Chapter 9. Your first purchase
Every number in the book has a source. To keep the book short, the notes live here instead of in print. Each source is listed with the section of the book it supports and the words it backs up, in the order they appear in the chapter. Web addresses are links; a page may have moved since the date shown.
The chapter page · Chapter 8 sources · All chapters · Chapter 10 sources
Buying coffee, buying bitcoin: “for your own use requires no identity check, and it is legal” · Following a thousand dollars: “Exchanges are money services businesses under the Bank Secrecy Act, federal”
FinCEN, “Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies,” FIN-2013-G001, 2013; 31 CFR 1022.210, anti-money laundering program requirements for money services businesses, including customer identification procedures, ecfr.gov, retrieved September 2026.
Buying coffee, buying bitcoin: “and I teach them as a red flag. Fees often run above 10%”
Federal Trade Commission, Data Spotlight, “Bitcoin ATMs: A payment portal for scammers,” September 3, 2024, ftc.gov, retrieved September 2026 (reported losses of over $110 million in 2023, nearly tenfold the 2020 figure). Fees: Iowa Attorney General, press release on suits against Bitcoin Depot and CoinFlip, February 26, 2025, iowaattorneygeneral.gov, retrieved September 2026 (fees of about 23% and 21% of each transaction); Massachusetts Attorney General, press release on suit against Bitcoin Depot, February 3, 2026, mass.gov, retrieved September 2026 (markups of 15 to 50%).
Buying coffee, buying bitcoin: “The FBI counted more than $388 million lost through crypto ATMs in 2025”, “They are no longer anonymous: most ask for your phone”
Federal Bureau of Investigation, Internet Crime Complaint Center, 2025 Internet Crime Report (April 2026), cryptocurrency kiosk complaints and losses, ic3.gov; state bans: Indiana (signed March 9, 2026), Tennessee (in force July 1, 2026), Minnesota (in force August 1, 2026); ID rules: operators’ own policies, such as Bitcoin Depot and CoinFlip, retrieved October 2026.
Buying coffee, buying bitcoin: “In January 2024, U.S. regulators approved bitcoin exchange-traded funds”
U.S. Securities and Exchange Commission, approval order for spot bitcoin exchange-traded products, January 10, 2024.
Following a thousand dollars: “Most exchanges let you buy the moment you start the transfer”, “One is the fee the platform states, roughly half a percent”
River, “What are River’s fees?” support.river.com, retrieved September 2026 (1.00% on one-time purchases up to $1 million; no fee on recurring purchases after the first week); Swan, “Fees,” swanbitcoin.com, retrieved September 2026 (1% on purchases, effective July 1, 2025); Kraken, “FAQs about buying instantly,” support.kraken.com, retrieved September 2026 (1% plus a spread, with payment-method fees shown at checkout); Coinbase, “Coinbase pricing and fees disclosures,” help.coinbase.com, retrieved September 2026 (fee and spread shown on the trade preview screen); Coinbase, “USD ACH Deposits,” help.coinbase.com, retrieved September 2026 (ACH transfers take three to five business days, and funds cannot be withdrawn until received).
Following a thousand dollars: “It runs from a few cents to a few dollars, depending on”
Bitcoin average transaction fee, daily series from Blockchain.com via YCharts, retrieved September 2026 (daily averages between about $0.17 and $0.58 from August through late September 2026); live fee estimates at mempool.space.
Following a thousand dollars: “Selling, spending, or trading is, and the IRS treats bitcoin as property”
Internal Revenue Service, Notice 2014-21, 2014 (virtual currency treated as property).
Following a thousand dollars: “Since 2025, U.S. exchanges report your sales to the IRS on Form 1099-DA”
Internal Revenue Service, “Gross Proceeds and Basis Reporting by Brokers and Determination of Amount Realized and Basis for Digital Asset Transactions,” T.D. 10000, 89 FR 56480, July 9, 2024; IRS Fact Sheet FS-2024-23, June 2024, irs.gov, retrieved September 2026 (gross proceeds reported for transactions on or after January 1, 2025; basis for certain transactions on or after January 1, 2026); Form 1099-DA.
You do not have to buy a whole coin: “A bitcoin divides into a hundred million satoshis, or sats, named” · What the ledger shows, and what it does not: “The whitepaper put it this way in 2008: “The public can see” · Worth repeating: “Satoshi designed it that way on purpose and said so in the”
Satoshi Nakamoto, “Bitcoin: A Peer-to-Peer Electronic Cash System,” 2008, section 10, “Privacy.” Divisibility to 100 million units is set in the Bitcoin software, not the paper.
Small first, then a habit: “40 years of behavioral research says defaults beat intentions: people stay”
Brigitte Madrian and Dennis Shea, “The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior,” Quarterly Journal of Economics, 2001; Richard Thaler and Cass Sunstein, Nudge, Yale University Press, 2008.
A store that sells one thing, or hundreds: “FTX filed for bankruptcy in November 2022 with a shortfall in customer”
FTX Trading Ltd., Chapter 11 petition, U.S. Bankruptcy Court for the District of Delaware, November 11, 2022; FTX debtors, second stakeholder presentation, March 2, 2023 (about $2.7 billion of customer assets identified against $11.6 billion of customer balances, a shortfall of about $8.9 billion), as reported by Securities Docket, March 3, 2023, securitiesdocket.com, retrieved September 2026.
A store that sells one thing, or hundreds: “Celsius froze withdrawals that June and never reopened them”
Celsius Network, notice pausing all withdrawals, swaps and transfers, June 12, 2022; Chapter 11 petition, U.S. Bankruptcy Court for the Southern District of New York, July 13, 2022, as summarized by the Vermont Department of Financial Regulation consumer alert, 2022, dfr.vermont.gov, retrieved September 2026; the company left bankruptcy and began paying creditors under its plan on January 31, 2024, without reopening withdrawals.
What the ledger shows, and what it does not: “the IRS and the Justice Department have prosecuted people who assumed”
United States v. Frank Richard Ahlgren III, U.S. District Court for the Western District of Texas: U.S. Department of Justice, press release on guilty plea, September 12, 2024, and sentencing to two years in prison, December 12, 2024, justice.gov, retrieved September 2026; Congressional Research Service, Legal Sidebar LSB11353, “United States v. Ahlgren: A Study in Lost Cryptocurrency Tax Revenue,” everycrsreport.com, retrieved September 2026 (Ahlgren sold bitcoin for cash in person, moved coins through mixers and multiple wallets, and deposited cash in amounts just under $10,000).
What the ledger shows, and what it does not: “The Fourth Amendment and Article 12 of the Universal Declaration of Human”, “a federal appeals court applied that rule to Coinbase records in 2024”
U.S. Constitution, Fourth Amendment; United Nations, Universal Declaration of Human Rights, Article 12, 1948; Harper v. Werfel, No. 23-1565, U.S. Court of Appeals for the First Circuit, September 24, 2024, certiorari denied June 30, 2025, No. 24-922.
Why people sell at the bottom, and why some lose everything: “Loss aversion, from Chapter 2, is the reason a $50 parking ticket”
Daniel Kahneman and Amos Tversky, “Prospect Theory: An Analysis of Decision under Risk,” Econometrica, 1979; Amos Tversky and Daniel Kahneman, “Advances in Prospect Theory,” Journal of Risk and Uncertainty, 1992 (loss-aversion coefficient near two).
Why people sell at the bottom, and why some lose everything: “Bitcoin’s price has fallen more than three quarters from a high on”
Glassnode, “A Bear of Historic Proportions,” The Week On-chain, June 2022, research.glassnode.com, retrieved September 2026 (bear-market lows of 75 to 84% below the prior high in 2015 and 2018); the 2021 to 2022 decline, from a November 2021 high of $68,906 to a November 2022 low of $15,517, or 77.5%, as reported by Yahoo Finance, 2026, retrieved September 2026; the 2011 decline, from about $32 in June 2011 to about $2 in November 2011 on Mt. Gox, about 93% (Bitcoin Magazine, “Anniversary of the Great Bubble of 2011,” June 2012).
Why people sell at the bottom, and why some lose everything: “On May 19, 2021, roughly $8 billion of leveraged positions were”
Bybt (now Coinglass) liquidation data, as reported by CoinDesk, “Bitcoin Drops Below $31K Before Rebounding; $8B in Liquidations Triggered,” May 19, 2021, coindesk.com, retrieved September 2026 ($8 billion of futures positions liquidated in 24 hours).
Photograph this page: the volatility contract: “An implementation intention is a plan written in advance in the”
Peter Gollwitzer, “Implementation Intentions: Strong Effects of Simple Plans,” American Psychologist, 1999; Peter Gollwitzer and Paschal Sheeran, meta-analysis, Advances in Experimental Social Psychology, 2006.
A fair objection: “Vanguard’s study, which Chapter 6 described, found that a lump sum beat”
Anatoly Shtekhman, Christos Tasopoulos and Brian Wimmer, “Dollar-cost averaging just means taking risk later,” Vanguard Research, July 2012 (lump-sum investing outperformed a 12-month dollar-cost average in about two-thirds of rolling 10-year periods: 67% in the United States, 67% in the United Kingdom and 66% in Australia, for 60/40 portfolios).
A store that sells one thing, or hundreds
Mt. Gox Co., Ltd., civil rehabilitation petition, Tokyo District Court, February 28, 2014 (about 850,000 bitcoin reported missing, about 750,000 of them customers’); Mt. Gox announcement of March 20, 2014 that about 200,000 bitcoin had been found, leaving about 650,000 missing, as reported by CBS News and the Associated Press, March 21, 2014, cbsnews.com, retrieved September 2026.
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