How to buy bitcoin
What are Bitcoins?
Bitcoin is an online Cryptocurrency. It’s like your regular dollar or euro, except it’s only available in digital form. Many people use bitcoins not just for purchasing goods and services but also as a form of investment.
The main difference of bitcoin from regular currency is it doesn’t use a third party for the exchange.
For example, when using your credit card to purchase something, your money goes through a bank or credit card company before reaching the merchant. When you use bitcoins, the coins are sent from your wallet to the merchant’s wallet without needing to go through a financial institution first. For the most part, this makes bitcoin transactions anonymous and untraceable.
Bitcoin, therefore, has the following advantages:-
Exchange money instantly with anyone from anywhere in the world
Eliminate the need to create a merchant account or use a financial institution
Low fees compared to financial institutions
Minimal risk of identity theft since most transactions are anonymous
Protection against fraud as one can’t counterfeit bitcoins.
How Bitcoin Transactions Work
Bitcoins are created through a process called “mining”. To keep things simple, it works like this:
The transaction is placed. Computer (“blockchain”) records details of the transaction. ”Bitcoin miner” verifies the blockchain is correct. The transaction is verified and coins sent to the merchant.
A computer, called a “block chain”, records the details of the transactions including the time and who owns how many coins. A “bitcoin miner” is any person with a computer that verifies that the details of the chain are correct and confirms the transactions. They’re usually paid a fee in bitcoins as well, thus increasing the supply.
Creating a Bitcoin Wallet
There are three ways to store bitcoins – using an online wallet, a paper wallet or a hardwire wallet.
To be able to store and use bitcoins online, you first need a “bitcoin wallet.” There are two ways to do this:
Install a Bitcoin client. This is software that powers the currency.
Create a third party wallet like with Blockchain.info.
(Please refer to the end of this tutorial for how to set-up Blockchain or other similar bitcoin wallets.)
You can also create a “paper wallet”. That’s exactly what it says – a paper with the code to your bitcoins. It’s cheap and not subject to hacking or hardware issues. Of course, you need to be mindful of where you keep it because it’s only paper.
Several sites offer paper wallet services like
Use a hard wire wallet. This is basically a compact device, similar to a USB stick, which stores your bitcoin keys. These are a little harder to obtain as there are limited facilities offering this service.
To buy bitcoins, you need an exchange service. The more popular ones are:
The process works pretty much the same way for all of these services. You need to register and verify your account and then provide proof of identity.