Bitcoin Basics
This page is a simple reference to the products and methods that I've found most useful in my experience with Bitcoin. I'll discuss how and where to buy it, how to make a transaction, and a few other tips and tricks you might find helpful. Don't worry if you don't quite grasp everything on the first pass. Just read through and soak in what you can. This information will always be here for you later if you want to come back and reference it. If you're having trouble with the important bits like how to buy Bitcoin there's a massive amount of information on the web that you can access with a quick google search. The information found here is meant to provide a basic outline and I'm sure someone out there might do a better job explaining things than I have. That said, I hope you find this page helpful and you are always welcome to ask questions by filling out my Contact Form. I've put a couple of buttons below for those of you who want to skip over some of the basic information and jump right in. 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 basically 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 basically 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 are 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 can be 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 applications. 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 applications. 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:
1LErYfUqKsXnQYHtLLk6qg9MeEw7QZZDRX
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 only used to send Bitcoin to your wallet. A "private key," on the other hand, should always be kept secret as the name suggests. Your private key address is used to withdraw Bitcoin from your wallet. You should never share your private keys. A private key is kind of like a forwarding address in the sense that when it's used it will automatically withdraw ALL of the Bitcoin from the wallet indefinitely. Any Bitcoin sent to the wallet in the future will automatically be transferred to the destination where the private key was used. 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 card for your purchase your Bitcoin will be deposited instantly into the wallet Coinbase provides for you. 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. Buying Bitcoin through Coinbase is the most reliable way that I have found to purchase Bitcoin. There are other places that offer Bitcoin for sale. Alternatively, Mycelium and Bitstamp are a couple of popular services, however, with these services you are purchasing your BTC directly from another person and you run the risk of having to wait a while for the transaction or getting ripped off by a stranger. Coinbase, in my opinion, is faster, safer, and easier. 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 always 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 in setting up a compound interest savings 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 always 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 in setting up a compound interest savings wallet by clicking here.
Sending Bitcoin
Once you have a Bitcoin wallet making a transaction is fairly simple but it does not come without risk. If this is your first time sending Bitcoin please read through this section completely before taking any action to make 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 Coinbase your transactions can be made under the "Accounts" heading. To make a BTC transaction look for a button that reads "send" or "receive" - "deposit" or "withdraw." Following the nature of this guide you will 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 savings wallet you'll need to enter your deposit address here. You can find your deposit 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 record the entire string of characters. 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.
