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How to Buy Cryptocurrency, A Guide For Beginners - Buying BTC, Ethereum or Ripple Online - Duration: 6:20.
Here is a simple guide on How To Buy Bitcoin: Bitcoin is a virtual type of currency that
is owned by no government, bank or nation. It is steadily increasing in value as more
and more people purchase it, and slowly, certain businesses are starting to accept
it. But it remains highly volatile, and this alone makes it impractical as a tool of commerce.
However, these are early days. The world is turning to face technologies like Bitcoin
and the blockchain that makes it work, and many of the world's biggest banks and consulting
firms are working hard to set up policy and case studies to be ready when the rest of
the world flips the switch, and Bitcoin becomes as big the hype suggests. If you want to
buy some, it's pretty easy. But first let's make sure you have somewhere safe to keep
it. So we created this how to buy bitcoin guide for you as non legal or investment advice
but a basic guideline for some important pointers.
First, the Wallet You'll need a wallet. Not a nice leather
billfold, because Bitcoins are not physical. There are no coins and no paper bills involved.
It is all virtual. The Bitcoin wallet is an app that you can download to your phone, and
your computer. It contains two 16-digit passwords: one is called a public key, and the other
is a private key. Quite simply, when you buy Bitcoin, your wallet
sends your public key information to the vendor, the same way you would enter a credit card
number into an online form. The public key tells the vendor's app where to send the
Bitcoin amount. The private key is the password you employ to confirm the transaction from
your end. This one-time code is reviewed by the computers on the blockchain, who then
approve the transaction unanimously as representing your receipt of a certain amount of Bitcoin.
Once the code has been accepted by the computers on the blockchain, your wallet's information
will say it has some Bitcoin in it, and then the code is sealed permanently into the next
block on the chain. If you are a casual user looking to buy a
small amount of Bitcoin, a software app-based wallet will be ideal. But there are actually
four wallet types available: * Software wallets. These are apps to be used
from your mobile device. * Online bitcoin wallets are hosted online
and can be accessed from any device. That's different from having the app on your phone.
It's online, like a web page. * Hardware wallets are physical devices with
enhanced security, designed for those doing large transactions.
* Paper wallets – these are files that you print out, and which contain the required
private key data. If your interest is light use, the most highly
rated wallet apps are: BreadWallet (iOS), Copay, Mycelium (Android), and Airbitz, which
actually comes with Starbucks discounts.
How to buy bitcoin and where to find it Most Bitcoin sales are done through currency
exchanges and specialist Bitcoin traders, as opposed to major banks. In the U.S., the
two most popular exchanges are Coinbase and Kraken. Like most other exchanges, purchases
are usually done via your bank account, so it is important before connecting up, to ensure
your Bitcoin exchange has a solid reputation. Other services like BitQuick do the sale through
an escrow service in which you wire cash to your BitQuick account (as opposed to them
accessing your regular account). Be aware that any currency exchange will charge
service fees, and there will usually also be mining fees from the blockchain miners
who approve your transaction. These fees are not huge, as compared to banks or international
cash wire services, but they are still fees. Certain banks, like Bank of America and Wells
Fargo in the U.S. and RBC in Canada are starting to accept Bitcoin, but they, too, require
access to your bank account. The reason why trading houses and banks insist
on direct access to an account is to limit the potential for fraud. Because of the discrepancy
between credit cards transaction times and Bitcoin processing times, it is possible for
less scrupulous people to make a Bitcoin purchase on a credit card and then run a chargeback
before the blockchain completes it approval process. This is obviously not good for the
credit card companies. If you choose to use a credit card, your purchase will be processed
as a cash advance, not a purchase.
How to buy bitcoin, other options for purchases Another interesting way to buy Bitcoin is
your local convenience store or gas station. This is a three-way relationship between a
Bitcoin broker, a local business with a terminal, and you. As strange as this may sound, it
is predicated on the fact that Bitcoin is independent of any bank, meaning you should
be able to transact your money anywhere. Here's how this works:
A participating Bitcoin broker establishes a relationship with small outlets like gas
stations and convenience stores that are equipped with a wire transfer merchant terminal. This
same terminal might also be used for cash payments to wire services like Western Union,
or even to lottery offices. You pay the convenience store $100, for example, and the clerk enters
it into the terminal. In return, you receive a slip of paper with a unique serial number
on it. This is your proof of payment of $100, which may be worth approximately $96 in Bitcoin
after fees. You return to the website of the Bitcoin broker and enter that number, along
with your wallet's public key. The broker then transfers $94 or so worth of Bitcoin
(again another service fee) to your wallet. (The fees in this example are subject to change).
This local approach works, but it is up to you, the consumer, to do some research to
find out which of your local Bitcoin brokers works with convenience stores, and how the
experience has been for others.
Final point Keep your Bitcoin information safe. If you
lose your wallet, either by losing your phone or forgetting the password, those Bitcoins
will be lost. Since there is no bank insuring your deposits, there is no recourse.
Bitcoin as a currency has a long way to go before it becomes common. If you are a serious
investor looking to profit off its rise in value, make sure to store your accounts with
hardware or paper wallets. If you are looking for some smaller-size fun, buying some Bitcoin
is a great practical education on the future of money.
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