Bitcoin Basics
This page is a simple reference to the methods that I personally have found most useful when dealing with Bitcoin. I'll discuss wallets, how and where to buy BTC, sending and receiving Bitcoin, and a few other tips and tricks you might find helpful. I've put a couple of buttons below for easy navigation. Feel free to bookmark this page or the home page for future reference.
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Types of Wallets:
When you buy Bitcoin you'll need a place to put it. This place is called a "wallet." There are three main types of wallets:
1: Software Wallet
When you buy Bitcoin you'll need a place to put it. This place is called a "wallet." There are three main types of wallets:
1: Software Wallet
A software wallet is probably the most common type used to store Bitcoin. Some wallets can be downloaded as an app and used on your computer or on a mobile device. Others are hosted by websites and can be accessed through your internet browser. Although software wallets are very popular they have the potential to be vulnerable to hackers. That said, there are security measures (such as 2FA) that will drastically decrease your chances of being compromised when sending or receiving Bitcoin.
2: Hardware Wallet
2: Hardware Wallet
Hardware wallets are my favorite way to store Bitcoin. They're a kind of hybrid between a software wallet and a cold storage wallet. Cold storage refers to a wallet that is completely cut off from the internet. A hardware wallet is a physical device to keep your digital currency in. They usually feature a digital display and can plug into your computer via USB. They're generally very secure and only interact with a software wallet when you are ready to withdraw your Bitcoin. Hardware wallets can be a bit pricey. If you are new to Bitcoin I wouldn't necessarily recommend forking over the dough for a hardware wallet until you're a more involved cryptocurrency user.
3. Paper Wallet
3. Paper Wallet
A paper wallet also uses cold storage and can be the most secure way to store Bitcoin. A copy of the paper wallet is kept on a USB key or printed out on a piece of paper. Even though it isn't connected to the internet you can still send Bitcoin to it's specific address where your funds are held until you are ready to withdraw them. Paper wallets tend to be a bit cumbersome because they make it harder to access your funds on a regular basis. They can be great for long term storage as long as they don't get damaged or lost.
All of the wallet types have pros and cons. Each type works best in specific scenarios. All wallets provide a "public key" more commonly called an address. This address is a string of letters and numbers and is like a bank account number in the sense that it's used when making transactions. A public key address might look something like this:
All of the wallet types have pros and cons. Each type works best in specific scenarios. All wallets provide a "public key" more commonly called an address. This address is a string of letters and numbers and is like a bank account number in the sense that it's used when making transactions. A public key address might look something like this:
16vPyEL4x1DLANw6uWvY8qiQtHeK3MFmAf
Most wallets provide a public key and a private key. It's important to know the difference between them. The public key can be shared with anyone because it's mainly used to deposit funds to your wallet. A "private key," on the other hand, should always be kept secret as the name suggests. Your private key address can be used to withdraw funds from your wallet but it's mainly used to give your wallet a unique identity that cannot be duplicated. A private key can also be used to restore a lost wallet but this method comes with risks. I won't get into the technical details here but just remember to keep your private keys private and don't loose them.
If all this seems confusing don't worry - it becomes easier to understand once you start using the various types of wallets and making transactions.
If all this seems confusing don't worry - it becomes easier to understand once you start using the various types of wallets and making transactions.
Buying Bitcoin
There are many places to buy Bitcoin these days. You may have to provide your wallet address when purchasing Bitcoin. Many exchanges that sell Bitcoin will automatically deposit your purchase into a wallet provided by the exchange. Coinbase is one of my preferred methods of buying and storing Bitcoin. They have been around for a while and offer a user friendly software wallet with good security. They also offer a mobile wallet app for your smartphone. If you use a credit or debit card with Coinbase to purchase your Bitcoin it will be deposited instantly into your wallet. You can also use your checking account with a routing number but you'll have to wait a few days for the transaction to go through. There are many ways to buy Bitcoin but I personally find Coinbase to be faster, safer, and easier than the alternatives. I urge you to do some research and decide which method works best for you.
Here's some basic guidelines for setting up an account with Coinbase:
When visiting the site just follow the prompts for signing up. Once you've signed up you'll need to set up a payment method. To do so you'll be asked to verify your phone number. For instant transfers you'll need to add a credit or debit card and you'll also have to provide a copy of your photo ID such as a drivers license. If you want to link your bank account directly there is no need to provide photo ID but you'll have to wait 2-5 business days for your transactions to take place. Adding a PayPal account is also an option but it can only be used for USD transactions (you cannot buy BTC with PayPal through Coinbase.) Lastly you will need to fill out an identity verification form. This form is found under your profile settings where you'll enter some personal information such as your mailing address. Now your Coinbase wallet will be active and ready to purchase Bitcoin. When it comes time to transfer your Bitcoin to another account there will always be a transfer fee. It's good practice to purchase or send $5-$10 more than you know you'll need to cover any fees. Under the "buy" section select the Bitcoin tab, select a payment method, enter the amount you want to purchase, and then click the "buy bitcoin" button. If you have trouble with any of this you can always use Coinbase's support page where you'll find answers. A simple google search might also help answer any questions you may have about purchasing Bitcoin or setting up a wallet.
If you were successful in buying some Bitcoin you can continue reading below about how to make a Bitcoin transaction or you can return to where you left off to set up a compound interest wallet by clicking here.
Here's some basic guidelines for setting up an account with Coinbase:
When visiting the site just follow the prompts for signing up. Once you've signed up you'll need to set up a payment method. To do so you'll be asked to verify your phone number. For instant transfers you'll need to add a credit or debit card and you'll also have to provide a copy of your photo ID such as a drivers license. If you want to link your bank account directly there is no need to provide photo ID but you'll have to wait 2-5 business days for your transactions to take place. Adding a PayPal account is also an option but it can only be used for USD transactions (you cannot buy BTC with PayPal through Coinbase.) Lastly you will need to fill out an identity verification form. This form is found under your profile settings where you'll enter some personal information such as your mailing address. Now your Coinbase wallet will be active and ready to purchase Bitcoin. When it comes time to transfer your Bitcoin to another account there will always be a transfer fee. It's good practice to purchase or send $5-$10 more than you know you'll need to cover any fees. Under the "buy" section select the Bitcoin tab, select a payment method, enter the amount you want to purchase, and then click the "buy bitcoin" button. If you have trouble with any of this you can always use Coinbase's support page where you'll find answers. A simple google search might also help answer any questions you may have about purchasing Bitcoin or setting up a wallet.
If you were successful in buying some Bitcoin you can continue reading below about how to make a Bitcoin transaction or you can return to where you left off to set up a compound interest wallet by clicking here.
Sending Bitcoin
Once you have a wallet making a transaction is fairly simple but it doesn't come without risk. If this is your first time sending Bitcoin please read through this section carefully before making a transaction. Most wallets work in a very similar manner. Your wallet will probably have a separate tab or page for making transactions. For example with the web version of Coinbase there's a button in the upper right corner. To make a BTC transaction look for a button that reads "send" or "receive" - "deposit" or "withdraw." Following the nature of this guide you'll probably want to choose the "send" option. Look for a place to enter the address you want to send the BTC to. If you are funding your FreeBitco.in wallet you'll need to enter the appropriate deposit address here. You can find your address by going to FreeBitco.in and clicking on the big green "DEPOSIT" button. Usually I find it much easier to copy and paste the address. Heading back to Coinbase or whichever wallet you are sending from you'll need to enter the address and the amount you wish to send. When that's done you'll click "send" or "continue" or whatever it may be. In some cases you may have to verify your transaction via email. It's always very important to use caution when making a Bitcoin transaction. If any mistakes are made or your security is compromised you could lose your Bitcoin. Here are some precautions that you should follow when making a transaction:
- Be sure to enter any given address EXACTLY as it appears. The letters in all addresses are case sensitive. Also make certain that the complete address is recorded from beginning to end. Sometimes the entire address may not be shown in it's given text box and it might be necessary to scroll through the address to note the entire string of characters. This can be rather tedious. One trick that I like to use is to copy and paste the address and then check the first few, as well as the last few, characters to make sure the address was copied completely and accurately.
- Keep in mind that making a transaction requires a fee and the amount of this fee should be added to the amount you wish to send.
- Start with small amounts. Especially if you are new to sending or receiving Bitcoin. Send a small amount first to ensure that the transaction goes smoothly. Trust me, nothing gives you that sinking feeling like sending everything you have only to find that you've lost the entire amount due to a technical mistake.
- It's good practice to generate new addresses for your wallet occasionally. Some people suggest to use a new address with every transaction. The history of all the Bitcoin transactions ever made is recorded on a public ledger called the blockchain. Your transactions are better kept untraceable and less vulnerable when you generate a new address on the receiving end of every transaction.
- Always do your best to avoid downloading malware. When acquiring a wallet be sure to obtain it from a reputable source. It may be worth doing a little online research to ensure you're receiving a secure and quality product.
- Most transactions are completed in a matter of minutes but they have to go through a series of confirmations and sometimes can take up to 24 hours to complete. In certain rare circumstances a transaction may take two or three days to complete. As long as you take the proper precautions the transaction will go through. Support teams are often overwhelmed with people freaking out because the transaction has taken over 20 minutes - be patient. Usually if everything went smoothly the wallet on the receiving end will have details describing the transaction as "pending." You can also look up any pending or past transaction on a blockchain explorer website such as btc.com. Just copy and paste the address in question to the search field and hit enter.
