How to Buy Bitcoin: How can a ‘newbie’ purchase their first bitcoin?
The easiest way to buy bitcoin is to visit Coinbase.Com and easily register with an account on your PC or Mac. Coinbase has quickly become the go-to platform for investors getting started with cryptocurrency. Coinbase has the simplest interface for new users and buyers. Keep in mind, you will need to sync your bank account and give up some vitals so they can verify who you are. Once you are registered then you can buy some bitcoin. You will have to wait about a week for it to arrive in your account. This is because both your bank and coinbase need to make sure each side of the transaction is legitimate. Once you receive your bitcoin then you can decide if you want to keep it on their site and in their wallet (similar to how your bank holds your USD or other currency,) or move it to an online wallet (hot wallet) to make purchases, to an exchange (centralized wallet) to make trades, or to your own wallet (there are a few options for this including offline USB ledgers, paper wallets, cloud or running an actual bitcoin node on your computer and syncing the wallet).
How do I invest in bitcoin?
Simply buy bitcoin and either store it away in an offline wallet in a safety deposit box, run a bitcoin node (21 Computer is easiest for newbs,) or you can trade it for other alt coins on an exchange site. Poloniex is one of the more popular bitcoin exchanges where you can trade bit coin for Ethereum, MAIDSafe, Factom, Ripple, Litecoin or thousands of other digital currency. Do research and invest wisely, as there can be volatility in the prices of these alt coins. The fluctuation in prices can be used to your advantage, and you have the ability to buy and sell these alt coins to make (or lose) your bitcoin. If you have an account with an online broker such as etrade or fidelity, you can also buy some stocks that use bitcoin and other blockchains on commissioned exchanges. There are ETFs that invest in bitcoin and other “disruptive technologies,” but at this time there is not an ETF or fund that is a pure play on bitcoin or directly reflects the price of the crypto currency. Additionally, the mainstream brokerage options available now are traded on the speculative over-the-counter market that provides little transparency or oversight from regulators. For the sake of exploring all options, another way to acquire bitcoin is on bitcoin backed gambling websites. I would only partake in gambling as entertainment as I would with any other currency. You can collect from bitcoin faucets as well but they are very small amounts of satoshis (divisions of bitcoin) and tend to be very intrusive sites that sometimes get hacked or phish for your information. Thinking outside of the box, I’ve also done work for hire for bitcoin! Once you get involved and start exploring your options how to buy bitcoin, you’ll find there are many ways to invest in the crypto currency!
How do I store bitcoin?
Storing bitcoin is simple. I recommend if you are a first time buyer just use my coinbase method of buying and you can store a small amount in their wallet. Practice transferring some bitcoin to your coinbase vault wallet to get a good idea of how to send and receive coins. You can also send some to a wallet you have set up on blockchain.info (which is very easy to set up as far as wallets go.) Once you get a good feel for bitcoin and have poked around and sent a small amount (.002 or so,) then you can plan on buying more or investing the ones you have to trade. Once you have decided to invest a fair amount then you can look into setting up and running a bitcoin node or investing in a hardware wallet to keep your bitcoin “off of the grid.” Don’t be intimidated by some of the more advanced options. Using your easy to set up coinbase wallet is more than fine for starting out, and you can experiment with some of these other options as you become more familiar with how to buy bitcoin and the workings of this new world of cryptocurrency.
Question 4. How do I choose the best wallet to store my coins?
Choosing the best storage for your bitcoins all depends on what you would like to do with your bitcoins. I like to keep some in a hot wallet (info on coinbase.com) for quick buying or selling. I also have a good amount in my offline ledger wallet for the most security. I also keep some bitcoins stored in a few different online exchanges in order to to buy and trade other alt coins. These are considered centralized exchange wallets since they store your digital currency for you. It’s easy and convenient to store your digital currency in an exchange, however this is probably the least secure place to store your coins. Several exchanges have historically failed or been hacked. I recommend poloniex.com and livecoin.net for good trading sites that have had few issues. Look up “Mt. Gox” and “Cryptsy” for scary stories on exchanges crashing and being manipulated. Here is a list of bitcoin exchanges no longer with us that was last updated in October of 2015.
How does bitcoin work?
Bitcoin, in it’s most basic terms, is a peer to peer network to transfer electronic currency quickly (usually under ten minutes) and with very low fees. It is also a super secure blockchain with an extensive network of computers operating nodes that make it both pseudo-anonymous and trusting. Simply put, it lowers costs for both consumer and seller because of the low miner fee to verify transactions and add it to the blockchain. It eliminates all middlemen like clearing houses and such that make costs bloat. For a detailed explanation, Bitcoin.org does a great job of explain the different nuances of who, how, and what and answers this particular question quick and precise here https://bitcoin.org
How Do I Know The Government Won’t Ban It?
The US government currently classifies bitcoin a commodity and not a currency. Many countries have different opinions of what bitcoin is and are still trying to figure it out. For instance, in the EU bitcoin is taxed like a currency and in Iceland it is currently illegal to trade cryptocurrency. It is impossible to say whether or not a government will ban bitcoin or the blockchain, but the whole point of bitcoin originally started as a libertarian movement to bypass the financial system that crashed the global economy in 2008. Governments would have to make the internet and computers obsolete to really keep bitcoin from being used at this point and even then you could finesse a way to power bitcoin or another alt currency through your phone, toaster oven or more (see Ethereum)
What is bitcoin backed by? Why is it valuable?
Ever since the Nixon Administration took the U.S. currency off of the gold standard, the U.S. Dollar is backed by nothing but the Government’s word (US is currently $19.6 trillion in debt.) The value of bitcoin is determined by the value people are willing to pay and sell the unregulated, decentralized currency. The security of seven years of real consumer use and in the trust that the blockchain has built with during this time is really what makes up the value of bitcoin. Bitcoin nodes are operated all over the world and the more nodes, the more decentralized and powerful bitcoin becomes. By 2020 bitcoin will be consuming the same energy level as Denmark! Also, bitcoin has a $6 billion dollar marketcap at the time of this piece and should see it touch $20 billion in the coming year (if not sooner). Bitcoin is being stored as a means of value globally in countries where inflation is high and corruption is rampant. Venture capitalist investments are flooding into blockchain technology, and the non-inflationary amount of bitcoin is set out to cap at just under 21,000,000. These are just some of the reason bitcoin has value. Lastly, whether poor or rich, anybody can get access to bitcoin with just a smartphone, giving the digital currency potential to continue growing – as bitcoin is accepted and embraced globally.