Bitcoin 101: Getting Started
Have you been hearing about this “bitcoin” thing a lot lately? Want to know what it is and how you get some?
Well luckily for you, in this article you will learn:
- The basics of bitcoin and cryptocurrency
- How to buy and sell bitcoin
- How to store bitcoin
What Is Bitcoin?
To put it most simply, bitcoin is a cryptocurrency, which is a type of digital currency. Unlike regular currencies (for example: dollar, euro, pound), cryptocurrencies are not controlled by a government or individual, and exist only on the internet (they do not have a physical form). Bitcoin is the first and most popular cryptocurrency. It can be purchased with regular currency – as well as stored and traded – anywhere in the world with an internet connection.
What Does Bitcoin Do?
Bitcoin allows anybody with a computer, phone, or tablet to make transactions with one another. The transactions are made quickly, dependably, and independently of 3rd parties. Started in 2009, the bitcoin network has yet to be hacked, proving it to be reliable and secure, as far as computer networks are concerned. The driving technology behind bitcoin – known as the blockchain – has been imitated thousands of times since its initial launch, resulting in the creation of a huge “altcoin” market. Blockchain technology is now being applied in countless other ways as a solution to traditional record-keeping problems.
Why Should I Care?
Blockchain technology is thought to be the future of finance and perhaps even the global economy. Wall Street is pouring millions of dollars into bitcoin- and blockchain-related investments every day, causing the price of bitcoin and several altcoins to skyrocket. With a 30,000%+ rise in price from 2012 to 2017 and a feverishly-active trading market spread on all corners of the earth, it’s evident that bitcoin has grabbed the world’s attention, and will continue to be on the radar of major news outlets for quite some time.
Over the last 5 years, the world of cryptocurrency existed inside of a microscopic pocket on the internet. Interest crossed over into the mainstream considerably in 2017, with platforms like Ethereum making it possible for software developers to create applications on the network. Some of these applications have received millions of dollars in funding from both public and private investors. Regardless of whether you are an investor or not, you will likely hear the words “bitcoin,” “blockchain” and “cryptocurrency” even more in the future.
Why Is Bitcoin Cool?
Bitcoin offers solutions to some of the problem with traditional currencies. Instead of relying on a trusted third party to conduct a transaction on a user’s behalf – like banks, money wire services or PayPal – bitcoin allows users to send money to each other directly. Each transaction is one-way and secured by computer cryptography. Bitcoins cannot be duplicated or spent twice. The programming rules that govern the bitcoin network cannot be easily influenced or changed on a whim, and the number of bitcoins that will ever be created is capped at 21 million. Thus, bitcoin is regarded as highly incorruptible and often referred to as “the future of money.”
Regardless of where you live, if you have the internet, there’s a good chance you can buy bitcoin.
Coinbase is our favorite place to buy and sell bitcoin for newbies. It has been around a long time and is extremely easy to use. Setting up a Coinbase account and buying bitcoin is about as easy as setting up a Paypal account.
How Coinbase Works
How To Get Started At Coinbase
There are 3 basic steps to signing up for any exchange.
Step 1: Register
Enter your name, email address, and password to begin the registration process. You will have to set up a 2-Factor Authentication method so that you account is harder to hack into, so have your cell phone handy.
Step 2: Attach Payment Method
Coinbase accepts a wide variety of payment methods, including debit and credit cards. The fastest transfer method is credit card, though the fee is slightly higher than if you purchase bitcoin with money from your bank account. Don’t be frustrated if Coinbase wants a week or longer to verify your information; this is the standard amount of time it takes them to clear the red tape necessary to set up a new user account. You can also link your PayPal account to your Coinbase account, allowing you to use PayPal money to buy or sell bitcoin.
Step 3: Buy Some Bitcoin
Now that your payment method has been activated, you can decide how much bitcoin you want to buy. You can buy much less than 1 full bitcoin. Simply type in the decimal value of the amount you want to buy, as low as 0.001 BTC (that would be 1/1000th of 1 bitcoin, or 1 mBTC). You will pay the rate shown on your screen. Because bitcoin price is volatile and may drop or rise tremendously in a period of just a few minutes, be sure to check that the price you are paying is acceptable before clicking “Continue.”
Ready To Get Started?
Visit coinbase.com and get $10 free bitcoin if you buy $100 or more.
After your first purchase, your bitcoin will be transferred to and stored in a bitcoin wallet that Coinbase has created for you. Coinbase takes their security very seriously, so this is a recommended place to store your bitcoin if you are not doing much with it. There are several types of bitcoin wallets, with the most popular being web-based and mobile wallets.
If you plan on spending your bitcoin at real life shops, or sending some in person, the Mycelium mobile wallet app is highly recommended. If you plan on keeping your bitcoin for a long time, it is recommended that you keep it in a paper wallet, or in Coinbase’s vault account feature. Pictured below is the Android app screen for Mycelium, showing the user bitcoin address, current balance, price of bitcoin and a QR code that represents the user’s address and is scannable by another mobile wallet for the transaction of bitcoin, phone-to-phone.
How Do I Send And Receive Bitcoin?
First, familiarize yourself with the bitcoin address associated with your bitcoin wallet, which is a string of numbers and letters 34 characters in length. This is the bitcoin equivalent of your email address. The address will always be associated with your account, so you can use it repeatedly if you’d like. Let’s say you want to send some bitcoin using Coinbase. Click the “Send/Request” button in your main account screen to bring up the following menu.
Copy the address to which you wish to send bitcoin. Paste it in the “Recipient” field, then simply enter in the amount of bitcoin you wish to send. You can toggle between bitcoin and dollar values by clicking on the “BTC” box next to the amount to be sent. Double-check you are sending your bitcoin to the right place, that you copied the whole address, and that there aren’t any extra characters in the field. Unlike traditional currency transactions, there is no real chance of recovering bitcoin sent to a wrong recipient. After you are sure the address is correct, click “Send Funds.”
What Can I Do With Bitcoin?
Bitcoin is becoming more accepted by merchants around the globe daily. Here is an extensive list of retailers who will accept bitcoin for payment. Some of the major online merchants to accept bitcoin for payment include:
- Microsoft – add money to your Microsoft account with bitcoin, which you can then use to download games, movies and apps from the Windows and Xbox stores.
- Overstock.com – daily discounts on many household, electronic and gift items, accepts bitcoin for payment of purchases outright.
- eGifter.com – buy and sell gift cards with bitcoin online with hundreds of popular merchants to choose from, effectively exchanging your bitcoin for a “cash” value.
In this article, we explored the basics of bitcoin: what bitcoin is, how to buy bitcoin, and where to store bitcoin. There is a lot more to learn than what we covered here. If you would like to know more about bitcoin, a good place to start is bitcoin.com, a user-friendly site dedicated to the explanation of all things bitcoin. There are also several good YouTube tutorials that quickly outline the essentials of bitcoin through an animated graphical presentation.
In summary, bitcoin is revolutionizing online payment systems and attracting Wall Street-sized investments through its continued success as a legitimate currency. Though only the first of thousands of blockchain-based software experiments and cryptocurrencies to follow since, bitcoin’s durability has earned it trust among users and investors, paving the way for blockchain technology’s continued upheaval and disruption of pre-existing financial systems.
Bitcoin achieves this through its principal tenet of decentralization, which offers financial empowerment of the individual and the disempowerment of domineering third-party money transactors like Western Union, PayPal and the banking system in large.
The bottom line: Bitcoin’s ability to help level the financial playing field for all is no longer going unnoticed, and we may very well be witnessing the birth of a revolutionary new system of monetary governance, where people can be their own banks, bankers and businesses, simply by maintaining complete control over their own bitcoin.
Ready To Get Started?
Visit coinbase.com and get $10 free bitcoin if you buy $100 or more.