how to buy bitcoin

Bitcoin Explained. How to Buy/Invest?

Cryptocurrencies are a new concept in the world economy. They were invented approximately only a few years back but they already attracted have a lot of attention. Especially since the year 2013, they experience turbulent changes in their exchange rates.

Bitcoin is the most popular cryptocurrency as of now. And as you might hear, it is highly volatile. This nature is both pro and cons of buying Bitcoin. You might face a waterfall dip and even a skyrocketing high.

To know more Bitcoin, Bitcoin Mining, security and the country regulations you can check this post of ours. Bitcoin is also used in the Dark web to make purchases.

How to Buy Bitcoin?

One must need to sign up and create a bitcoin wallet first.

To buy bitcoins on a bitcoin exchange using a bitcoin wallet as a depository, payment can be made with a credit card, debit card or bank transfers.

how to buy bitcoin

Step 1: Choose a Bitcoin wallet

Bitcoin wallet is not a physical wallet and Bitcoins are not real coins to store in it. So what is Bitcoin? It is just public key and private key which is used to buy and sell them. And as it is only sets of keys there are various wallets available with different options and security levels to store them. Each wallet has its own pros and cons.

Coinbase and Blockchain are the two most widely accepted popular wallets. Coinbase is directly connected with bitcoin exchange which makes buying and selling of bitcoins so much easier. Coinbase also provides offline storage of your bitcoins for added safety.

Mobile Wallet

Even though an offline wallet is considered for enhanced security, a normal buyer would make use of the online and mobile wallets for convenience and accessibility. Mobile wallets make it easy to access Bitcoin even when travelling but in an unpleasant situation where your mobile gets hacked, the coins will be in danger of being lost forever.

Make wallets handle this security concern in their own ways. Mycelium (open protocol) and Airbitz (client-side encryption) are two such successful mobile wallets that have focused on the security of the coins.

Software and Hardware Wallets

Hardware wallet is the safest of all. It can be preferred if you are planning to store the Bitcoins as an investment and not on spending it. But you might need to spend some extra amount to buy the Hardware. A normal legacy hardware wallet will require only PIN Code to access them. But there are some wallets like Trezor which offers 2-factor authentication and a password manager.

Software wallets, on the other hand, are not as secure as hardware wallets, but it is more preferable for beginners as it is very simple to set up and can be accessed via Web from anywhere. Make sure to keep your computer clean and malware-free all the time. Some of the software wallets to consider are Electrum (decentralized servers), Copay (store multiple wallets), and Jaxx (accepts different cryptocurrencies).

Paper Wallet

One more wallet to be considered more secure than any other in theory is Paper Wallet. Public and Private keys will b printed on a piece of paper and can be scanned or read to online or software wallet to transfer or use them. But there is the risk of paper getting stolen, lost or getting some damage. In such case, the coins will be lost forever.

All these wallets which are mentioned above are only mere examples of their type and we don’t personally recommend any wallet. It is the user’s sole decision to choose one based on his usage and preference.

Step 2: Choose the Bitcoin trader

For a beginner, the place to buy Bitcoins will be an exchange. There are many exchanges available with varying performance and features. Some are very popular and trustworthy among the Bitcoin community like Coinbase. Please make sure to do your research before finalising an exchange to make your first purchase.

To sign up on a bitcoin exchange, one must need to provide some form Identification like their Photo ID and a picture of you holding the ID. Please make sure to check the exchanges KYC policy.

There is another direct route to buy Bitcoins, you can choose Peer to Peer (P2P) service from LocalBitcoins or WazirX. P2P allows you to buy Bitcoins directly from the seller and there won’t be any middleman. You can choose from the variety of payment options available.

We don’t recommend trading in person, but if you choose so, please meet in a safe place for trading.

Step 3: Choose a payment method

Most of the exchanges and wallets will not deal directly with cash. You have to choose a payment method such as Credit card, Debit card or Online transfers. If you are opting to buy Bitcoin via Peer to Peer in LocalBitcoins are WazirX, wide variety of payments options are available like USDT, USD, IMPS, UPI, Cash Deposit, Online Payments, International Wire, Skrill, PayPal and many other methods based on the country and seller.

Step 4: Buying and storing Bitcoin in your wallet

As mentioned earlier, Bitcoin is volatile. So, the prices will vary from time to time. Let’s consider some popular wallet is selling bitcoin for a sum of $8000. You can always make use of CryptoCompare to check the live exchange and buying price of all exchanges before deciding in which exchange to buy.

Even if you planning to spend a lot of money to buy Bitcoin, you will be buying probably buying a fraction of it. There is nothing wrong in it and it is not that we can buy only 1BTC in whole. Wealthy can afford more than that and can buy in large sums.

To make the first purchase, enter the amount in your FIAT currency and the exchange will show the equivalent BTC of the sum which you will get upon placing the order. Bitcoin will be added to your wallet which you choose. In case you wish to transfer the bought BTC to a different wallet, there will a little transfer fee. That is how the Bitcoin transfer works.

Unlike buying currencies, Bitcoin transactions have to be recorded in Blockchain, so it will take some for the buying, selling and transfer to be visible. This time may be much longer than usual if the traffic is too much or the trading is on its peak.

Step 5: Using the Bitcoin.

Sell Bitcoin

If you are planning to sell the Bitcoin at a competitive price for Profit. Be prepared by setting up a seller account and a perfect plan. Because Bitcoin value fluctuates and you should be ready to sell your coins once your planned moment is noticed. Being ready with a plan will help you in avoiding panicked rush as everyone will be doing the same.

Trade Bitcoin

Bitcoins can also be used in exchanges to trade for other cryptocurrencies or FIAT money. A wide choice of crypto to fiat currency pair will be available in the exchange to choose. You can sell the Bitcoins the same way you bought it. Simply, put a sell order at the decided value and your exchange will execute it when the price is reached.

Hold Bitcoin

Bitcoin or any cryptocurrency is at its earlier stage of development. But still, Bitcoin has faced many challenges and went to a great dip and raised back to an extreme high. It’s is always believed that Bitcoin will reach $1 million. It may or may not happen. But Bitcoin has the calibre to do it. The value of the currency depends on the investors and the choice that people make.

Cryptocurrency is unstoppable. It is people money

Unlike FIAT market where the government can introduce money whenever they wish. The total number of Bitcoins that can be mined is only 21 million. Bitcoins can’t be introduced in the system by anyone. It can only be mined.

Demand Is Booming

Sell Dollars, Buy Bitcoin

Robert Kiyosaki

Bitcoin explained. How do Cryptocurrency work?

Cryptocurrencies are a new concept in the global economy. They exist only for approximately a few years and they already attracted a lot of attention. Especially since the year 2013, they experience turbulent changes in their exchange rates.

Cryptocurrency payments can be made without personal information linked to the transaction. This offers strong protection against identity theft and almost full anonymity.

The Cryptocurrencies belong to the group of virtual currencies. We can consider cryptocurrency as a digital medium of exchange, based on principles of cryptography allowing the performance of secure, decentralized and distributed economic transactions.

Virtual currencies are based on solving mathematical problems which require enormous computing power.

Cryptocurrencies bring to their user’s freedom of payments. They provide the possibility to send and receive any amount of money quickly anywhere in the world at any time. Users of cryptocurrencies are not limited spatially or in time when realizing their payments, so their users are in full control of their money.

The Birth of Bitcoin

The most famous cryptocurrency and the first to be introduced was Bitcoin in 2009. It was designed by a person or a group of persons hiding under the pseudonym Satoshi Nakamoto.

As part of the implementation, Nakamoto also devised the first blockchain database.

Two types of Bitcoin users exist ordinary users and so-called Bitcoin miners.

Ordinary users of Bitcoin use digital wallets similar to electronic banking applications. The wallet is software for management of Bitcoin cash, thus for sending and receiving payments in bitcoins. Bitcoins exist only as information in files in a computer or a mobile device. Access to these files is restricted to the holder of the private key, which is used to secure the money. If the file system in the computer is damaged or the wallet file is inadvertently deleted, then the wallet file is lost and the bitcoins it contains are lost forever (in case that the wallet file was not backed up). Although the public address of the wallet still exists, it can only be accessed by the private key, which was deleted. Unless one breaks the very secure encryption built into the system, then it would not be possible to recover the lost coins and breaking encryption used by the Bitcoin network by a force is virtually impossible promptly.

Bitcoin Mining

The mining is a process of new Bitcoins creation and it is performed by miners. Miners are the second group of Bitcoin users and they are solving artificial mathematical problems by dedicating their computational power to the Bitcoin network. The mining is used to confirm waiting transactions by including them in the blockchain. The blockchain is created every 10 minutes in the case of Bitcoin. So every payment in Bitcoins is confirmed in a time of 10 minutes. It enforces a chronological order in the blockchain, protects the neutrality of the network, and allows different computers to agree on the state of the system. For the transactions to be confirmed, they must be packed in a block that fits very strict cryptographic rules that will be verified by the network. These rules prevent previous blocks from being modified because doing so would invalidate all following blocks.

Bitcoin Mining

Mining also represents some kind of a competitive lottery that prevents any individual from easily adding new blocks consecutively in the blockchain. So no individuals can control what is included in the blockchain or replace parts of blockchain to roll back their payments. The creation of blocks is proof of the work system of mining, so the data are costly and time-consuming to create in accord with requirements. Bitcoin uses SHA2-256 cryptographic algorithm as a proof of work mechanism during transaction confirmation.

Researchers indicated that some cryptocurrencies might be manipulated also by pre-mining. In that case, a currency is mined or generated by its founders before mining code is released to the general public. This might be a part of a cryptocurrency’s original design. Similarly, some cryptocurrencies might have hidden launches available to only a few individuals and might have extremely high rewards for the first miners.

Cryptocurrency Revolution

Since the introduction of Bitcoin tens of other cryptocurrencies like Ethereum, Litecoin, Dash, Dogecoin, Ripple have emerged. The most are based on similar specifications as the Bitcoin, which represents the first fully implemented cryptocurrency protocol. The other most popular cryptocurrency Litecoin uses scrypt algorithm as a proof-of-work and has faster transaction confirmations (2.5 minutes). Most cryptocurrencies gradually introduce new units of currency until reaching a preset maximum cap of the total amount of currency that will ever be created. The maximum cap of cryptocurrency aims to assure the scarcity, similar to the case of precious metals. It also should prevent hyperinflation [6]. On the contrary, some cryptocurrencies might experience hyper deflation as the amount of the currency in circulation will approach its preset finite cap.

Dark web and the Bitcoins

All currently existing cryptocurrencies are pseudonymous, so they provide a very high degree of anonymity. Therefore cryptocurrencies are less prone to be confiscated by law enforcement institutions. These facts make cryptocurrencies very attractive for the black market, terrorist activities. The case of the Silk Road is infamous. It was e-marketplace used for drug dealing (and another black-market trading) and it was accepting payments in cryptocurrencies.

Impossible transactions traceability and no central guarantee of currency are the main reasons for the wide usage of bitcoins on the dark web.

However, since the introduction of cryptocurrencies, they continually gain attention (positive or negative) from the media and public, especially during the fast price rise of Bitcoin and Litecoin during the year of 2013.

Country Regulations

Regulators in several countries have warned against the use of cryptocurrencies. Some countries have taken specific regulatory arrangements to dissuade potential users of cryptocurrency. The willingness to accept it varies in different countries. Authorities in Norway stated that it does not fulfill the requirements of being a currency. In Finland, Bitcoin is not considered a legal currency, because it is by definition in conflict with local legislation. It states that payment instruments must have the issuer responsible for its actions. On the other hand, buying cryptocurrencies is in Finland considered a purchase of goods.

How secure and transparent it is really?

All information concerning the cryptocurrency money supply is readable and available in the blockchain for anybody to verify and use in real-time, so cryptocurrencies are transparent. Furthermore, no individual or organization can control or manipulate the cryptocurrencies protocol because they are cryptographically secured.

Cryptocurrency users can also protect their money by encryption and backing up their wallets. Also, merchants can’t hide any charges as can happen with other payment methods. The cryptocurrency transactions are secure, irreversible. This protects merchants from losses caused by fraud or fraudulent chargebacks. This allows merchants to have lower fees, enlarge markets and decrease administrative costs.

For enhanced privacy, we recommend to use anonymising broswers like Tor.