How to Use Bitcoin
Bitcoin is a devolved digital currency where one does not need an intermediary party such as a bank to buy, sell or exchange. Satoshi Nakamoto created it after realizing the need for an electronic payment system, which majored in cryptocurrency. It is the most popular among the many cryptocurrencies in the world.
One needs to buy from an online exchange to get started with bitcoin. This means that you also need a wallet to help store the bitcoin.
It can also be used for investment with anticipation of selling it later when the prices are high.
This article will elaborate further on how to use Bitcoin and enable our readers where to start a successful trade.
- Purchasing Bitcoin
When buying bitcoin, there are several tips that you need to know as you gain experience in the cryptocurrency world. Some of these are.
- Start with buying small amounts of Bitcoin- One can buy bitcoin from many online sites such as Spectrocoin and Indacoin. The first transactions are limited, but the limits keep rising with subsequent purchases.
But still, for a start, you can buy Bitcoin directly without having to open an account, so long as they are within limits.
- Buy Higher amounts of Bitcoin from an Exchange– Trading exchanges such as Coinbase are widely used to buy bitcoin and if you intend to make huge purchases, choose the best-rated exchanges online.
When creating a trading exchange account, you must submit relevant documents for verification and be allowed to trade for higher limits. This method is much safer than buying bitcoin because your wallet account has passwords known to you alone.
- Purchase Bitcoin Using a Bitcoin ATM in your area– Bitcoin ATMs are spread in major towns where you can insert your currency in exchange for bitcoin. When you purchase, a link will be sent to your email notifying you that the bitcoin has been transferred to your online wallet for use.
- Sell your Products or services using Bitcoin to increase your Portfolio– With the increased use of bitcoin, suppliers are now using it to make sales. This is done by opening a bitcoin shop, where you create awareness among your customers that you accept bitcoin for your services. An example of such a site is OpenBazaar.
- Use Peer Groups to Buy Bitcoin- Several Online traders buy and sell bitcoin for profit. Before engaging in any of them, confirm that they are legitimate and enquire if they can carry out an offline transaction. These peer partners can be obtained from exchanges such as https://localbitcoins.com/.
If they agree to work with you offline, do not meet in private places, especially if you do not know each other, for your safety.
- Mine Bitcoin– Bitcoin mining is possible. However, they require one to have mining equipment which is relatively expensive to buy. However, some companies offer these services and pay you according to the hash rate per coin mined.
- Opening A Bitcoin Wallet
A Bitcoin wallet is a program or a device that stores private keys (Passwords) for cryptocurrency transactions. This process can be done in a wide variety of ways. Some of them are;
- Creating a web wallet- Web wallets are easy to use if you wish to make frequent online transactions. This wallet is like other online wallets. You only need to register and transfer the bitcoin but, most importantly, secure it using additional layers of security. Among the best hybrid wallets with unique security layers is the Copay, which one can use in different wallets.
- Use your Mobile Wallet to access your Bitcoin– Smartphone phones have apps that enable you to access your wallet—if you wish to use your bitcoin wherever you are, then download some of these apps, such as the Bread wallet and Airbitz.
- Using a Hardware Wallet for an Enhanced Security-These are physical devices, also known as cold wallets, where you buy and store your bitcoin, more so if it is meant for investments. The price of these ranges depends on security and size.
Some of these include the Trezor, which is among the best rated and costs roughly $109.
If you do not want to buy one, you can improvise your own, such as an old iPhone, though you need to ensure it is specifically used for storing Bitcoin only.
On the other note, it is recommended that if you wish to store different cryptocurrencies, then buy a hardware wallet that integrates multiple cryptocurrencies.
- Download Software Wallets- A software wallet is recommended for more control, especially if you want to use the wallets. The software wallet allows you allows you complete the transactions independently. However, the speed of the transaction depends on the blockchain, which can take even two days to complete.
Some of the software to give priority when downloading include.
- The bitcoin Core- this is the original Bitcoin wallet, though slow and has fewer features. But since it does not depend on external servers, it is more secure.
- Armory- This wallet has advanced features with a high technological build ensuring security enhancement.
- Use Paper Wallets for Long-term Investments– At times, using a paper wallet is more secure, specifically when making a long-term investment.
A paper wallet has your bitcoin address, which you can print the QR code and scan whenever you want to use your bitcoin.
However, it has its limitation, such as being prone to get lost and fire, which one could lose an entire investment.
- Enhance Additional Security for Your Wallet– As much as a wallet looks secure, it is important to have additional security to prevent hackers from accessing your account. This can be done by having regular backups – for example, using a different hardware device and securing it in a lockable cabinet.
You can also add the 2-factor Authentication code, which you will be prompted on every login.
In the event of a paper wallet, print several QR codes and store them in different areas as a backup.
- Confirm the Existence of your Public and Private Bitcoin Address– These addresses are used to receive or send bitcoin. Your wallet should provide these addresses, which can be a stream of numbers, or a QR code, which you can send to the person sending Bitcoin to you to allow sending.
- Only Use Public Address for Bitcoin Transfer- When you buy bitcoin, you must sell it at once. A public address is used to perform this transaction. Use the send option in your wallet to insert the wallet address provided by the receiver.
Receipts of the same vary from one different version to another.
- Bitcoin Transactions Completion.
Now, with all this information, you are good to complete the transactions, and this can be done using the following steps.
- Transfer the Bitcoin to a wallet of choice- As mentioned, bitcoin is used as a means of exchange. If making purchases, the transaction can only be completed by transferring the Bitcoin to the wallet. A mobile wallet is preferred for such transactions so long as the services offered are compatible with your wallet. One such app is the BitPay app, which is effective in transfers.
- Make Payments to Merchants- In this case, the merchant will provide you with the public address, which you will scan or copy to send the Bitcoin to their wallet.
Note: Bitcoin transactions incur fees associated with the network. The fee can either be charged to your account or could be part of the payment you are making to the client.
- Confirm the Transactions– When the Bitcoin is sent, the transaction is sent to the blockchain awaiting receipt from the merchant. This takes at least 30 minutes to go through.
A Point to Note: Once bitcoin is sent cannot be reversed. Before sending, confirm that the address is correct to avoid losing any.
- Which are Popular Ways of Using Bitcoin?
There are plenty of ways to use Bitcoin. Some of them include.
- Trading Bitcoin with Other Currencies– Diversification of cryptocurrencies is essential. In case one goes down, you stand to benefit from the active one. Using bitcoin to buy other currencies can be one of the ways you can use your portfolio. For instance, using Bitcoin to buy Ardor, among others.
- Buying Gift Cards– Because of the popularity experienced in Bitcoin, many websites that deal with gifts accept people to make payments using Bitcoin. Some retailers that accept this type of transaction include Amazon, Target, and Starbucks.
- Making Online Purchases- Major retailers in the world are now accepting Bitcoin. Examples are Microsoft, Shopify, and Etsy, among many others. With this growing trend, you do not have to worry about how to make your purchases when you have your wallet on your phone.
- Holding Bitcoin-Holding Bitcoin works the same way as the stock exchange. However, it is important to note that cryptocurrencies are highly volatile, and the risk of holding can be high. But then, risk takers maintain for a period in anticipation of appreciation and sell it when prices are high and on demand.
It is important to be wary of online scam sites that can promise high returns by holding in their wallets and losing your portfolio.
- Support the Needy Using Bitcoin– Many charitable organizations accept bitcoin, and you can use it to support such initiatives. If you wish to support, you can visit https://news.bitcoin.com/fifteen-ways-to-donate-bitcoin-to-charity-this-season/ and view some of the legitimate organizations that accept support by use of bitcoin.
Bitcoin technology is growing in leaps and bounds, and we should embrace it for convenience. With this in mind, source for local merchants who accept bitcoin and trade with them as you expand internationally. Doing this will enable one to gain experience and learn more about Bitcoin usage.