Bitcoin is the first ever digital currency to eliminate the middlemen by avoiding payment processors and banks. To start using this virtual currency for investments or payments is simple as can be. While bitcoin is empowering, it is also extremely different from currencies used every day.
Let’s dive deeper into how we can use this currency and 5 easy steps every bitcoin transaction invariably involves.
#1 Getting Started With Bitcoin
Before Bitcoin is used, a few facts must be clear so that users can try out this currency in a safe way and avoid general pitfalls. Firstly, bitcoins are impossible to counterfeit or inflate. Secondly, these can be sent or used for any amounts, with anyone at any place in the world at very low transaction costs. Additionally, blocking bitcoin payments or wallets is impossible.
#2 Getting a Bitcoin Wallet
Setting up a bitcoin wallet is simple. One can choose from quality mobile, hybrid, and desktop wallets. A mobile wallet must be used if bitcoins have to be accessed. Mobile wallets are smartphone apps found on iOS and Android devices. Some popular mobile apps include Breadwallet and Airbitz. Users can also make a web-based wallet for online usage. It works just like an online account, where users register, transfer the bitcoin, and then login to manage the wallet. Hybrid wallets are more useful for security and privacy-conscious users. For those looking for more control, a software wallet is the best bet. These wallets require downloading software on the computer.
If increased security is the sole aim, hardware wallets or cold storage are perfect as devices designed to hold a bitcoin wallet alone. As no software application can be setup on them, they signify massive security. Keeping the wallet secure is important. So is making regular backups of the same. Any backups online must be encrypted using a strong password as well as two-factor authentication where possible.
#3 Generating Keys
Bitcoin users also have to create private and public bitcoin addresses. This allows receipt of bitcoin from others. The private address assigned is one used for sending bitcoin to others. The public addresses cover a stream of thirty random characters that are alphanumeric and start with 1 or 3. Private addresses have more characters and start with 6 or 5. Wallets generate these addresses/ keys which are given as machine-recognised QR code. Products and services can be paid for by checking the code.
#4 Acquiring Bitcoins
Acquiring bitcoins is just as easy. Small amounts of this virtual currency can be purchased online. Limits are in place for the amount of bitcoin that can be spent on sites like Indacoin where bitcoin can be purchased using major debit or credit cards. For purchasing larger amounts of bitcoin, use online trading exchanges like Kraken or Coinbase. Different exchanges have different account minimums. Once bitcoin has been purchased through an exchange, it can be stored in the trading account.
Another option is to buy bitcoin offline from a seller. Finally, you can mine bitcoins. Bear in mind that bitcoin mining requires dedicated servers and specialised software. Some cloud mining firms may also let you mine bitcoins with them.
#5 Spending Bitcoins
Making online purchases using bitcoins is easy. Online service providers and retailers such as Overstock, OKCupid, and Microsoft use bitcoin as payment. While browsing an online site, looking for a bitcoin logo is the norm. Users can even convert bitcoins into gift cards, to chief online and offline retailers. This includes Starbucks, Target, and Amazon. Investors may choose to hold on to their bitcoin or wait for an increase in value, though.
The bottom line is that bitcoins are excellent for making quick purchases or even lasting investments.
Disclaimer: “This article was contributed by the CEO of Blackmore Group, Phillip Nunn. Entrepreneur, financial expert, corporate evangelist, fintech and crypto trading authority, Phillip is an industry speaker and renowned thought leader on topics such as Fintech, Cryptocurrency, and Blockchain technologies. Follow his blog at https://phillipnunn.co.uk/phillips-blog/ ”