How to Start using BitCoin
Cryptocurrencies, such as BitCoin, are an innovative type of currency that relies on Blockchain technology. The whole point of these digital currencies is to make transactions quick, easy and without third parties such as banks charging fees. Several businesses have already begun making use of cryptocurrencies, most notably BitCoin (BTC). Getting set up couldn’t be easier!
Your BitCoin Wallet
Given that there are no banking institutions, each user is responsible for their own finances, this includes storage. Just like how you would use a wallet to store your fiat currencies, there are digital wallets which serve as a storage space for your hard earned BTC. A digital wallet is a type of software that facilitates the storage, sending and receiving of your BTC. Several different wallets exist and it’s up to you to choose which one works for you. However, many people make use of two wallets, a hot wallet which is the wallet people use for daily use and a cold wallet which acts as a savings account.
Using your Hot Wallet
Once you’ve found your preferred wallet you will need to download that software. Once you’ve created your account and downloaded your software you should notice a QR code and a string of numbers and letters, this is your BitCoin address. This BitCoin address will be used by other users to send BTC directly to your account. Sending money on your end works in exactly the same way, you simply either scan the QR code or input the address, choose the amount of BTC you want to send and hey presto, you’ve just made your first cryptocurrency transaction!
One misconception is that a BitCoin address is similar to an account number. The main difference is that you are encouraged to share your BitCoin address. A better way to think of your BitCoin address is as an email address. Anyone can send you mail, but so long as you keep your password, or private key, safe, then no one can else use your BitCoin wallet. Whereas credit card transactions require a certain level of trust between parties, the whole point of cryptocurrencies was to eliminate the need to trust other parties. You decide how much money you want to send, rather than having to trust a merchant to withdraw to authorized amount!
One major concern for first-time users is safety. Blockchain technology means that cryptocurrencies are highly secure. One way that this is done is that the Blockchain’s source code is public, which means anyone can check to see if someone is doing something malicious behind the scenes. So long as you keep your private key safe then your BitCoin wallet is also secure.
Using your Cold Wallet
This will be the wallet where you store most of your funds, as a result, you’ll want the best security for this wallet. The best way to do this is by disconnecting this wallet from the internet (hence a cold wallet). By keeping your wallet offline you are far better protected from hackers, but the downside is that without an internet connection, you won’t be able to process transactions from this wallet. Several types of software exist specifically for use as a Cold Wallet, each with their own pros and cons.
If you wish to be truly independent, then consider investing in an offline hardware wallet. These function like an external hard drive or a USB stick. Some of these are extremely sophisticated, such as TREZOR which features its PIN system to deter keyloggers. However, while extremely safe they are also slightly more complex. One type of cold storage to be wary of are paper wallets. These were very popular in the early days of BitCoin, but using a piece of paper the size of a bus ticket to keep all of your BTC is very dangerous as it is easy to lose and can also very easily be damaged or worn out.
Once you have all your wallets set up, you can start using BitCoin. One of the best ways to get BitCoin is by buying it through an exchange. Changelly is a cryptocurrency exchange where you can buy hundreds of other cryptocurrencies, including BitCoin of course. It is extremely safe and offers some of the best exchange rates. It easy to use general interface and reliability have helped it to keep over two million registered users happy!
Services like BitPay can also be used by merchants who are looking to start accepting BitCoin payments. You will be charged a small fee depending on how popular your business is, but in all cases, it will always be cheaper than using a fiat payment processor such as PayPal.
The whole point of a currency, is to trade, so where can you actually use BitCoin? There is a huge list of companies that accept BitCoins and the list keeps growing every day! Here are some of the more well-known companies that have accepted BitCoin:
- Virgin Galactic
- Etsy Vendors
- Euro Pacific
- Lionsgate Films
- Naughty America
There you have it, a quick and easy guide that get yourself started in this exciting new world finances! Although the world of cryptocurrencies can seem daunting, just follow this guide and once you have your wallets all set up, then you’re all set! It really is that easy!