Bitcoin is the world’s best known and most widely used crypto-currency. It was invented by a cryptographer called Satoshi Nakamoto and quickly grew in popularity because it allowed individuals to transfer value peer-to-peer without the help of financial institutions. In the early days bitcoin gained notoriety because it was used on the infamous darknet market “The Silk Road” but in more recent times it has gained mainstream acceptance and is even supported by many Fortune 500 companies. For example, you can now use bitcoin to pay for goods and services on sites like Expedia.com, Dell.com and Microsoft.com.
For many years bitcoin was considered “nerd money” because only computer geeks had the technical knowledge to buy and store the digital currency. Thankfully those days are gone and now even technophobes can easily buy, save and spend bitcoin. Using bitcoin for the first time is similar to using the internet for the first time. You will be introduced to some new software and unfamiliar terminology but after a few minutes you will realize that it’s just as easy as using PayPal.
To help you conquer the bitcoin learning curve as quickly and easily as possible, we’ve put together this quick guide for beginners.
CHOOSING A BITCOIN WALLET
A bitcoin wallet is where you keep your BTC safe and secure. You can install a wallet on your PC/Mac or download a mobile wallet to Android, iOS and Windows Phone devices. Online wallets are also available that operate similar to services like Skrill and Neteller.
When choosing a bitcoin wallet, you need to decide whether you want to take full custody of your crypto-currency or allow a third party “bitcoin bank” to hold your coins for you. Popular wallets that give you full ownership of your BTC include Mycelium, Airbitz, Copay and BreadWallet. Online wallets like Xapo and Coinbase provide free bitcoin “vaults” where you can secure your coins from the most determined of hackers.
HOW TO BUY BITCOIN
Once you have installed your bitcoin wallet, you will be ready to purchase some BTC. There are many ways to acquire the digital currency but we will only examine the top 3 today.
Bitcoin ATM – There are over 1,000 bitcoin ATM’s (sometimes called BTM’s) in operation across the globe. As the name suggests, BTM’s look and function similar to regular ATM’s. At the machine, you simply enter dollars, euros, pounds or whatever your local currency is and the machine will send the equivalent amount of bitcoin to your wallet. Commission at these machines ranges from 5% to 15% so while they are easy to use, they can be quiet expensive compared to other options.
Localbitcoins/Paxful – These website are like the Ebay of bitcoin. They hook you up with bitcoin holders in your locality who want to sell bitcoin. You can opt to meet the seller in person or simply pay them using PayPal or bank transfer. These sites use a reputation system so you know how trustworthy the seller is before you buy. Commission on these sites is only 1% so they are an excellent option for those looking to get the most bitcoin for their money.
Bitcoin Exchanges – Probably the easiest way to buy bitcoin is through a bitcoin exchange because you can simply use your Visa or Mastercard to make the purchase. Some bitcoin exchanges may require you to provide photo ID and a utility bill due to AML and KYC requirements. Popular bitcoin exchanges include Bitstamp, Kraken, GDAX, BTCC and Bitfinex. Commission varies depending on volume but the average buyer can expect to pay around 1%.
HOW TO MAKE AN ONLINE BITCOIN PURCHASE
Now that you have successfully acquired some BTC, you may want to make a purchase online. The process is basically the same regardless of whether you want to pay for your VPN service or buy a computer from Dell. For this example we will assume that you are paying for a hotel room on Expedia. Once you get to the payment page, you will notice that you can opt to pay by credit card, PayPal or bitcoin. If you select “bitcoin”, a QR code will be displayed on the screen that contains both the payment amount and payment address. To confirm the payment, all you need to do is open the bitcoin wallet app on your smartphone and point the phones camera at the QR code. It’s that simple. Transaction fees on the bitcoin network typically cost between 10 and 50 cent so it is significantly cheaper than using many conventional payment methods.
We hope that you found this beginner’s guide useful and that you now feel confidant enough to join the crypto-currency revolution.