How to Buy Bitcoins

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Bitcoin is an alternative online currency system that covers the function of digital money. Bitcoins are used both as an investment and as a payment method for goods and services, appreciated by many because it eliminates intermediaries. Despite the increasing popularity of this currency, many businesses do not yet accept it and its usefulness as an investment is really doubtful and potentially risky. Before starting to buy bitcoins, it is important to understand what they are, the advantages and disadvantages.

How to Buy Bitcoins

Know the Bitcoins

1) Learn the basics of the Bitcoin system.
It is a completely virtual currency, which allows users to exchange money for free, without relying on third parties (such as banks, credit cards or other financial institutions). Bitcoins are not regulated or controlled by a central authority such as the ECB and all transactions take place in an online market, where users are anonymous and almost completely untraceable.
The Bitcoin network allows you to exchange money instantly with any other person in the world, without having to create a seller account, or rely on a bank or financial institution.
Money transfers do not require names, so the risk of identity theft is low.

2) Learn the concept of bitcoin mining.
To understand the Bitcoin system, it is important to understand the aspect of mining, that is, the process in which coins are created. Even if it is a complex activity, the basic idea is that every time a Bitcoin transaction is carried out between two people, it is digitally stored by a computer in a transaction log, which describes all the details of the exchange ( as the time and the number of bitcoins owned by the users involved).
These transactions are then shared with the public in the form of block chains, which contain all the transactions and identities of all bitcoin owners.
The “miners” are the people who own the computers that constantly check the blockchain, to make sure it is correct and up-to-date. They are the ones who confirm the transactions and in exchange for this work, they are paid in bitcoins, increasing the currency in circulation.
Since bitcoins are not regulated by a central authority, the mining operation ensures that the user who transfers the bitcoins has enough, that the promised quantity is actually transferred and that the balance of the accounts of the two users involved is correct. at the end of the transaction.

bitcoin mining

3) Get familiar with the legal issues surrounding the Bitcoin network.
Recently, the US agency responsible for the fight against recycling has announced new guidelines for virtual currencies. These rules will regulate bitcoin exchanges but will leave the rest of the Bitcoin economy intact for the time being.
The Bitcoin network is resisting government control and has developed a good following in the world of crime, for example among drug traffickers and gamblers, thanks to the anonymous nature of currency exchanges.
US federal law enforcement agencies may conclude in the future that the Bitcoin network is a recycling tool and may look for ways to dismantle it. Even if the bitcoins are completely eliminated is a real challenge, a strict legislative regulation could greatly reduce the spread of the system and greatly limit the legitimacy of the currency.

Know the Advantages and Disadvantages of Bitcoins

4) Consider the advantages of bitcoins.
This currency guarantees low commissions, protection against identity theft, protection against payment fraud and immediate transactions.
Low commission: Contrary to traditional financial systems, where the system itself (such as PayPal or a bank) is compensated with a commission, the Bitcoin network does not provide any cost to users. The network is maintained by the miners, who are rewarded with new money.
Protection against identity theft: the use of bitcoins does not require a name or any other personal information, but simply an ID for the digital wallet (the medium used to send and receive bitcoins). Contrary to what happens with credit cards, in which the intermediary has complete access to your personal information and to your account, Bitcoin users operate completely anonymously.
Protection against fraud: since bitcoins are digital, they cannot be counterfeited and therefore scams become impossible. Furthermore, transactions are not reversible, unlike credit cards.
Immediate Transfers: Historically, money transfers often encounter delays, restraints or other problems. The lack of a third party ensures that money can be transferred between people easily and without the complexities, commissions and delays associated with purchases made with different currencies.

 

5) Consider the disadvantages of bitcoins.
With a traditional bank account, if an attacker makes a fraudulent transaction with your credit card or your bank fails, there are laws designed to limit losses by consumers. Contrary to normal banks, the Bitcoin network does not have a security system to protect users from loss or loss of currency. There is no intermediary body that can repay you.
Consider that the Bitcoin network is not immune to hackers and the average Bitcoin account is not entirely protected from malicious or security vulnerabilities.
One study found that 18 out of 40 businesses that offered bitcoins in other currencies closed and only six of them repaid their customers.
Exchange volatility is also a significant downside. This means that the price of Bitcoins in dollars fluctuates a lot. For example, in 2013, 1 Bitcoin was worth around $ 13. It rose rapidly to $ 1200 and today it has shot up to $ 19,000 (January 2018). For this reason, if you decide to buy Bitcoin it is important to keep your investment, otherwise, you could lose a significant sum of real currency.

6) Understand the risk of bitcoins as an investment.
One of the most popular uses of bitcoins is the investment and this practice deserves special attention before continuing. The main risk of bitcoins is their volatility. Due to the very rapid price fluctuations, the risk of losing the investment is very high.
Moreover, given that the value of bitcoins is determined by supply and demand if this currency were to be regulated by any form of law, the number of interested users could decrease, making the currency theoretically worthless.

 

7) Keep your bitcoins on the internet.
To purchase this currency, you must first create an electronic storage system. At the moment there are two ways to do it:
Deposit the keys of your bitcoins into an electronic wallet. It is a file on your computer where you can put your money, similar to a real wallet. You can create one by installing the Bitcoin client the program that generates the currency. However, if your computer is hacked by a virus, a hacker, or if you lose your file, you may lose your bitcoins too. Always back up your wallet to an external hard disk so you do not lose your currency.
Deposit your bitcoins into a third-party service. You can also create an e-wallet on third-party sites, such as Coinbase or blockchain.info, saving your currency in the cloud. This system is simpler to set up, but it means placing your bitcoins on a third party. The sites mentioned are two of the largest and most reliable, but there are no guarantees on their safety.

8) Create a paper wallet for your bitcoins.
It is one of the most used and least expensive solutions to keep your currency safe. The wallet is small, compact and made with paper on which a code is printed. One of the benefits is that your private keys are not stored in a digital environment, so they can not be subject to cyber attacks or hardware breakdowns.
Many websites produce paper portfolios for Bitcoins. They can generate a Bitcoin address for you and create an image that contains two QR codes. One is the public address you can use to receive Bitcoin, the other a private key, which you will use to spend the currency deposited in that address.
The image is printed on a long piece of paper that you can fold and take with you.

9) Use a physical wallet to deposit your bitcoins.
Portfolios of this type are very few and difficult to obtain. They are dedicated devices that can store private keys in electronic form and facilitate payments. They are usually small, compact and some are shaped like USB keys.
The Trezor portfolio is ideal for miners who want to acquire large amounts of bitcoins, but who do not want to rely on third-party sites.
The compact Ledger wallet works as a USB storage system for your bitcoins and uses smartcard security. It is one of the least expensive physical portfolios on the market.

Exchange Bitcoin

10) Choose an exchange service.
Getting bitcoins from a currency exchange service is the easiest way to acquire this currency. These services work like all traditional exchange services: simply register and convert the currency of your choice into bitcoins. There are hundreds of sites that offer this possibility and the best solution depends on your geographical location. However, here are some of the best-known services:
CoinBase: this popular exchange service and electronic wallet also allow you to exchange dollars and euros with bitcoins. The company has a website and a mobile app to allow users to buy and exchange bitcoins easily.
Circle: this exchange service offers users the ability to deposit, send, receive and exchange bitcoins. At the moment, only residents in the United States are able to link their bank account and deposit funds.
Xapo: this site offers an electronic wallet, a debit card and the ability to deposit real currency on your account and convert it into Bitcoin.
Some exchange services also allow exchanging bitcoins. Others function as electronic wallets with limited buying and selling possibilities. Most of them keep the real or digital money for you, just like ordinary bank accounts. They are a good option if you want to do bitcoin operations often and do not care about total anonymity.

11) Provide the service with proof of your identity and contact information.
When you sign up for an exchange service, you must provide your personal information to create an account. The laws of almost all states require that all persons, whether physical or legal, using a Bitcoin exchange service meet the anti-money laundering requirements.
Even if you are asked to give proof of your identity, exchange services and electronic wallets do not offer the same level of protection as banks. You are not protected by hackers and you will not be refunded if the site fails.

12) Buy bitcoins with your account.
Once you have created a profile on a currency exchange service, you must link it to an existing bank account and arrange for money transfers between the two. Usually, you will have to do it with a bank transfer and you will have to pay a commission.
Some exchange services allow you to make deposits in person in a bank account. You will have to do it at a counter and not at an ATM.
If you are asked to link a bank account to the exchange service account to use it, you will probably only be able to provide information from banks that operate in the country where the service is located. Some services allow you to send money to overseas accounts, but commissions are much higher and currency exchanges may be delayed.

Use a Seller

13) Look for sellers on LocalBitcoins.
This is the site most frequently used for personal exchanges between local vendors. You can organize a meeting and negotiate the price of the virtual currency. The site also offers protection for both parties.

14) Use Meetup.com to find sellers.
If you do not like the idea of doing business in person, use Meetup.com and look for a Bitcoin meeting group. You can decide to buy the virtual currency with other people and ask for advice from other members who have already dealt with the sellers.

15) Negotiate the price before the meeting.
Depending on the seller, you may have to pay a 5-10% surcharge for in-person transactions. You can check the current bitcoin exchange at http://bitcoin.clarkmoody.com/ before accepting the seller’s offer.
You should also ask the seller if he prefers to be paid in cash or with an online payment service. Some sellers can accept payments via PayPal, although most want non-reversible cash transactions.
A respectable seller will always negotiate the price with you before the meeting. Many also do not wait too long to finalize the sale once an agreement is found, in order to avoid problems in case of sudden fluctuations in the price of bitcoins.

16) Meet the seller in a public place frequented by many people.

Do not do it at home. You should take all possible precautions, especially if you bring the cash needed for the purchase with you.

17) Make sure you have access to your Bitcoin wallet.
When you meet the seller in person, you need to access the Bitcoin wallet with your smartphone, tablet or laptop. You will also need an internet connection to confirm the success of the transaction. Always check that the bitcoins have been transferred to your account before paying the seller.

Use Bitcoin ATMs

18) Find the Bitcoin ATM near you.
These are devices that have only recently emerged, but their number is growing. You can use an online map of Bitcoin ATMs to find the nearest one.
Many institutions around the world now offer Bitcoin ATMs, from universities to local banks.

19) Withdraw money from your bank account.
Almost all Bitcoin ATMs only accept cash because they are not configured to accept credit or debit cards.

Enter cash in the Bancomat. At this point, scan the QR code of your wallet or access the necessary codes from your smartphone to load the bitcoins on your account. [27]
The exchange rates offered by Bitcoin ATMs have a 3-8% commission.

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