How to buy Bitcoin
The first thing you need to do before you can buy Bitcoin is to download a Bitcoin wallet.
This is where you will be storing your Bitcoins and used to send and receive them as well. Some wallets also act as exchanges where they will also allow you to buy and sell Bitcoin. Only basic details are required to set up an account, usually your name, email address and a password is all that is required.
The most popular service for a web wallet is Blockchain.info. You can sign up for a wallet with them within two minutes.
There are also third party providers that will provide a wallet and also allow you to buy Bitcoin. The most popular ones being Coinbase and Coinmama. They also provide apps that can be used on your mobile phone.
This is what a Bitcoin wallet on Coinbase would look like. It’s very similar to the look and feel of a traditional online banking experience.
Once you have registered an account, you will be asked to connect your bank account, credit card or your debit card. This will allow you to purchase Bitcoins using your credit card. You can buy a fraction of a Bitcoin, basically however much or little you can afford to invest.
Once you initiate a request for Bitcoin, online “miners” will approve the transaction. There is a small fee for each transaction in order to pay the miners to process the transaction. If there is a lot of transactions in a short period of time, these transaction fees can go up in price.
When you are ready to purchase or sell Bitcoin, you can now make the transaction with your wallet service simply by choosing the Buy or Sell options.
Alternatively, you can buy Bitcoin directly from sellers on other websites such as this one. There are several reason why you may choose to go down this route.
1. You live in a country that has restrictions on buying Bitcoin.
2. You have buying amount limitations on other exchanges.
3. You want to keep your identity private.
4. You are not confident in using the technology involved in purchasing Bitcoin.
5. You want to work with a reputable service provider.
Once purchased, the Bitcoins are then transferred to your wallet. Bitcoin transactions are not reversible unlike a traditional bank transaction. There are no refunds. It is important that the correct wallet address is given to the sender of the Bitcoin and vice versa.
How to secure your wallet
Securing your wallet can be achieved by using a two-factor authentication process. What this means is that, in addition to your username and password, your wallet will ask for a secret pin that only you can access via your phone or a third party authentication app like Google Authenticator.
Public and Private keys
Your wallet will have two keys. One private which you can generate or allow the wallet to generate one for you and a public key which the wallet will generate for you.
Your Bitcoin technically is not stored in your wallet. It actually sits on a public ledger called the blockchain. Your private key, which is a long string of number and letters is linked to your Bitcoins on the public ledger allowing only you to access them. This is why it is important that you keep your private keys somewhere safe. You can even print them on a piece of paper and keep a hardcopy of your private keys offline in a secure place. Think of the private key as your ATM PIN, allowing you to gain access to your account.
Your public key is like you bank account number. This serves as an address that you can safely share with anyone. The public key is used to receive Bitcoins with.
Options for buying Bitcoin:
|Wallet||Buying Limits||Verification||Fees||Exchange Rate|
|Coinbase||Yes||500 week||ID, credit charges||3.99%||Fair|
|Coinmama||Yes||150 week||Not required||5% via Simplex||High|
|JWS Wealth||No||No Limits||Not required||2.9% + 30cents via Stripe||Very High|
Once you have Bitcoins in your wallet. You can do do whatever you want with them. There are many retailers beginning to accept Bitcoins or you can just hold on to them if you think they will go up in value. You can also trade them for other cryptocurrencies on several exchanges that specialise in cryptocurrency trading.