coins, mix them with those of other users and release them to a new address (or several addresses), taking a service fee in the process. The service will do all the technical heavy lifting for you, however, it will also know your addresses. Normally, the mixers promise to delete your addresses from their databases some time after the transaction, but you need to trust them to do that. 

Another risk is that custodial mixers get shut down by law enforcement agencies from time to time, because they are often used by scammers, black hat hackers and other cybercriminals. For the same reasons, centralized custodial platforms are suspicious of funds coming out of mixers and may treat them as criminal money by default. 

Since 2019, a number of founders who operated crypto mixers were arrested and charged with facilitating money laundering, the services got shut down and in some cases sanctioned by the U.S. The list includes [Bestmixer.io](https://www.europol.europa.eu/media-press/newsroom/news/multi-million-euro-cryptocurrency-laundering-service-bestmixerio-taken-down), [Helix](https://www.justice.gov/archives/opa/pr/ohio-resident-charged-operating-darknet-based-bitcoin-mixer-which-laundered-over-300-million), [Bitcoin Fog](https://www.justice.gov/opa/pr/individual-arrested-and-charged-operating-notorious-darknet-cryptocurrency-mixer), [ChipMixer](https://www.europol.europa.eu/media-press/newsroom/news/one-of-darkwebs-largest-cryptocurrency-laundromats-washed-out), [Cryptomixer](https://www.europol.europa.eu/media-press/newsroom/news/europol-and-partners-shut-down-cryptomixer), [Blender and Sindbad](https://www.justice.gov/archives/opa/pr/operators-cryptocurrency-mixers-charged-money-laundering#:~:text=For%20Immediate%20Release,public%20safety%20and%20national%20security.). 
U.S. law enforcement also went after some non-custodial services – see the well-known cases of Tornado Cash and Samourai Wallet founders – but non-custodial apps still don’t hold your funds and don’t know your addresses. 

## DIY CoinJoin

A harder but more self-sovereign path is to run a CoinJoin transaction, mixing your coins with other people’s funds yourself. CoinJoin is a privacy mechanism for bitcoin, allowing people to simultaneously mix their transactions together without a third-party centralized operator - one of the more advanced ways to send bitcoin anonymously (although popular mixers use CoinJoinon on their back end, too).  

To run CoinJoin yourself, you have several options. 

First, the easiest one – use a wallet with the CoinJoin function. Until fairly recently, Samourai and Wasabi wallets were the go-to options, however, the U.S. law enforcement shut down Samourai in 2024, arrested its two founders, Keonne Rodriguez and William Lonergan Hill, and [seized](https://www.justice.gov/usao-sdny/pr/founders-and-ceo-cryptocurrency-mixing-service-arrested-and-charged-money-laundering) its servers, so Samourai’s Whirlpool CoinJoin operator is no longer functional. Wasabi’s team [stopped](https://thedefiant.io/news/regulation/wasabi-wallet-to-eliminate-coinjoin-amid-u-s-regulatory-fears#:~:text=Wasabi%20Wallet%20To%20Eliminate%20Coinjoin,transfer%20assets%20using%20the%20protocol.) supporting CoinJoin the same year. 

Sparrow Wallet allows you to run CoinJoin to either make the funds inside your wallet more private or send it to someone in a private manner. To do the first, you create a “fake CoinJoin,” turning two units of bitcoin inside your wallet into five new outputs and making it appear to an outside observer as if two people participated in CoinJoin. And the PayNym function allows you to send funds to another Sparrow user more privately as the software generates a new address for each transaction. You can read more about how it works on the wallet’s [website](https://sparrowwallet.com/docs/spending-privately.html).

If you want to go full hardcore, self-covereign mode, you’ll need to [run your own bitcoin node](https://hodlhodl.com/blog/en/bitcoin-node). After you get your node running, set up the [Jam](https://jamdocs.org/) app – this is a decentralized marketplace for CoinJoin transactions. It allows you to automatically find collaborators for joint transactions and also earn sats while helping others to CoinJoin. 

Finally, you can always do CoinJoin manually with the people you know, but that would require a certain amount of trust, as one of you would need to serve as a coordinator, gathering transaction data from others – this [Bitcoin Magazine article](https://bitcoinmagazine.com/technical/a-comprehensive-bitcoin-coinjoin-guide) explains the process in detail.  

## Lightning strike

Another way to spend your bitcoin privately is to do it via Lightning – the bitcoin blockchain’s Layer 2. Privacy here comes from the fact that Lightning payments bounce between payment channels across the network, making it from one node to another without leaving any visible trace on the ledger. For this option, as usual, you can either use a wallet supporting Lightning and facilitating such transactions – that would be a custodial solution – or firing up your own Lightning node. Read more about [Lightning and how it works](https://hodlhodl.com/blog/en/lightning).

Bitcoin privacy is a spectrum: the amount of effort you are willing to make to achieve it is up to you, so be curious and have fun with it! 


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How to send bitcoin anonymously

When you talk to bitcoiners, sometimes you might get a sense that you are never, ever, supposed to spend your bitcoin – that’s it’s more like a forever savings account rather than an actual digital cash. That’s an understandable approach: even given the current bear market sentiment, if you’ve held your bitcoin for the past ten years, your investment has already gone up a mind-blowing 15,000%! One of the people I know, a distinguished crypto expert, told me the hat he bought for bitcoin in 2012, just for the fun of it, could now pay off his mortgage…

However, if you treat bitcoin not just as a rainy day investment but more as an everyday payment tool – say, you get paid for your work in bitcoin – you need to spend it. And today, there are plenty of ways to do it without cashing out first. Let’s go through them.

## Direct bitcoin payments

There are still few physical places in the world where you can pay someone directly with a peer-to-peer bitcoin transfer, but they exist. Some bars around the world accept bitcoin – if you’re a New York-based bitcoiner, you must know about [PubKey](https://www.pubkey.bar/) with their bitcoin-themed events, for example – they accept bitcoin via Lightning. Or if you’re in London, [BrewDog](https://brewdog.com/) pubs have been accepting crypto payments since 2019. 

Among the most well-known companies that accept bitcoin directly from your wallet are electronics seller [Newegg](https://promotions.newegg.com/nepro/16-6277/index.html), domain name registrar [Namecheap](https://www.namecheap.com/support/payment/bitcoin/), and provider of encrypted email, VPN and other privacy tools [Proton](https://proton.me/support/pay-with-bitcoin). Booking websites [Travala](https://www.travala.com/payment/bitcoin-btc) and [Alternative Airlines](https://www.alternativeairlines.com/cryptocurrencies) also allows you to pay for hotels and flights directly from your bitcoin wallet.  

The landscape of businesses accepting bitcoin changes all the time – some join the party, and some decide that crypto is not actually for them – so you’d need to do a bit of your own research and see which places in your town accept bitcoin. For that, you can check the [BTC Map](https://btcmap.org/) or look up business by categories on [Bitcoinwide](https://bitcoinwide.com/). But keep in mind that the information on these resources might be outdated – you might want to reach out to the vendor and double-check whether they actually accept bitcoin and how. 

## Gift cards 

If the store you want to buy from does not accept crypto directly, you still might be able to pay for their stuff without converting to fiat – with gift cards. Services like [Bitrefill](https://www.bitrefill.com/), [Coinsbee](https://www.coinsbee.com/en/), [BitPay](https://www.bitpay.com/gift-cards), and [eGifter](https://www.egifter.com/buy-gift-cards-with-bitcoin) offer a broad range of gift cards for all kinds of things. 

You can buy just debit cards with some cash on them or dedicated gift cards to pay for your cell phone service, online subscriptions, gaming platforms, as well as get credits for online marketplaces like Amazon, Ebay or Etsy, buy electronics, order food or buy groceries, shop for clothing, furniture and other kinds of things. There are also services like [Moon](https://paywithmoon.com/merchants), which allow you to buy virtual debit cards and pay with them for goods and services with selected merchants. 

In this scenario, you send a gift card seller your bitcoin and receive a code for your digital gift card, which you then can use. Check which services are available where you’re based and what gift cards they offer.

## Payments via intermediary services

The world of mainstream, brick and mortar businesses is gradually warming up to bitcoin, but still few household names dare to operate actual bitcoin wallets. However, there is a fair amount of well-known brands that accept bitcoin via partnerships with crypto payment services. This way, customers can spend their crypto but the store will get fiat on its bank account, as the intermediary service converts bitcoin into fiat behind the scenes. Here are some of the big names that adopted such a scheme.

American grocery chain Whole Foods, home goods retailer The Home Depot, as well as restaurant chains Chipotle, Baskin Robbins and Starbucks accept bitcoin via the payment processor Flexa, so customers can pay using the SPEDN app.

U.S. cinema theaters chain [AMC](https://www.amctheatres.com/pay-your-way) accepts bitcoin via BitPay.

Luxury brands Gucci, Ralph Lauren and Balenciaga have been accepting bitcoin payments in selected U.S. stores via BitPay, as well as watch brands Hublot and TAG Heuer. There are also a number of luxury watch and jewelry online shops where you can pay with bitcoin as well. 

Swiss insurance company AXA accepts bitcoin via a partnership with Bitcoin Swiss. 

Birkenstock, Crocs, Chanel, Under Armour and other fashion brands accept bitcoin in South Africa via a partnership with Scan To Pay and [Binance](https://www.binance.com/en/blog/payments/1046741512387358714).

In Canada, you can pay your utility bills via Lightning, using [Bitcoin Well](https://bitcoinwell.com/blog/live-on-a-bitcoin-standard-pay-your-bills-with-bitcoin-on-the-lightning-network). Services like Strike, Electrocoin, Zypto, Swain and Mt.Pelerin allow users in Europe to pay bills and invoices in crypto. 

There is also a similar option for users who are comfortable with keeping some of their bitcoin on a centralized exchange: major exchanges like Kraken, Coinbase, Gemini, Crypto.com and others issue debit or credit cards that allow users to spend crypto from their accounts, with the exchange facilitating the conversion of crypto into fiat on the backend. 

## Something bigger

Over the past years, new ways to spend bitcoin have emerged for those who accumulated a considerable stash and are ready to go big in their purchases. For example, in the U.S., you can buy real estate via services like RealOpen, which facilitate converting buyers’ crypto into fiat for sellers. Or, alternatively, help secure purely crypto deals for luxury properties, like Christie’s International Real Estate. 

In Europe, bitcoiners can use services like Brighty to buy real estate in the UK, France, Malta, Cyprus, and Andorra. Different countries allow different ways for exchanging your bitcoin for a new home: some, like Portugal, allow direct cryptocurrency transactions, while others, like Spain, require converting bitcoin into euro for such transactions.

Alternatively, instead of exchanging your bitcoin for a home, you might use it as a collateral for a loan.

Depending on where you live, there are various options to spend your bitcoin, discover and support your local crypto-friendly businesses – and have fun with it. Don’t forget to check your local crypto tax regulations and whether spending your crypto means tax liability for you. 


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How to spend bitcoin in your everyday life

Bitcoin has been created as a peer-to-peer electronic cash. However, the way the protocol was designed makes it hard to use it for everyday spending: every transaction needs significant time to finalize, compared to fiat payment networks like Visa and Mastercard. In 2016, developers Joseph Poon and Thaddeus Dryja suggested a solution that would make bitcoin significantly faster – the Lightning network protocol. 

Transactions are getting written into the bitcoin blockchain in blocks, which are added one by one every 10 minutes, making the overall speed of the bitcoin network around 7-10 transactions per second. And it takes six blocks, or about an hour, for the transaction to be considered irreversible, i.e., too hard for malicious actors to roll back by compromising the blockchain – in a hypothetical scenario where someone would try to do that. 

The idea of Bitcoin Lightning is that not every transaction needs to happen on-chain. Finalization time and bitcoin network fees make small transactions impractical – but you can build a virtual second layer above the bitcoin blockchain where people can exchange small amounts and settle on-chain every once in a while. 

## What is Bitcoin Lightning?
 
The concept behind the **Bitcoin Lightning Network**, proposed by Poon and Dryja, implemented by Lightning Labs in 2018, moves small peer-to-peer transactions from the main bitcoin blockchain to Layer 2. Users open payment channels between each other by locking funds in 2-of-2 multisigs. How 2-of-2 multisig works? These multisigs are smart contracts that create temporary ledgers of transactions which are not written into the blockchain but still verified and secured by the bitcoin cryptography. 

Users can transact between each other multiple times, but on-chain, only two transactions are visible: the one creating the payment channel and the one returning users their funds according to the latest state of the payment channel. The changing state of the bitcoin network works as a clock here for transactions to complete or expire. 

But there is more: users can transact not only with the people they opened mutual payment channels with – they can connect to the global network, which currently consists of ‎17,438 nodes worldwide, with over 5,000 BTC locked 41,109 channels. This network allows users to send funds to wallets that they haven’t opened channels with, as satoshis bounce through other nodes and channels until they reach the receiving user. Poon and Dryja wrote that “requiring everyone to create channels with everyone else does not solve the scalability problem” for bitcoin, but connecting channels into a network available to all participants does. 

This mechanism allows using bitcoin for small transactions without clogging the bitcoin network and making it hard to use: when too many transactions are waiting for confirmation, transaction fees get higher and users have to wait longer for their payments to go through. But keeping small transactions off-chain takes the pressure off the network. 

## How does the Bitcoin lightning network work?


Understanding how the Lightning Network works helps explain why it can process transactions faster than the Bitcoin network.

For a full description of Lightning’s technical details, check the [white paper](https://lightning.network/lightning-network-paper.pdf) by Poon and Dryja – we’ll give a high-level overview for basic understanding here.

To open a Lightning Network channel and connect to the Lightning network, you need a Lightning node – just like you need a [bitcoin node](https://hodlhodl.com/blog/en/bitcoin-node) to participate in the bitcoin network. You can host your bitcoin and Lightning nodes on the same hardware or have separate devices, depending on the hardware you use and your own preferences. 

A Lightning funding transaction locks your funds in a P2WSH (Pay-to-Witness-Script-Hash) multisign address. It starts with a funding transaction, when two participants create a 2-of-2 multisig with each of them controlling one key. This funding transaction gets broadcasted onto the bitcoin blockchain. 

After that, both participants sign an initial commitment transaction, spending from the 2-of-2 output of the funding transaction. After that, they can perform more commitment transactions, each of which updates the state of the payment channel without broadcasting it to the bitcoin blockchain.

When participants decide to close the channel, they make a final settlement transaction, which gets confirmed on the blockchain. Alternatively, one party can close the channel by broadcasting the latest commitment transaction.

## How to use Bitcoin lightning network?

You can use Lightning network payments for a number of things. First of all, you can pay people faster and more privately via Lightning network: unlike on-chain bitcoin transactions, Lightning transactions, especially the ones that go through multiple hops, do not connect the wallets of sender and recipient on the public blockchain for everyone to see. 

“I pay for my VPN via lightning. I'd just prefer that my credit card company doesn't know who my VPN supplier is. And if I want to send cash to someone, I use lightning and that person doesn't know where it came from,” says [this Reddit user](https://www.reddit.com/r/Bitcoin/comments/1h1tbpv/comment/lzeg7p8/).

To simplify using Lightning for people who don’t want the pain of setting up and maintaining their own nodes, popular wallets support their own payment channels – this is more convenient, but practically amounts to using centralized custodians, so keep that in mind. 

You can buy gift cards via services like [Bitrefill](https://www.bitrefill.com/us/en/gift-cards/) or [Cryptorefills](https://www.cryptorefills.com/en/united_states/gift_cards) using Lightning, which includes subscriptions to VPNs, streaming and gaming services, gift cards for fashion brands and retail chains, electronics stores, and pre-paid digital debit cards. Usually, popular Lightning wallets offer built-in integrations allowing you to buy gift cards. You can also tip your favorite bloggers on Nostr using Lightning for the so-called [Zaps](https://nostr.how/en/zaps). Bitcoiners in Canada can even pay [utility bills](https://bitcoinwell.com/blog/live-on-a-bitcoin-standard-pay-your-bills-with-bitcoin-on-the-lightning-network) with Lightning via Bitcoin well.

If you’re a business owner, Lightning may be a good payment option for your crypto-savvy customers. Theoretically, running your own Lightning node and serving as a relay for other people’s transactions can also bring you some income in the form of fees, but in practice, it requires significant investment both in terms of money and time – if you’re curious about this aspect, take a look at this [discussion](https://www.reddit.com/r/lightningnetwork/comments/1eoatwi/is_it_worth_starting_a_bitcoin_lightning_network/) on Reddit. 

## Issues with Lightning 

As a new and complex technology, the Bitcoin Lightning network has some risks, which is good to keep in mind – and use it carefully, like any nascent technology. 

There are certain scenarios in which malicious actors can attack Lightning nodes and make users lose funds – rather than bugs in the code, such attacks would be results of complex technical and social mechanics that can come into play when multiple people are exchanging money in a decentralized way. The list of such possible attacks includes:

- [mass exit attack](https://arxiv.org/pdf/2208.01908), in which multiple nodes collude and either go offline, locking the funds in channels for long periods of time, or steal funds by submitting closing transactions that settle channels using expired protocol states;
- [transaction-relay jamming attacks](https://gnusha.org/pi/bitcoindev/CALZpt+GdyfDotdhrrVkjTALg5DbxJyiS8ruO2S7Ggmi9Ra5B9g@mail.gmail.com/): an attacker operating a node could break the chain of hops by replacing a valid transaction with a malicious one using a higher fee – as a result, an honest node operator could lose funds;
- [time-dilation attack](https://arxiv.org/pdf/2006.01418), in which an attacker manipulates the time locks to delay transaction settlements, disrupting the whole network.

These are purely theoretical scenarios – at least until now, there have been no known cases of such attacks. 

But there have been attacks exploiting bugs in Lightning clients. For example, in November 2021, a hacker [exploited](https://protos.com/bitcoin-lightning-tipping-telegram-bot-hacked-cryptocurrency/) a bitcoin tipping bot for Telegram and stole 0.14 BTC, or about $9,480, taking advantage of a bug in the Éclair client by ACINQ. In October 2022, a [bug](https://protos.com/taproot-bug-freezes-bitcoin-inside-lightning-network-for-hours/) in Lightning Labs’ Bitcoin full node implementation, BTCD, prevented users from creating and closing channels until it was fixed. 

With all that said – have fun with Lightning but use it with caution! Bitcoin keeps evolving, new technologies constantly emerge on top of it, and that’s what makes it exciting.

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What Is the Bitcoin Lightning Network: how to use it and why we need it

When you browse offers on Hodl Hodl, you can come across ones with the payment methods WISE / REVOLUT / NALA / REMITLY / STRIKE / SEND WAVE / WESTERN UNION / PAYSEND / XOOM, and it safe to expect that in these cases your counterparty would be using the same online payment system / neo bank specified as a payment method. However, it is not always the case. 

The common case on the platform is when users specify above mentioned payment methods for compatible payment systems. In this blog post we’ll be using an example of M-Pesa to Revolut. 

What if instead of providing their Revolut details, the user asks you to send money to their M-Pesa wallet in Kenya? 

This guide explains how these international transfers work and why they are considered generally safe.

## What is M-Pesa

M-Pesa is a mobile money platform that launched in Kenya in 2007 and has since expanded across several African countries. If you’re wondering **what is M-Pesa**, it’s essentially a mobile wallet that allows people to store, send, and receive money using their mobile phone — no traditional bank account required. Think of it as a digital wallet tied to a phone number.

For context, M-Pesa processes billions of transactions per year and serves tens of millions of active users. In Kenya and much of East Africa, it's the primary way people handle everyday finances — paying bills, receiving salaries, transferring money to family. When a Hodl Hodl seller gives you M-Pesa details, they're giving you the equivalent of their bank account information. It's just that their "bank" lives on their phone.

## How a Revolut → M-Pesa trade works on Hodl Hodl

Here's the part that surprises most people: Revolut natively supports sending money internationally to M-Pesa accounts. It's not a workaround or a hack — it's a standard feature sitting right inside the app, alongside bank transfers, card payments, and every other payout method Revolut offers.

On Hodl Hodl, every trade is protected by a [2-of-3 multisignature Bitcoin escrow](https://hodlhodl.com/blog/en/escrow-explained#what-is-escrow). One key belongs to the buyer, one to the seller, and one to Hodl Hodl. No single party can move the funds alone. This protection works the same way regardless of whether payment goes through a Revolut tag, a SEPA transfer, or an M-Pesa wallet.

Here's what a typical trade looks like from start to finish:

1. You find an offer on Hodl Hodl and read the Offer Description — a well-written one will clearly state that payment goes to M-Pesa via Revolut's international transfer
2. You accept the offer, which creates a Purchase Contract. The seller deposits Bitcoin into the [multisig escrow address](https://hodlhodl.com/blog/en/escrow-explained#how-does-multisig-escrow-work)
3. Once the Bitcoin is locked (status: **In progress**), the seller shares their M-Pesa details in the trade chat
4. You open Revolut, tap **Payments → International**, select the destination country (e.g. Kenya), pick **M-Pesa** as the transfer method, and enter the recipient's name, mobile provider, and phone number
5. Revolut shows you the exchange rate and all fees — review everything and send. The money typically arrives in seconds
6. You mark the payment as sent on Hodl Hodl (status: **Paid**)
7. The seller confirms receipt and releases the Bitcoin from escrow (status: **Completed**)

## Who else supports M-Pesa

Revolut isn’t the only option. Many services support online money transfer to M-Pesa, including **Wise, NALA, Remitly, Strike, Sendwave, Western Union, Paysend, and Xoom**. They all offer M-Pesa as a standard delivery method. It's an industry-wide payment rail.

## Why sellers list these offers under "Revolut"

This is where the expectation gap comes from, and it helps to understand the seller's perspective.

Hodl Hodl's offer system lets sellers choose from a set of payment method labels. A seller in Kenya who wants to receive KES into their M-Pesa wallet looks at the available options and picks "Revolut" — because Revolut is the tool the buyer will use to initiate the payment. From the seller's side, that's accurate. From the buyer's side, though, "Revolut" usually means a quick tag-to-tag transfer to another Revolut user.

Neither side is wrong. The label just means different things to different people, and that mismatch is what creates the moment of confusion when the trade opens.

The fix is simple: write clear **Offer Descriptions**. Which brings us to the next section.

## Writing better Offer Descriptions: what sellers need to know

[Hodl Hodl's Terms of Service](https://hodlhodl.com/tos) are specific about this: the information you provide when creating an offer — your Offer Description, payment method, currency, instructions — must be **true and accurate**. This isn't a suggestion; it's part of the agreement every user accepts when using the platform.

When a buyer accepts your offer, they enter into a Purchase Contract governed by the terms you set. The system works on the assumption that those terms clearly describe what the buyer should expect. If your offer says "Revolut" but the actual payment flow involves an international money transfer to M-Pesa in Kenya, and this isn't explained anywhere in your Offer Description, that's a gap between what was advertised and what's being asked — and it creates real problems.

### A practical template

Here's an example of an Offer Description that sets expectations properly:

>"Payment via Revolut's international transfer to M-Pesa (Kenya). This is a standard built-in feature of the Revolut app — go to Send → International → Kenya → M-Pesa. You'll see the exact fees and exchange rate before confirming. Transfer typically arrives in seconds. This is NOT a Revolut-to-Revolut tag transfer. If you haven't used this Revolut feature before, message me in the trade chat and I'll walk you through it."

This takes about 30 seconds to write and it eliminates most of the friction that causes trades to fall apart. Buyers who read this and accept the offer know exactly what they're getting into. Buyers who aren't comfortable with it simply move on — no wasted time for either side.

### How disputes and reputation are affected

Hodl Hodl's support staff resolves disputes by inspecting the Offer Description, evidence of payment, chat messages, and user reputation. If your description is vague about the actual payment flow, a buyer can reasonably argue they weren't informed before accepting. That's not a strong position to be in during a dispute.

On the flip side, a clear and detailed Offer Description works in your favor. If the buyer accepted an offer that explicitly said "payment via Revolut international transfer to M-Pesa (Kenya)" and then opens a dispute claiming they didn't know, the terms they agreed to speak for themselves.

Beyond disputes, unclear offers lead to frequent cancellations. Cancellations hurt your completion rate and your reputation score — both of which are visible to every potential trading partner on the platform.

### Third-party rule

Hodl Hodl's Terms of Service explicitly state that third parties may not be involved in making or receiving payments — doing so is a violation of the agreement.

### What Hodl Hodl can do about non-compliant offers

The [Terms of Service](https://hodlhodl.com/tos) give Hodl Hodl the right to hide or remove offers that violate the agreement. In more serious or repeated cases, accounts can be suspended or terminated. None of this is unique to M-Pesa offers — it applies to every offer on the platform. But because M-Pesa offers are more prone to buyer confusion when poorly described, they tend to attract more disputes and complaints, which makes compliance especially important.

## Common questions from buyers

**Will Revolut flag my account for sending to Kenya?** Revolut supports international transfers to 100+ countries, Kenya included, and M-Pesa is a delivery method they built into their app. That said, Hodl Hodl is not affiliated with Revolut or any third-party payment provider — we have no control over their account decisions, policies, or service availability. You are responsible for complying with the terms of whichever payment service you use, and we recommend reviewing their current policies before making a transfer.

**What about exchange rate costs?** Revolut displays the exact exchange rate and all fees before you tap Send. Nothing is hidden. You can factor the total cost into your evaluation of whether the Bitcoin price on the offer is worth it — the same way you'd factor in any other payment cost.

**Is it complicated?** It's a few more taps than a tag-to-tag transfer, but the Revolut app guides you through each step. After you've done it once, it feels no different from any other send.

**How do I evaluate the seller?** The same way you evaluate any counterparty on Hodl Hodl: check their reputation score, number of completed trades, account age, and feedback history. Hodl Hodl's reputation system is there exactly for this purpose. The payment method doesn't change the trust model — the multisig escrow protects your Bitcoin regardless.

**What if the seller says they didn't receive the money?** Then check on how disputes work, Hodl Hodl's [Dispute Rules](https://hodlhodl.com/pages/dispute_rules).

## Key takeaways

Revolut-to-M-Pesa is a standard feature supported by both Revolut and Wise, used by millions of people for everyday international transfers. On Hodl Hodl, the multisig escrow protects your Bitcoin no matter which payment method is involved.

**Buyers** –  a payment method you haven't tried before isn't the same as one you should avoid. 


**For sellers** – a clear Offer Description is the single most effective thing you can do to reduce cancellations, avoid disputes, and build the reputation that keeps your trading volume growing.

## Important: Service Disclaimer

**Hodl Hodl is an independent technical platform, not a payment institution**. We are not affiliated with, endorsed by, or connected to Revolut, Wise, M-Pesa, or any other third-party provider mentioned.

- **No Control**: We cannot influence their operations, account decisions, or service availability.
- **Informational Only**: This guide is provided "as-is" for informational purposes as of **March 2026**. Features and terms of third-party apps may change without notice.
- **User Responsibility**: You are solely responsible for complying with the Terms of Service of your chosen payment provider. Hodl Hodl assumes no liability for any third-party account restrictions or transaction issues.

##  References

- **Wise** — [Send money to M-Pesa](https://wise.com/us/send-money/send-money-to-m-pesa)
- **Wise** — [Guide to KES transfers](https://wise.com/help/articles/2932362/guide-to-kes-transfers)
- **Revolut** — [Send money to M-Pesa](https://www.revolut.com/en-AU/money-transfer/send-money-with-mpesa/)
- **Revolut** — [Revolut launches Mobile Wallets, allowing for faster transfers across the world](https://www.revolut.com/en-FR/news/revolut_launches_mobile_wallets_allowing_for_faster_transfers_across_the_world/)
- **Hodl Hodl** — [Terms of Service](https://hodlhodl.com/pages/terms_of_service)

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M-Pesa



HodlHodl is a P2P Bitcoin trading platform that charges a fee on each successfully completed trade. The fee is a percentage of the amount of Bitcoin transferred to the escrow address, ranging from **0.45% to 0.5%** depending on the user's account status.




## How Do Bitcoin Exchange Fees Work?




When a contract is created, each counterparty pays their own respective fee rate independently. For example, if the seller has a fee rate of 0.5% and the buyer has a rate of 0.45%, each party pays their own rate — the seller pays 0.5% and the buyer pays 0.45%.




HodlHodl receives fees in **Bitcoin only**. The fees are calculated from the Bitcoin deposit and deducted upon release from escrow — and only if the contract was completed successfully.




- The **seller** deposits Bitcoin into escrow including their trading fee on top of the contract amount.
- The **buyer** receives slightly less Bitcoin than was deposited in escrow, with their trading fee deducted from the release amount.
- In turn, the buyer sends the agreed fiat amount to the seller.
 
This way, both buyer and seller each pay their own respective share of the fee.

There is also a **Bitcoin network (transaction) fee** deducted from the deposit upon release. Since it would be impractical to split this fee across the fiat side of the contract, the transaction fee is always covered by the buyer.




## How Much Does It Cost to Use HodlHodl?




There are different trading fee rates depending on the user's status:




Standard registered user — **0.5%** 




User registered with a referral code — **0.45%**




User who has referred at least one active trader — **0.45%**




💡 Using a referral code when registering **permanently** reduces your fee from 0.5% to 0.45%.




## What Is the Minimum Trading Fee?




All trades are also subject to a **minimum trading fee**, which applies when the standard percentage-based fee would be too low to cover transaction costs.
 
The standard trading fee is **0.5% per side** (or 0.45% with a referral code). However, on small trades, this percentage can result in a very low absolute amount — in those cases, the minimum fee floor kicks in instead.
 
The minimum fee is **dynamic** and depends on:
- Current Bitcoin network congestion (mempool state)
- The size of the transaction in bytes
 
Under normal conditions, it **does not exceed the equivalent of 5 USD in BTC**. During periods of high network activity, it may be slightly higher.


⚠️ **Important:** As stated in HodlHodl's Terms of Service, the final fee (platform fee + Bitcoin network fee) only becomes visible **after the seller sends Bitcoin to the escrow address**. Before that, only an *estimated* fee is shown during contract creation — because the actual Bitcoin network fee cannot be predicted in advance and may vary based on current blockchain conditions.


**HodlHodl is not responsible for the Bitcoin network transaction fee.**




## Practical Example




**Trade:** 1 BTC at $10,000 — Seller fee: 0.5% — Buyer fee: 0.45%




**Seller side:** The seller deposits **1.0050 BTC** ($10,050.00) into escrow. 
Of that, 0.0050 BTC ($50.00) is their trading fee, and 1.0000 BTC ($10,000.00) is the contract value.




**Buyer side:** The buyer receives **0.9955 BTC** ($9,955.00). 
Their trading fee of 0.0045 BTC ($45.00) is deducted from the release, while they send **$10,000 fiat** to the seller.




**Total fees withheld from escrow: 0.0095 BTC ($95.00)**




In summary: the seller deposits 1.005 BTC → escrow withholds 0.0095 BTC in fees → the buyer receives 0.9955 BTC, while sending $10,000 fiat to the seller.




## Further Reading




- [Trading Bitcoin Security Guide](https://hodlhodl.com/blog/en/security-guide)
- [Best Ways to Store Bitcoin](https://hodlhodl.com/blog/en/best-way-to-store-bitcoin)
- [HodlHodl Multisig Escrow Explained: Why We Never Hold Your Bitcoin](https://hodlhodl.com/blog/en/escrow-explained)
- [Your Own Bitcoin Node: Why and How to Run It](https://hodlhodl.com/blog/en/bitcoin-node)

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Bitcoin Exchange Fees Explained

Bitcoin is digital gold because it’s decentralized, but what makes it decentralized? People like you, running nodes of the network and making sure transactions are validated and written into the blockchain in a truly decentralized and global fashion.

But there are more benefits of running your own bitcoin node than just the virtue of keeping the bitcoin network what it’s supposed to be. You can take full control of your bitcoin transactions and run your own little bitcoin hub for you and your family from the comfort of your home. The amount of effort and money you need for that is pretty low. 

## What is a bitcoin node vs. miner

In blockchain, nodes are computers validating transactions and broadcasting them to be recorded into the blockchain. In bitcoin, as well as some other blockchains, there is a difference between a validating node and a miner: while nodes only validate transactions as compliant with the blockchain’s rules, miners also record them into the blockchain – and receive a reward for that (that’s how new bitcoins are being created). 

Bitcoin mining these days requires significant investment into specialized hardware, as well as electricity bills – these machines consume a lot of power, and you need to constantly cool them down, too. Maintaining a node, on the other hand, doesn’t cost that much and also does not reward you with new bitcoins – but it helps you keep your financial sovereignty on the maximum level.

A full node downloads and stores a copy of the entire blockchain, down to the genesis block and the very first transaction. It validates all incoming transactions and blocks and enforces the bitcoin consensus rules: the supply cap of 21 million bitcoin, how new coins are issued and how double spends are prevented.  

A lighter version, which is called a **pruned node**, saves memory space by deleting old blocks. Then, there is a so-called **light node**, which only downloads headers of the blocks and relies on other, full nodes. In this article, we will be talking about full nodes.

## Why run your own Bitcoin node

A node is essentially an intermediary validator that passes transactions to miners so they can add them to the blockchain. You can configure your wallet so that your transactions go through your node – this way, you won’t rely on any companies to process them.

It’s the most private and secure way to process your transactions: when your wallet connects to someone else’s server, they can see your IP address and your extended public key (XPUB), so whoever is operating the node can link your IP to all your transactions. Relying on your own node means you keep all that data to yourself. 

You can also do some other fun stuff: 
- participate in CoinJoins with maximum privacy; 
- buy and sell bitcoin on trustless p2p marketplace like Bisq; 
- receive payments in a private fashion via PTC Pay server; 
- run your Lightning node like a pro; 
- get information on the state of the network and look up wallets while getting data directly from the blockchain. 

You can also use your bitcoin node to do things not directly related to bitcoin, like taking advantage of decentralized data storage solutions with InterPlanetary File System (IPFS), managing a nostr client for a decentralized analog of X, and more. 

## Bitcoin node hardware

So where to start? Buy some hardware – luckily, you don’t have to spend a whole lot of money on it. In fact, you can run a bitcoin node on any computer, however, doing so will most likely turn it unusable for anything else, so it’s more practical to buy a separate device. 

The easiest option is to buy a ready-to-use node with pre-installed code, and there are a bevy of them on the market now: [Umbrel](https://umbrel.com/), [MyNode](https://mynodebtc.com/), [Start9](https://store.start9.com/), [Nodl](https://www.nodl.eu/products/). The price tag for these starts at $500. This is the fastest and easiest way, however, you would need to trust the hardware maker to install the right code on the device (not that trustless!) – and you won’t get the full DIY experience. 

A cheaper and more hands-on option is to buy a mini computer and install the bitcoin code on it yourself. These machines cost $200 – $400 on average. Some old bitcoiners told me HP EliteDesk Mini does the job pretty well, but there are also other [options](https://www.amazon.com/s?k=mini+pc&i=electronics&s=price-desc-rank&crid=38KTGHD1K1D14&qid=1772408071&sprefix=mini+pc%2Celectronics%2C158&ref=sr_st_price-desc-rank&ds=v1%3A44ntS7wX%2Fb%2FJC%2FYRcaLrT3FR0DbVN9GC83sf2uH4k5E). Keep in mind that you’ll need 64 GB of memory to run the code and about 2 TB to store the blockchain data – you can also buy SSD cards for that separately. And if you want to go full DIY fun mode, take a look at the Raspberry Pi or RockPro 64 mini computers – these can cost as little as $50. 

General hardware requirements:
- vCPU Core 2Ghz (boost),
- 4 GB RAM,
- Ethernet port.

## Bitcoin node software options

When you get your hardware, if it’s not a pre-installed out-of-the-box solution, you’ll need to install the bitcoin software on it. There is a range of open source clients you can use: Umbrel, Start9, ezNode, myNode, RaspiBlitz, RoninDoJo. You can read more about each one in this [Bitcoiner.Guide](https://bitcoiner.guide/node/diy/) article. 

You would need to flash your mini computer or 64 GB memory card with the software, then fire up your node. Freedom Lab NYC provides some handy step-by-guides for setting up your Bitcoin node using the [Umbrel](https://freedomlab.nyc/resources/bitcoin-node-umbrel/), [StartOS](https://freedomlab.nyc/resources/bitcoin-node-startos/) or doing it the hard way and compiling the Bitcoin Core software [from source code](https://freedomlab.nyc/resources/bitcoin-node-from-source/) (only for advanced bitcoiners). 

This process requires patience: sometimes, things don’t work right away and you need to erase, reboot and start from scratch. Don’t lose faith, have fun with it! After you get your node up and running, give it time to download the bitcoin blockchain and synchronize with the network. It may take several days at this point – the bitcoin blockchain has gone a long way since 2009! 

## Benefits of running a bitcoin node

Alright, you did it, now what? You just joined the global community: there are currently over 25,000 bitcoin nodes running around the world, according to [Bitnodes](https://bitnodes.io/nodes/all/). If you check the link, it also shows the global Bitcoin node distribution map, however, most nodes have no geolocation. That’s a feature, not a bug: the best practice is to connect bitcoin nodes to the internet via Tor to maintain privacy of their owners, so you definitely should pay attention to that while setting up your node. Unless you want to intentionally put yourself on the global bitcoin node map!

The most important thing you can do once you’ve got your bitcoin node up and running is to connect your wallet to it – check your wallet app’s settings to do it. These ways, only your node will know your IP, wallet and transaction details. If you are the lead bitcoiner of your family helping everyone else to figure it out, you can also help them connect their wallets to your node, too. And if you want to anonymize your transactions with [CoinJoin](https://bitcoinmagazine.com/technical/a-comprehensive-bitcoin-coinjoin-guide), running it via your own node will definitely ramp up your privacy.

If you want to use Lightning and not rely on any intermediaries to open your channels, you can connect your Lightning node and your bitcoin node for a maximum trustless setup. To be clear, you can run a Lightning node without running your full bitcoin node, but that way, you would rely on other people’s nodes to connect to the bitcoin blockchain. 

You can also use your node to receive bitcoin payments in a private fashion, without publishing your wallet address: set up a BTC Pay server so that it generates a new address every time someone wants to pay you through your website. 

You can run your own blockchain explorer and look up data on wallets and transactions in the most self-sovereign fashion: check [Bitfeed](https://github.com/bitfeed-project/bitfeed?tab=readme-ov-file#readme), [Bitwatch](https://github.com/zapomatic/bitwatch?tab=readme-ov-file#readme) and [Mempool](https://github.com/mempool/mempool?tab=readme-ov-file#readme).

The more you try, the more you learn – once you get your bitcoin node running and familiarize yourself with the game, you might discover a lot of other things you can do using the same hardware. For example, running your own podcasting or streaming server, collaboration tools, decentralized storage, social media client and even your own, private instance of ChatGPT – check out Umbrel’s [app store](https://apps.umbrel.com/category/bitcoin) to get a glimpse of what’s possible.

And if it’s hard in the beginning and a little buggy, and needs some work and fixing in the process – you know you’re doing it like a real bitcoiner! 


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Your own bitcoin node: why and how to run it

You bought some bitcoin – congratulations! Now it’s time to think about how to keep your Bitcoin safe and handy for your needs. The best option for your bitcoin storage is directly related to what you are planning to do with your coins, so it’s important to approach this question strategically. In this article, we will break down different **Bitcoin storage methods** and explain their advantages and tradeoffs, from easy to the most complex solutions.

## Centralized crypto exchange account

The most basic one for newbies and day traders – the fact that you use HodlHodl is already a sign that you’re not the part of that typical crowd, but hold on, we'll explain. Centralized exchanges are the easiest way for crypto neophytes to buy their first bitcoin – and the fastest way to sell. 

What is a centralized exchange? Centralized exchanges (think Binance, HTX, Kraken, etc.) put your bitcoin in a so-called omnibus wallet where your funds will be mixed with other users’ coins. Once you send your bitcoin there, your exchange is in charge of it – basically, it will sell it for you or let you withdraw it when you request it. 

The obvious upside is convenience: exchanges normally have multiple payment methods available, as well as multiple smart trading tools and order types, so it's a handy instrument for users who trade a lot.  

The biggest downside – **not your keys, not your bitcoin**! While your coins are in the custody of an exchange, it’s up to the exchange whether to let you use it or not. And if your exchange gets hacked and the crypto gets stolen – your bitcoin might be gone with the rest of the loot. And of course, any centralized exchange at this point will require a KYC check to register and account – you’ll have to provide plenty of personal information like your address, banking info, and even biometric face data. All that data can be stolen if your exchange is compromised, too. 

## Software wallets

Software wallets on your phone or desktop are the easiest way to make sure no one but you is in charge of your coins. There are multi-coin wallets that allow you to store various cryptos and ones that support only bitcoin. 

Keeping your bitcoin on your own device means the cryptographic keys to your money only exist on that device. This way, nobody else has access to your keys unless you share them – or share your seed phrase, which is a set of 12 or 24 words that wallets recognize as a representation for your keys when you’re recovering your wallet. And of course, that’s the biggest advantage of this method: you can use your crypto without a middleman. 

However, this autonomy can also be a downside: if you lose your device and fail to make a backup, you lose access to your bitcoin and nobody can help you retrieve it. You must have heard the [horror stories](https://en.wikipedia.org/wiki/Bitcoin_buried_in_Newport_landfill) of people who forgot they had bitcoin on their old devices, threw those devices away and only later realized they lost millions of dollars in bitcoin!

There are [hackers](https://www.wired.com/story/unciphered-ironkey-password-cracking-bitcoin/) who might be able to recover your keys for a reward, but no guaranteed way to do it has been found so far – otherwise, everyone would be cracking each other’s software wallets open! Takeaway: power means responsibility – you need to develop a certain discipline and a set of security habits to keep your bitcoin secure on your device. 

There is another thing to keep in mind: software wallets can be compromised. In 2023, users of Atomic Wallet lost up to [$100 million](https://www.elliptic.co/blog/analysis/north-korea-linked-atomic-wallet-heist-tops-100-million) altogether due to a hack, with trace leading to North Korean hackers. 

Now, let’s take a look at some of the best software crypto wallets out there.

Mobile **multi-coin wallets**: [Trust](https://trustwallet.com/download), [Trustee](https://trusteeglobal.eu/trustee-wallet/), [Exodus](https://www.exodus.com/), [Zengo](https://zengo.com/), [Aqua](https://aqua.net/) (only for BTC and USDT).

Mobile **bitcoin-only wallets**: [BlueWallet](https://bluewallet.io/), [Muun](https://muun.com/), [Blockstream Green](https://bitcoin.org/en/wallets/mobile/ios/green/?step=5&platform=ios&user=experienced&important=control&features=2fa,bech32), [Electrum](https://electrum.org/#download) (only for Android).

Desktop bitcoin-only wallets: [Bitcoin Core](https://bitcoin.org/en/wallets/desktop/mac/bitcoincore/?step=5&platform=mac), [Electrum](https://bitcoin.org/en/wallets/desktop/mac/electrum/?step=5&platform=mac), [Blockstream Green](https://bitcoin.org/en/wallets/mobile/ios/green/?step=5&platform=ios&user=experienced&important=control&features=2fa,bech32), [Sparrow](https://bitcoin.org/en/wallets/desktop/mac/sparrow/?step=5&platform=mac).

Bitcoin-only wallets with mixer (coinjoin) features: [Wasabi](https://wasabiwallet.io/), [JoinMarket](https://www.joinmarket.net/) (Windows only). Samourai wallet used to be one of the most popular anonymity wallets but the project got shut down after the U.S. authorities seized the website and convicted founders of operating an unlicensed money-transmitting business. 

To find a wallet that fits your needs best, check this Bitcoin.org [guide](https://bitcoin.org/en/choose-your-wallet).

## Hardware wallets

Hardware crypto wallets are a more sophisticated and expensive option for people who don’t feel safe keeping their crypto on the same device they use for email and messenger apps. What are hardware wallets? Hardware wallets are dedicated devices created exclusively for storing bitcoin keys. Looking like a USB stick or a tiny calculator, hardware wallets typically have minimalistic design, small screens and one or the other way of connecting to other electronic devices. 

The main trade-off is the same as for software wallets: if you lose your device and your backup, you lose your bitcoin. But as long as you have them, nobody can touch your coins. 

## What are the differences between hardware and software wallets?

The key advantage compared to software wallets is that hardware wallets normally are not connected to the internet, so it’s impossible to compromise them with software exploits. A desktop or a phone can catch a virus from a shady website or app, but a hardware wallet is mostly (or always) offline. Plus, hardware wallets’ technical design is pretty basic, so it can’t run any kind of software other than the one it was designed for: signing bitcoin transactions. 

Hardware crypto wallets have their own specific attack vectors, for example, someone can steal and physically meddle with the device. It’s also possible to imagine a supply chain attack in which someone physically compromises a batch of hardware wallets – or manufactures compromised devices by design, making it possible to steal from the future owners. 

To date, there hasn’t been a known supply chain attack on the hardware wallets as such, however, in 2023, Ledger suffered a software supply chain breach when a threat actor compromised an employee and [published](https://thehackernews.com/2023/12/crypto-hardware-wallet-ledgers-supply.html) malicious code that infected popular dApps and drained funds from users that connected to those dApps.  

To use a hardware crypto wallet to spend your bitcoin, you need to temporarily connect it to your computer or phone using one or several of the available methods:


- usb port or USB cable, 
- Bluetooth,
- microSD card,
- QR codes if a wallet has a camera,
- NFC (Near Field Communication) – the same technology that allows contactless payments via credit cards and phones. 

Like software wallets, there are multi-coin and bitcoin-only options. Here are some popular ones:

Multi-coin hardware wallets: [Ledger](https://www.ledger.com/), [Trezor](https://trezor.io/), [SecuX](https://secuxtech.com/), [BitBox](https://bitbox.swiss/bitbox02/), [Tangem](https://tangem.com/en/). 

Bitcoin-only hardware wallets: [Blockstream Jade](https://blockstream.com/jade/), [Coldcard](https://coldcard.com/).

Again, to find an option most fitting your needs, check the Bitcoin.org guide for hardware bitcoin wallets.

If you want to take a step further down this rabbit hole, check fire-proof metal [solutions](https://www.google.com/search?q=seed+phrase+storage+options&num=10&newwindow=1&sca_esv=ebc9003c0e8ff0d8&biw=1152&bih=622&sxsrf=ANbL-n46UY8h9yv7BZ0JW2-eSFwxsJjaCQ%3A1771188119945&ei=ly-SaeSmOemm5NoPy__ukQ8&ved=2ahUKEwikzuD1rdySAxVpE1kFHcu_O_IQ4dUDegQIBRAP&uact=5&oq=seed+phrase+storage+options&gs_lp=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&sclient=gws-wiz-serp) for seed phrase storage.

And if you want to go full hardcore open-source DIY mode, you can… make your hardware wallet yourself!  For that, you would need to buy a cheap development board, for example, [LilyGO T-Display](https://lilygo.cc/en-us/products/t-display?srsltid=AfmBOoonWTC7LIvXFWXAB53hvAxLLoixY3M3qq3RSgrYp_Mz0sdxdRL7). Then, you need to connect it to your desktop and flash it with open-source wallet software, for example, [Blockstream Jade](https://github.com/Blockstream/jadediyflasher). 

Check this [guide by Freedom Labs](https://freedomlab.nyc/resources/diy-hardware-wallet/#easy-way-hard-way) if you’d like to try – the whole process requires about an hour of your time (a generous estimate) and a few dollars to spend on hardware. The process may be confusing at times if you don’t deal with computer hardware and open-source code on a regular basis, but it’s pretty fun exercise for anyone who is curious about true, die-hard sorts of self-custody.

## Multi-signature solutions

First, let us admit: multisigs are not for beginners! How does multisig work? A multi-signature wallet is a whole setup that allows you to distribute control over your bitcoin between several devices – hardware wallets or phones/computers with software wallets on them – so that if one device is lost, stolen or compromised, you still can use your bitcoin. 

This kind of storage is normally used for large amounts of bitcoin or for situations in which several people or entities jointly own and manage a bitcoin treasury. Typically, there are few schemes for multisigs: 2-of-2, 2-of-3, and 3-of-5. 

To spend bitcoin in a multi-signature wallet , several wallets need to sign the transaction – only then it will be broadcasted to the network. For example, two people can agree to put bitcoin in a joint wallet and only spend it when they both agree. Or you can set up your own 2-of-3 multisig so that when you want to spend your bitcoin, you’ll need to sign the transactions with two out of three devices you own – for example, your phone, your desktop and your hardware wallet. 

HodlHodl smart contracts, for example, rely on 2-of-3 multisigs: when users initiate a trade, a seller locks bitcoin into a multisig. The multisig needs two out of three signatures to release funds: one signature is controlled by the seller, one by the buyer, and the third one by HodlHodl, which can use it to resolve disputes. 

For users who are willing to pay for the secure cold storage of their bitcoin, there are institutional solutions offered by companies like Casa, where you can configure your multisig in a way that keys to your joint bitcoin treasury are distributed between you, your family or business partners, and a third party guarantor. 

***
	
Keeping your bitcoin safe requires consideration and responsibility – make your choices consciously and stay safe!    


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Best ways to store bitcoin

**How Your Bitcoin Stays Safe**

**How safe is P2P Bitcoin trading? Hodl Hodl is a P2P Bitcoin trading platform that operates differently from traditional exchanges. The key difference? We never hold your funds. Instead, we use a secure multisig escrow system that keeps you in control of your Bitcoin at all times.**


## What is Escrow?

Escrow is a **P2SH** (Pay-to-Script-Hash) Bitcoin multi-signature address generated specifically for each trade contract. Think of it as a secure lockbox that requires multiple keys to open — no single party can move the funds alone.
At Hodl Hodl, we use a **2-of-3 multisig escrow** system. This means three keys exist for every escrow address, but only two are needed to release the funds:

- One key belongs to the Seller
- One key belongs to the Buyer
- One key belongs to Hodl Hodl

## **How does multisig escrow work?**

![How does multisig escrow work?](https://zrhsczo76h2c.compat.objectstorage.eu-zurich-1.oraclecloud.com/hodlhodl-blog-production-mainnet/hh_multisig_escrow_scheme_5d5ef56ccb.png)

1. Contract Creation — Once a trade contract is started, Hodl Hodl generates a unique multisig escrow Bitcoin address for that specific trade.

2. Seller Deposits Bitcoin — The seller sends Bitcoin from their wallet to the escrow address, where it becomes locked.

3. Buyer Sends Payment — The buyer sends fiat payment to the seller using the agreed payment method.

4. Release from Escrow — Once the seller confirms they've received the payment, they release the Bitcoin from escrow directly to the buyer's wallet address.

## What Happens in a Dispute?

**Both the buyer and the seller can start a dispute. Once a Hodl Hodl administrator reviews and resolves the dispute, they can use the Hodl Hodl key combined with either the buyer's key or the seller's key to release the funds from escrow to the rightful party.**

**This is the power of 2-out-of-3 multisig escrow: it provides a fair resolution mechanism while ensuring no single party has unilateral control.**

## Why Is This Safe?

**The multisig escrow system provides several layers of security:**

**No Third Party Holds Your Funds** — Hodl Hodl cannot move funds from escrow without the seller's signature. Your Bitcoin remains under your control, even while locked in escrow.

**Protection Against Exchange Compromise** — Even if our exchange were to be hacked, your Bitcoin in multisig escrow remains unaffected. The funds can only be moved with the required key signatures.

**Direct P2P Trading** — All trades occur directly between buyers and sellers. The multisig escrow simply provides a trustless mechanism to ensure both parties fulfill their obligations.

**Buyer Protection** — With the 2-of-3 multisig escrow system, buyers aren't left powerless. They hold one of the three keys, giving them recourse if something goes wrong.

**Hodl Hodl's multisig escrow represents the true spirit of Bitcoin: trustless, peer-to-peer transactions where you maintain control of your funds. No custodial risk, no third-party holding your Bitcoin — just secure, direct trading.**

## Further Reading

- [**Trading Bitcoin Security Guide**](https://hodlhodl.com/blog/en/security-guide)
- [**5 Common Myths About Bitcoin - Debunked**](https://hodlhodl.com/blog/en/bitcoin-myths)

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Hodl Hodl Multisig Escrow Explained: Why We Never Hold Your Bitcoin

We are thrilled to have participated in the recent Africa Bitcoin Conference 2025 (ABC), where our team had the opportunity to share our expertise and showcase our commitment to user privacy and security. As a peer-to-peer trading platform, Hodl Hodl is dedicated to providing individuals with the tools and knowledge they need to take control of their financial freedom.

## Workshop: Bitcoin to Self-custody: Anonymous Bitcoin Purchase with Hodl Hodl

Our workshop, led by our CEO and renowned Bitcoin-only educator BTCSessions, was a huge success. Attendees learned **how to buy Bitcoin anonymously** using our platform, ensuring they maintain full control and self-custody of their assets. The step-by-step guide on how to purchase bitcoin anonymously provided a comprehensive understanding of the process, empowering users to protect their identity and financial sovereignty.

## Growing Presence in Africa

We are excited to announce that Hodl Hodl is expanding its presence in Africa, a region that is rapidly embracing Bitcoin and cryptocurrency adoption. Our platform is well-positioned to meet the growing demand for secure, peer-to-peer trading solutions, and we are committed to supporting the local community through education, outreach, and innovation. We believe that Africa has immense potential for Bitcoin adoption, and we are dedicated to playing a key role in this growth.

## Join Our Team in Africa: We're Hiring!

As we continue to grow and expand our services in Africa, we are actively seeking talented individuals to join our team on the continent. We have openings for Community Managers, Developers, and other roles that are passionate about Bitcoin, self-custody, and financial freedom. If you're based in Africa and are interested in being part of a dynamic and innovative company, we invite you to reach out to us at [hr@hodlhodl.com](mailto:hr@hodlhodl.com). We're looking for individuals who share our vision for a more decentralized and financially inclusive Africa, and who are excited to contribute to the growth of the Bitcoin ecosystem on the continent.

If you're passionate about Bitcoin and want to be part of a team that's making a real impact in Africa, we'd love to hear from you.

Thank you to everyone who attended our workshop and stopped to chat with us at the Africa Bitcoin Conference. We look forward to continuing the conversation and exploring ways to work together to promote financial freedom and to advance the adoption of Bitcoin across the African continent! 


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Hodl Hodl Makes a Strong Impression at the Africa Bitcoin Conference: Empowering Users with Self-custodial Anonymous Bitcoin Purchasing

HODL HODL BLOG