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By cutting intermediaries, transactions are also significantly cheaper, especially when it comes to international payments.
Bitcoin also takes on the role of central government banks (e.g. the Bank of England). Governments have traditionally controlled the supply of currency, which is open to manipulation and corruption.
Blockchain Bitcoin is fully open. It is not owned or controlled by anyone, it is managed by a network of many computers around the world.
Of course, the young cryptocurrency does not do without its critics. In the mainstream media, traditional banks and financial commentators warn that the “bubble” has burst and the possibility of the Bitcoin network being used by criminals.
12 key things to know about bitcoin
As a beginner, I spent days exploring the pros and cons of bitcoin, its benefits and risks. Here is my distilled list of key points.
- Trust – Bitcoin fills the “gap of trust” between the two parties (now the role of banks)
- Safe – Transactions are encrypted in Blockchain, which cannot be hacked
- Decentralized – If no one controls the body, it cannot be beaten, hacked or manipulated
- Unregulated – In case the payment is made in error, there is no guarantee of protection
- Transparent – And the code, and all the transactions of BTC (imagine knowing where each tax penny went)
- Low cost – Removes institutions and friction, especially for international payments
- Speed – Full digital network (and no more free changes!)
- Limited supplies – 21 million bitcoins are allocated
- Truly global – Does not exclude people geographically
- Privacy – Institutions do not store your data
- Virtual – stated its name, bitcoin has no physical coins. All 1 and 0
- Hot – The value of bitcoin fluctuates wildly, as it is still relatively new.
Ultimately, Bitcoin promises to democratize money by eliminating virtually all friction and the cost of secure payment.
You don’t need to understand everything to buy bitcoin.
Under the hood of Bitcoin is an incredibly sophisticated technology that makes it so secure. Most people don’t really know how card machines work and even the internet, but they still use them every day.
Later we will delve into the history and implications of bitcoin if you want to know more. 🙂
Should I buy bitcoin?
First, you don’t need to buy full Bitcoin. That would be pretty expensive! And bitcoin can be divided up to a hundred million. If desired you can buy a BTC for just £ 5.
If you can’t get rid of £ 5 or debt, don’t buy bitcoin as you may lose money.
There are 3 types of people who buy bitcoin:
- Speculators – the value has increased en masse, but it is still very volatile, making bitcoin a risky investment
- Actual users – why is this all! Costs and even earnings on bitcoins are slowly gaining traction
- Curious – Bitcoin is a new exciting technology, and many just want to understand the future of money and become part of the conversation.
Everyone has their own motives when it comes to buying and selling bitcoin, but the purpose of this guide is for the third type. I myself bought a small amount of bitcoin to understand and appreciate this new technology and the opportunities it brings.
Once you actually go, buying and sending some bitcoins, it’s much easier to figure it out!
I believe everyone will benefit from buying a small bitcoin just in order to teach themselves a digital currency that could soon become part of our future.
I think bitcoin is the first cryptocurrency that has the potential to do something like change the world – Peter Till, co-founder of PayPal
How to buy a textbook with bitcoin
I’m going to walk you through the exact steps I took to buy bitcoin. I bought some with the sole purpose of getting through the movement.
There are many other (potentially questionable) methods and websites that you can use – which can be a little cheaper – but it’s all about minimizing the risk and complication for yourself as a newborn.
Before buying bitcoin you will need only 5 things:
- Bitcoin address – A string of numbers unique to you that allows you to receive bitcoin (acts as a bank account number). Also known as the “public key”.
- Bitcoin wallet – A secure place to store your bitcoin (acts as a bank account).
- Bitcoin exchange – Website for converting cash into bitcoin (acts as a change office).
- Payment method – Debit or credit card to buy bitcoin.
- A form of identity – You will need to hand in a passport or driver’s license.
7 steps to buying bitcoin
After much research I decided to use Coinbase as “one stop”. They gave me the address, the BTC digital wallet and the conversion of pounds into bitcoin itself.
I also like their intuitive website and mobile app that allows me to send and receive bitcoins on the go. The whole process of buying Bitcoin, described below, took me less than 15 minutes.
Create an account
Click here for a special promo page that invites you to join.
At this link you will be able to get a bonus amount of free Bitcoin if you buy or sell over $ 100 / £ 76 (you don’t need it).
Fill out the short form and create your Coinbase account.
Confirm your email
Go to the mailbox and click the link to check. This may take a few minutes (check the junk folder if it lasts longer).
Connect your phone
To ensure the security of your account, you will now need to connect your mobile phone.
This is known as 2-factor authentication which means no one can access your account without knowing your password and holding the phone.
Coinbase will immediately send you an SMS with the code. Enter this in the field and your account will be created and secured
Confirm your identity
To follow Coinbase’s financial rules, you need to verify your identity, and this is the next page you’ll see.
Enter your personal information and the next step is to select the type of ID for which you will need to upload a photo.
You will then need to do the same to confirm the address.
The live check only takes a minute. Upon completion you will be taken to the Coinbase dashboard.
Add a payment method
On the Coinbase dashboard scroll down and now click “Add payment method”.
For the purposes of this lesson, I suggest using a debit or credit card. This allows you to instantly purchase bitcoin for a small fee. Bank transfer is an option, it may take several days to create it.
Start the card authentication process and now you are ready to buy your first Bitcoin.
Click “Buy Now” on the dashboard (or “Trade” in the top menu).
Make sure “Bitcoin” is selected and your payment method must be pre-loaded.
Enter the amount of money (or bitcoin) you want to buy. I bought £ 100, but it could only be £ 5 (for a £ 7 sign-up bonus you need £ 76).
The conversion will be displayed automatically. The field on the right displays the complete transaction, including fees.
Click “Instantly buy bitcoin” and Bitcoin will be added to your wallet right away. Congratulations! 😀
In my example I bought £ 100 with a total Coinbase fee of £ 3.41. The remaining £ 96.59 bought me 0.01603666 bitcoin.
Check your Bitcoin digital wallet
Click “Portfolio” in the top menu.
In relation to “Bitcoin” you should see your amount and transaction.
How to send and receive bitcoin
Now that you know how to buy bitcoin, you may like to try using it. Sending and receiving Bitcoin is managed from your Bitcoin Coinbase wallet (click on the Bitcoin account).
To get Bitcoin from someone else, they just need your unique Bitcoin address. You can find yours by clicking “Get”. It is also in QR format, which is very convenient on mobile phones.
To send Bitcoin, there are a few more steps:
- Click “Submit”
- Enter the BTC address of the recipient or wallet
- Enter the BTC amount (to send from your digital wallet)
- Write a message (acts as a payment certificate)
- Click “Continue” to confirm the transaction
If you want to try this right now, make a small donation to RNLI. Here is their address.
Download a bitcoin management app
The Coinbase app allows you to access your BTC wallet on the go.
This, of course, opens up the ability to spend and transfer bitcoin locally using QR codes, for example, in stores or between friends over dinner.
Remember that in your Bitcoin wallet is a log of all transactions.
Bitcoin transfers are also stored in the public Blockchain, but they are completely anonymous because there is no way to associate addresses with people.
For strokes only, Click here to see an example of a transaction I sent to a friend’s wallet. Again, don’t worry about understanding it, but we’ll get back to Blockchain technology a little later in this guide if you’re interested.
What can you buy in bitcoin?
From local London pubs to global retailers, businesses of all sizes are beginning to perceive bitcoin as payment.
Here are some examples of well-known brands that currently accept Bitcoin as payment:
Where you can spend bitcoin
See our »that you can buy with bitcoinguide for more!
The rise of bitcoin across the UK
You may also be surprised at how many places near you are now accepting bitcoin.