After you’ve spent a little time getting to understand the principles behind Bitcoin, you’ll probably feel ready to venture into the brave new world of cryptocurrencies yourself. Remember, any movement of Bitcoin between you and another party is either a transfer of ownership or a newly minted token as a result of mining. Either way, it will be recorded in the blockchain. The guidelines here are intended to help make your experience of buying and selling Bitcoin as smooth as possible.
Set Up a Bitcoin Wallet
Depending on how you acquire your Bitcoin, you may not need to immediately have a place available to store them (more on that below). Using a Bitcoin wallet from the start is advisable, however, because it is the most secure way to hold Bitcoin until you’re ready to use them. In addition, this puts you in total control of your virtual funds with no third parties involved.
There are several different types of Bitcoin wallets, with trustworthy options in each category. Deciding which is best for you will take a little time and research but is well worth the effort. The features that they offer and the platforms that they can be used on vary, so you need to make sure that you pick the right one for you. The different types, with examples of each, are listed here:
- Mobile Wallets: Mobile wallets are designed for use on mobile devices. They’re practical and portable, with some of the best options including Airbitz, BitPay, Mycelium and Jaxx.
- Web Wallets: info is a good example of a web wallet. These wallets are available online and work well if you are usually on your desktop rather than using a mobile device.
- Hardware Wallets: As the name suggests, a hardware wallet is a piece of computer hardware that you physically attach to your system and use rather than cryptocurrency software. Much less susceptible to malware and viruses, they are considered more secure and options like Ledger and Trezor are well worth checking out.
- Advanced Wallets: After you’ve been working with Bitcoin for a while you might want to consider an advanced wallet. These work well for the original purposes of Bitcoin, so are good for serious miners and those performing complicated transactions. When you’re ready to join that category, Armory and Multibit are the most highly recommended advanced wallets.
- Paper Wallets: Paper wallets are a way of taking your Bitcoin offline and securing them that way. You’ll be able to create and print out a unique key via paper wallet websites, like walletgenerator.net, which gives access to your full Bitcoin store. As long as you keep this safe, your virtual currency should remain secure.
Create a Public Bitcoin Address
After you’ve established your Bitcoin wallet, use it to generate a public address through which you can receive your Bitcoin. These addresses are usually long strings of letters and numbers, and allow anyone holding Bitcoin to transfer them to you on the blockchain ledger.
With your Bitcoin wallet in place, you’re ready to get some funds inside it. Acquiring Bitcoin can be done in various ways:
- Mine Bitcoin Yourself: Although increasingly difficult and expensive, you can set yourself up as a Bitcoin miner. You will require powerful hardware and specialised software such as CGMiner.
- Become a Bitcoin Bounty Hunter: Many companies are allowing people to earn Bitcoin by completing various jobs and tasks. These range in difficulty from posting to social media, to helping catch a hacker, and the pay varies accordingly. There are several websites offering these jobs, such as Bonuty0x.io; you just need to approach them with caution and be sure you can trust them.
- Buy Bitcoin Privately, from a Bitcoin Trader or on a Bitcoin Exchange: This is probably the most common way to get Bitcoin these days. Private sales are fine, whether you give the money in cash or electronically, but it is advisable to do it in small amounts until you really feel that you can trust who you are dealing with. Bitcoin traders are better for smaller amounts and Bitcoin exchanges for larger sums.
Traders and exchanges will store your cryptocurrency for you, as mentioned above, but they are less secure than Bitcoin wallet storage. Traders usually have a service charge of about 1%; exchanges are lower than this and operate like a stock exchange. You’ll be able to look at bid/ask spreads 24 hours a day as you choose the right time for you to buy Bitcoin this way.
Use Your Bitcoin
As long as you and the person or entity you want to trade with have Bitcoin wallets, you can use the cryptocurrency. These days it is possible to deposit into some casinos, pay for medical and dental services, buy products and even purchase homes using Bitcoin. You can also make donations using the cryptocurrency, including to large organisations such as Wikipedia, or sell them and turn a profit. As virtual currencies become more ubiquitous, the list of ways in which they can be used will keep growing too.