Bitcoin base is our ultimate guide to get started with the giant of all cryptocurrencies. In this post, we explain to you: how to invest in cryptocurrency, how to buy it, where to store it, and how to spend it. Take it as step-by-step instruction for beginners.
Bitcoin is the first-ever decentralized digital currency as we know it. Touted as the biggest disrupting forces for finance and banking. In simple words, a peer-to-peer electronic cash system.
As the world struggled to manage the global crisis in 2008, Bitcoin emerged as a balancing force for those who’d lost trust in the centralized and all-controlling financial institutions. Hence, a lot of blockchain technology enthusiasts jumped with joy when they saw a prospect that allowed digital currency that can be used without going through a custodian third-party entity.
BITCOIN BASE – HOW TO GET STARTED
More than a decade down the line, a lot of people are serious about Bitcoin. Rightly so, with a market cap bigger than most corporations and a higher level of credibility than a lot of national currencies across the world – Bitcoin is in fact a driving force for the future of FinTech.
On our crypto blog, we’re posting weekly about the latest news and trends. Today, we are going to discuss the necessary steps on how you can get started with Bitcoin. Before we get into the nitty-gritty involved in buying Bitcoins and then holding or investing it, let’s look at some pointers on what makes Bitcoin so important.
The base of Bitcoin is blockchain technology. To get a better understanding you might want to read “What is Blockchain” before you continue here. If you are an absolute beginner in cryptocurrencies, then consider reading our post “What is Bitcoin“. Now, as you have the base knowledge about the Bitcoin blockchain, let’s get started on how to earn your very first coin:
Base Benefits of Bitcoin
The most important benefits, and the Bitcoin base, is decentralization & trust. Why? There are fraud and a lot of scams going on, yes. But people are skeptical about a fully decentralized financial world. Understandably so, trusting people with money is not a cakewalk. But keeping an open mind while reading things is equally important. Especially when the problem is too big to ignore or slide under the rug. In addition, we have countless other benefits like:
Sending or receiving international payments has been a big challenge that businesses and individuals have faced for decades. The fact that this is a big problem is baffling, especially given the fact that we’ve had decades of booming globalization and rampant internet adoption across the world. With Bitcoin, this problem is getting solved. This means a great demand for the currency, making it a valuable asset to have in the long run.
Low transaction fees
Unreasonable transaction fees are another feature of the centralized banking and financial world. To make finance more justifiable, it is important to shun away the high transaction costs that people have to bear.
Let’s compare some major service providers. While a regular bank transfer will cost you up to $15, the PayPal fee is up to 5%, and Revolut fees starting from0,5%. These intermediaries have one thing in common. Their fee lists are long, confusing, and complicated. Guess why?
With Bitcoin and other cryptocurrencies, this problem is being worked upon. A SegWit transaction will cost you $0.03 if you confirm it with 1008 blocks.
No third parties involved
The involvement of third party entities in the financial system has long plagued businesses over the decades. The sheer custodian nature of banking moguls, meshed with the high and mighty government bodies has created more challenges than they solved. This led to a number of issues. To overcome this, a lot of technology-driven organizations are now interested in Bitcoin.
Bitcoin is available to everyone! It’s a simple process and all you need to send and receive Bitcoins is a smartphone or computer with a connection to the internet. Therefore, Bitcoin is available even if you don’t have access to a passport, traditional banking system, credit card, or other methods of payment.
HOW TO BUY BITCOIN
Buying Bitcoin is really easy. Just keep in mind that everything surrounding Bitcoin is done online. Hence, you have to follow the right steps for getting started with Bitcoin. In order to buy Bitcoin, you must follow the instructions from a trusted source of information.
Because the technology is still nascent and hence the ecosystem is fragmented, a lot of bad players can try to scam you. We have talked about this issue earlier. Just be careful and only trust yourself. Especially, when you see “free” offers. Sure, there are ways around to buy Bitcoin.
Read our guide on how to get free Bitcoin. Yes, it really works! Now, we will explain to you, step by step, how to buy cryptocurrency:
Get yourself a Hardware Wallet
The first step to receive your first Bitcoin is to buy a hardware wallet. For beginners we recommend the Ledger Nano S. It’s the world’s most popular hardware wallet.
If you’re serious and want to buy unlimited types of coins, then you might consider Trezor Model T as your favorite. This high-end option supports more than 1,000 different coins. From Ethereum, Ripple, Litecoin, all the way to Monero or NEM.
SHA, Grost, KECCAK
As an alternative, if you cannot wait until your hardware wallet has arrived, you can also download a software wallet. But keep in mind that a piece of software can be hacked. Therefore, we can not recommend this third option.
A hardware wallet is 99,99% safe. Unless you lose it. So, this is where you will be storing your Bitcoin. From here you can access your cryptocurrency as and when you need to spend or invest your digital coins.
By using your bank account, credit or debit cards, you can buy Bitcoin from various cryptocurrency exchanges – and then transfer the funds to your Bitcoin wallet where you can keep it safe and secure. So, your second step will be:
Sign-up to a Bitcoin Exchange Platform
Over the years, a lot of exchanges have been regulated. Come to think of it, this can be helpful for you. These exchanges might ask you for photo I.D too, in order to ensure that no bad players are able to buy Bitcoin and use it for the wrong purpose.
If you’ve received your Ledger hardware wallet, you’ll have to download their ledger live application. Within this application, you can connect your ledger, buy cryptocurrency, manage, and send the easy way. This procedure will let you sign-up directly from within your wallet. For step-by-step instruction on how to set up your Ledger Nano S visit our Bitcoin Wallet Tutorial.
Trezor models will let you use their own online wallet to setup your device. This process might be more convenient for you.
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HOW TO MANAGE BITCOINS
You will have to manage your Bitcoin base and balances by using the “private” and “public” keys. These “keys” are simply long strings of numbers and letters that are created as a result of a high-security encryption algorithm working to keep your balances secure. These keys are automatically implemented for your while setting up a wallet. But why do you need 2 keys?
This is the address where all the transactions are logged and stored. It serves as a username for social media platforms, used in the digital signature of the user.
This is another long string of numbers and letters that serves as the password for you to buy, sell, and trade Bitcoins on exchange platforms.
Once you have set up a wallet, you will then need to prepare the necessary documents and a stable internet connection.
Buying or selling Bitcoins takes time. More than 10 minutes for each transaction. Other coins are much faster. Ethereum transactions are done within 6 minutes, while Ripple only takes 4 seconds. Just to mention, there are some other prominent exchanges where you can buy Bitcoin. Good ones are Coinmama, CEX.io, Coinbase, or Gemini.
ALTERNATE WAYS OF ACQUIRING BITCOINS
The Bitcoin base is all about variety. Hence, there are different ways of getting Bitcoins, apart from just going ahead and buying it. Let’s take a look at some of these different ways to acquire Bitcoins:
The cryptocurrency exchanges that we discussed above are still centralized to a large extent. For those who wish to have a more peer-to-peer mode transaction, they can go to these P2P exchanges and buy directly from Bitcoin owners:
Once you have created your account on these platforms, all you need to do is post a buy/sell order with the necessary details of payment terms and prices. Following this, suited transaction partners will opt for it. By using these P2P exchanges, your anonymity is not as secure as in the case of a decentralized exchange. However, you get the chance to buy the right offer and perhaps save money.
Accepting Bitcoins as Payment
This is another great way of acquiring Bitcoins. By doing this, you can directly get coins instead of getting cash and then working to convert it into Bitcoin. If you offer services and products to people who possibly own Bitcoins, it is a very efficient way of acquiring Bitcoin.
These Bitcoin ATMs serve as in-person Bitcoin exchanges. By putting cash in, users can acquire Bitcoin in an efficient manner – which is then transferred to a digital wallet. Here you can find a crypto coin ATM near you.
TIP NO 1 – HODL YOUR BITCOIN BASE SAFE
Our first Bitcoin base tip is about holding your coins. We crypto experts call it “hodling”. HODL is slang in the crypto community for holding. It’s all about holding Bitcoins and not selling. Furthermore, it’s about keeping them safe. Because, after the roller coaster year of 2017 in the cryptocurrency world, the narrative around Bitcoin and crypto, in general, has been shaped differently. Instead of just buying the dips and selling the crests, a lot of institutional investors are now understanding the importance of holding Bitcoins.
But holding Bitcoins haven’t been very easy for the less tech-savvy investors. While various platforms are working hard on these security challenges, it is better to follow the best practices and keep your Bitcoins secure.
Like other forms of money, Bitcoin is also stored in a wallet as mentioned before. These digital wallets can be in the form of hardware or even software.
If we were to put it simply, cold wallets (hardware wallets) are more secure than other forms to hold Bitcoins.
So, let’s recap our Bitcoin base and analyze the ways of holding coins safely:
This is the “Fort Knox” option of holding cryptocurrency secure. As seen before, they look similar to a USB-stick that can be carried around. Apart from inherent security, the added layer of anonymity is a big advantage of using hardware wallets. Because hardware wallets do not use any linked data, no identification data can be leaked to bad players.
The isolation from malware attacks is the biggest advantage of using these hardware forms of Bitcoin wallets. The only challenge is that there is no option to recover your Bitcoin in case you lose the hardware wallet itself. In case you have no hardware wallet yet you should buy a Ledger Wallet here.
These are wallets that are not connected to the internet. Because they are not available online, it makes them inherently safer than cloud-based online wallets that can be tampered with by hackers. However, you still need to keep your desktop safe from malware attacks as that can lead to exposure of your private keys.
This is another great option to store Bitcoin safely. To use this option, however, one needs to have a great understanding of how Bitcoin works. There are a number of tools available online that can be used to create a wallet online with an extra layer of security.
TIP NO 2 – SECURITY LAYERS
This is a popular concept among people who are looking to make their Bitcoin secure. As the name suggests, it needs permission from a bunch of people for the transaction to take place. By doing this, you can minimize the chances of your Bitcoin wallets being hacked.
These sets of 3-5 people are decided in advance based on mutual trust and confidence. Whenever a person needs to access the wallet, they need to get approval from others for completing the transaction.
Take backups, always
Like everything else on the internet, it is important for you to take backups of your Bitcoin wallet too. Regular backups will help you to stay in control of your Bitcoins all the time. All you need to do is backup all your wallet.dat files and store them in multiple secure locations.
Keep your hard- & software updated
Bitcoin wallets running on obsolete software can be a soft target for hackers and bad players. So, make sure that you keep the software updated. As a general rule, updated versions of the software are always going to be more secure.
WHERE TO SPEND BITCOIN
Bitcoin adoption has been boosted over the last decade or so. The people who hold Bitcoin are now able to use it for transactions.
One of the most popular Bitcoin transactions happens to be for the $80 million pizza back in 2010. Laszlo Hanyecz, a BTC owner in 2010, decided one day to pay 10,000 Bitcoins for a pizza. At today’s rate, that pizza is worth 80 million dollars. Because it happened on May 22nd, the day is jokingly remembered as the Bitcoin Pizza day by the crypto community.
Thankfully, there are far better and more economical ways of spending Bitcoins in today’s world. All you need to do is have some BTCs and find a business/individual who is willing to accept Bitcoin in return for a product or service.
In this part, we are going to discuss the various ways of spending Bitcoin. Let’s get started:
Tipping and Charity
A lot of charitable organizations are already accepting Bitcoins as donations and charity. Not only this, but a lot of publications and editorials also allow you to tip Bitcoins to their authors. A number of social media platforms, like Reddit, allow you to use Bitcoin and tip content creators you really admire.
Bitcoin can also be used to purchase gift cards. There are a number of platforms that allow users to buy gift cards and even some items in exchange for Bitcoin. Some of the platforms include eGifter and Gyft. Just sign up on their website and start getting gift cards for your special people.
As we all know, almost everyone is a gamer these days. Consequently, a number of video gaming platforms have started accepting Bitcoins in exchange for premium features or necessary tools.
Food and Travel
There are a lot of restaurants and travel websites that are already accepting Bitcoin. You can also get a comprehensive list of such restaurants by going to bitcoinrestaurants.net. A lot of websites are available where you can buy plane and cruise tickets and pay with bitcoin. CheapAir is a great option for this.
INVEST IN BITCOIN
Knowing the ropes of Bitcoin before getting started with trading your precious money is extremely important. Doing research and gaining info about Bitcoin and the market structure before investing helps you avoid negative returns.
Here are some tips that will help you steer clear off of mistakes beginners generally make with cryptocurrency trading:
Know Your Options
Knowing your options when it comes to cryptocurrency storage and exchanges is very important. Review all the options for exchanges and choose the ones that are most secure and easiest to trade-in. PrimeXBT is a good starting point for serious investors as it also offers trading for other leading cryptocurrencies.
Know The Market Cap
Since a cryptocurrency’s value is based on circulating supply more than anything, you must always keep your eye on the market cap. Basing your investment decisions solely on coin value can make you regret it later. With investing in Bitcoin, try to focus mainly on the market cap, and the percentage of it you’re buying. The closer it gets to the market cap, the greater demand it will create later.
Diversify Your Crypto Investments
It’s all too easy for investors to be obsessed with crypto trading when the volatility is working for them. Neither does it take time for these obsessions to fall, when it goes against them. You can counter some of this volatility by diversifying your investments by investing in other promising cryptocurrencies. Much like in stock markets, idiosyncratic risks can be dealt with by diversifying your investments.
Set Clear Targets
As cryptocurrency is a relatively new market, the right time to buy or sell doesn’t exist. With a market so volatile, setting both profit and loss targets is really important when opening a trade. By setting exit points for both when the market goes with or against you, you can ensure profits and minimize losses.
WRAPPING IT UP!
So, this was our Bitcoin base guide on how to get started with Bitcoins. Now, all you need to do is understand these details and start. Now you might think about becoming a trader. Then you should read our guide “How to Trade Bitcoin” with 7 hacks on how to make money.
Like this guide? Be sure to share it on social media or with friends who might be interested in Bitcoin. In case you have questions feel free to leave a comment below.
Finally, the road to a decentralized world of currencies and finance is long. But it’s definitely worth it! To take full advantage of it you might need an expert in cryptocurrency consulting.
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FAQ ABOUT BITCOIN BASE
Which bitcoin wallet?
First of all, bitcoin is about trust and security. Therefore you should buy a hardware wallet. The best choice for beginners is the Ledger Nano S ($70) or Trezor Model T which offers more than 1,000 coins to buy, store, and sell on it.
Is bitcoin a good investment?
Absolutely! Bitcoin is the giant of all cryptocurrencies. The bitcoin blockchain is disrupting the financial market for years and more and more people love the security and the freedom of using bitcoin instead of any FIAT currency (USD, EUR, or whatever).
Why bitcoin is going up?
Bitcoin is the future of money. Furthermore, the future of payment and asset transactions. The more mainstream providers offering bitcoin payment, the higher the price is going up. Recently, PayPal, VISA, and Mastercard announced that they will accept bitcoin. The price was going up from $9,100 to 11,000 within 3 days. Finally, most of the professional investors jumped on the bitcoin as well. This is also a clear signal for the bitcoin price to go higher.
Will bitcoin go up?
Most definitely! Most experts believe that bitcoin could easily rise up to $50’000 in 2020. The reasons are manyfold: 1. Volatility returns; 2. Institutional interest rising; 3. Very low risk-on markets; 4. Banks are allowed to hold cryptocurrencies, 5; The demand for digital currency has dramatically increased, 6; Bitcoin is legitimate against inflation, and therefore, most experts believe, that bitcoin will at least reach the same value like gold or above.