Bitcoin adoption is occurring five times faster than Internet adoption in the mid nineties. For most who buy, store, spend and trade their Sats, they use a custodial service such as Coinbase, Binance, Crypto.com etc.
The thing is, those custodians are not actually looking after your bitcoins at all, since the bitcoins are simply UTXOs on a decentralised, distributed blockchain. No bitcoins enter the blockchain from outside and no bitcoins leave it. The blockchain is a closed system, albeit open, permissionless, censorship resistant, and all that good stuff.
So what are they looking after? Well, the private key that accesses the bitcoins that you have purchased. The likelihood is, that your balance is simply a query of a centralised database, sat in a cloud service providers data centre and the private key to the exchanges balance is theirs, not yours. So other than a way of having exposure to the bitcoin digital assets price movement, it’s kind of missing the whole point of bitcoin being a peer to peer digital currency with no intermediaries since you’re not custodian of the private keys to your own bitcoin balance on the blockchain.
Also, in order to transact, you need an intermediary validator node. That maybe the crypto wallet custodian service provider or maybe they themselves use another third party node service provider. The point is, you don’t know and all of a sudden we’ve gone from being “self sovereign bitcoiners” to just being clients of a crypto bank with an unknown number of intermediaries confirming and validating and tracking and approving (or not), our “peer to peer” bitcoin transactions. And bitcoins open and permissionless design just got regulated to require KYC. So you’re handing over all kinds of documentation, most likely to an unregulated foreign corporate who in return lets you query their centralised database of customers bitcoin balances based on how much bitcoin they sold to you. It’s not ideal is it?
The first step in upping ones game (and massively upping the level of responsibility) is to host your own private keys to your non-KYC bitcoin address using a hardware wallet, and very very very securely storing the recovery phrase to the private key such that every kind of natural disaster is accounted for. With bitcoin, its easy to store your wealth in a seizure resistant way, but its also easy to put yourself on the other side of bitcoins security if you lose the ability to access your own wallet over 5, 10, 15 or 50 years. So bear that in mind too.
Even hosting your own private keys still requires you to use software client from a company such as Ledger, Trezor etc to provide the full node needed to validate and confirm your transactions, even though you now verify the transactions yourself using the hardware wallet device.
So the next level of self sovereignty means running your own node. There are two easy ways to do this.
- Run bitcoin core software on a linux machine or a windows machine and wait until the full blockchain has been synchronised to your local storage.
- Run Umbrel – a comprehensive suite of “apps” running on a raspberry pi or a linux host, including a bitcoin core node and lightning node (by default).
In order to get umbrel up and running the quickest and easiest way (and lowest power way), I’d recommend a raspberry pi with very fast and large microSD card, at least 4GB RAM (8GB better if you intend to run many of the other apps available in the Umbrel App Store) and a 1TB minimum NVME external storage device to house the 600GB bitcoin blockchain.
I use a raspberry pi 400 with 4GB RAM and run Bitcoin Core and Lightning nodes, Samourai Dojo Server, Tailscale VPN, Pi-Hole and Bitfeed. And it runs very nicely indeed.
Getting up and running was a five minute job – no, it really was I swear, which makes it all the more tragic that people aren’t running their own bitcoin nodes. Plenty of people run their own media centres and nas storage at home, and running your own bitcoin node is no more difficult. Umbrel have made this super easy to do.
- Download the sd card image from Umbrel
Follow the wizard all the way through. I used Raspberry Pi Imager to write the image file to the sc card, same as I would with any other Pi image, but Umbrel recommend a different one. You do you, but I’d recommend one or the other since I know they both work.
Then plug in your 1TB NVME Storage device, pop the sd card in the Pi, connect it to your network with a cable rather than wifi and power it up (use a proper pi power supply).
After a short while, you’ll be able to access http://umbrel.local from a laptop or desktop on your network and watch umbrel getting itself ready, then you can go through the motions of creating the bitcoin core wallet etc using the easy to use GUI. Make a note of all the bitcoin recovery phrase words just as you would with your hardware wallet.
The bitcoin blockchain will start to sync and will take a few days probably since its not just the download of lots of little files, but also the verification that they’re all present and correct (cryptographically verified accordingly).
While the bitcoin blockchain is syncing though, you can enable 2FA in the Setting and Install the other apps available in the app store.
I’d definitely recommend Tailscale VPN so that you can get to your node using your phone or laptop from anywhere in the world as if its on your local lan. Once installed, log on using a google account (other options available too) and see all the devices on your network and the IP addresses you need to access them by logging into https://login.tailscale.com/admin/machines
You can still run this at the same time as connecting to ExpressVPN if you’re using public Wi-Fi too. It’s “as well as” rather than “instead of”.
I’d also recommend pihole. It replaces the DHCP server and thus your primary DNS server on your LAN so provide Ad protection to your entire network.
Check out the Umbrel App Store from your Umbrel Node’s admin page for the other apps available, such as BTCPay Server to send invoices and receive bitcoin payments and also Samourai Dojo Server so that you can connect your Samourai BTC wallet app on your mobile device to your own bitcoin node if you use Bitcoin’s CoinJoin privacy feature that the Samourai wallet provides.
It’s really quick and easy to get all this up and running. I did it in a couple hours and everything just worked. I have to say, I’m very impressed.
Be sure to take a good solid set of notes as you go along, because you need to know how to recover all of this in the event your Pi or NVME block storage device goes pop!
You should only store enough bitcoin on your Umbrel wallet that you’d be prepared to loose. Your main stack should be kept in cold storage and moved to Umbrel and and when you need to open a lightning channel or make a transaction. Umbrel is considered Beta software, but it’s a very well polished offering already and will only get bigger and better as more products are included in the app store.
Welcome to the new era of the decentralised internet!
Upgrade to version 0.5.0
A new upgrade and the biggest Umbrel upgrade yet has just been released today (7/6/2022). I’ve logged on to my Umbrel node using the Tailscale address, backed up my channels as prompted and clicked on Upgrade…
Everythings running fine.
Update: I discovered this excellent tutorial on setting up Lightning. I highly recommend it, although setting an alias for your lightning node isn’t easy like it once was. I managed to crash my Umbrel node trying to change it -and from 2.5 hours away. D’oh! I Have No Idea What I’m Doing: Lightning on Umbrel⚡️ | Stonly
Running Multiple Lightning nodes on Umbrel
There are a handful of ways of managing a lightning node but two of the most popular ways are using ThunderHub and/or Ride The Lightning.
Each of these two tools runs on a different Lightning Node base however. One using c-Lightning (Core Lightning) and the other using Lightning Network Node (LND), so if you install both these tools, you’ll have two separate lightning nodes running on your Umbrel Personal Server, not one.
Whilst this might be slightly irritating, it does come with an advantage that you can create a channel between them and play around with liquidity before venturing out into the bigger lightning network.