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Author Topic: Using Bitcoin - An Absolute Beginner's Guide  (Read 1545 times)
Johnny7041
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October 30, 2013, 08:01:03 PM
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(Hey. A while back I went looking for a completely nontechnical and noob-friendly explanation how to acquire and use Bitcoin.
Despite a quite thorough search, I couldn't find much that wasn't out-of-date, or likely to be intimidatingly technical, or that wasn't obviously and spam-ily biased. So I decided to write my own quick introduction and thought I would post the text of it here in case anyone wanted to repurpose it for a blog or wiki or whatever.
So, yeah, feel free to copy and modify this however you want)




Using Bitcoin - An Absolute Beginner's Guide



WHAT IS BITCOIN?

Bitcoin is an online virtual currency, accepted at thousands of places worldwide.
http://en.wikipedia.org/wiki/Bitcoin

You can already use it to do countless things, including buy books from Amazon, pizza from Pizza Hut, and, in some places, even pay your bills, rent, and fill up your car.

Also, more esoteric things (Australian cows, anyone?):
http://abcnews.go.com/ABC_Univision/buy-bitcoin/story?id=19172034

Until recently it's had a reputation as being pretty user-unfriendly, but in the last year or so, new services have popped up that make it much, much easier to use.


YES, BUT WHAT IS IT?

Basically, a Bitcoin is a unit of currency created by doing some very difficult mathematical problems. The people who do these problems, and thus create new bitcoins and keep the network running, are called 'Miners'.

Fortunately, you don't need to mine your own bitcoins (though you can if you want), you can exchange 'real' money for bitcoins.
There are quite a lot of Miners, since - at the moment of writing - a single bitcoin is worth more than $200.
(You can check the current exchange rate here:
http://coinmill.com/BTC_USD.html#BTC=1 )

...And, no, you don't need to buy a whole one. Just like dollars have cents, you can buy a fraction of a bitcoin.
The smallest amount you can buy is a 'satoshi': a hundred millionth (.00000001th) of a bitcoin - currently worth less than a thousandth of a cent.


STEP 1: GET A BITCOIN WALLET

If you want to use bitcoin, first you need a Wallet. This is like an email address that holds your bitcoins.
Like Email, you can use either a wallet stored online or one stored on your computer.

ONLINE WALLET -
This is almost certainly the easiest option for beginners. A lot of sites offer free online Wallets.
for example, you can get one in seconds right now at:
https://blockchain.info/wallet/new
https://www.strongcoin.com/en/users/sign_up
A list of online wallet services can be found here:
https://en.bitcoin.it/wiki/Category:EWallets


BITCOIN CLIENT -
If you want to hold and control your money yourself and aren't afraid of a bit of complexity, you can install the Official Bitcoin Client onto your computer.
See the guide here:
http://bitcoinintro.com/wallets/official-bitcoin-client/


SMARTPHONE APP -
More recently, the option has become available to add a 'wallet' app to your phone that holds your coins and keeps them easily accessible.
See here: http://bitcoinintro.com/wallets/smartphone-wallets/


(A good, much more detailed overview of different Wallet options and their pluses and minuses can be found here:
http://bitcoinintro.com/wallets/ )



When you create a new Wallet, you will be given its address. This is a string of numbers and letters and looks like: '12EhiyRHncwzM9BbMghfBCJwa1ztYEFUcP'
This is like an email address - it's what people will be sending money to if they want you to get it.

A separate code will also be created - the Private Key. This looks a lot like the wallet address and is the password that allows access to the money stored in your wallet.
In most cases you won't need to see or remember the Private Key - your wallet will remember it for you, you just need to remember the password to your wallet.
However, you should be careful to keep this code private, since anyone with it can spend your money.
Some people might want to keep a copy of their wallet's Private Key, in case some disaster strikes the wallet host.
See: https://en.bitcoin.it/wiki/Securing_your_wallet
(...And, yes, you can have as many different wallets as you want)

Most wallets will let you generate a new receiving address (some even do it automatically). This helps preserve your privacy.
Every transaction that is ever made with Bitcoin is recorded forever in the Blockchain (the Bitcoin ledger of transactions). If you always use the same address and mention publicly that you own that address, then anyone can see every place that you have ever sent or received money from.
If, however, you create a new address for each major transaction and keep your ownership of at least most of them private (which shouldn't be difficult, since most wallets don't require your name or any identifying information), then you can operate with near-total anonymity.
(Though see the 'Further Reading' for more information)

If you do change addresses, be sure to always check that any particular address is still current before you have money sent to it.



STEP 2: BUYING BITCOINS

So, you've got somewhere to store your bitcoins, now to get some...

Important note: you should always be careful in your transactions. Always check the legitimacy of any site or group that you deal with before giving them your money.

Another important note: It's wise to buy a bit more bitcoin than you're planning to use. This will help to compensate for fees charged by bitcoin dealers or exchangers and will also help shield you against bitcoin currency fluctuations (which can be significant)


1. Coinbase
If you live in the US, you can use a new site called 'Coinbase' that links to your bank account, just like Paypal does.
This makes transferring money to and from Bitcoin a snap.
https://coinbase.com

About:
http://en.wikipedia.org/wiki/Coinbase
http://blog.coinbase.com/post/34357253898/you-can-now-buy-and-sell-bitcoin-by-connecting-any-u-s


2. Credit Card/Paypal
If you're not in the US, or you'd prefer to stick to more familiar methods, you can buy bitcoins with Credit card or Paypal.
Historically, it's been quite difficult to purchase bitcoin with these methods.
It is possible, but tends to be a bit slow and fiddly and can cost a significant percentage in broker fees.

Good guides on how to do this:
http://bitcoinwithpaypal.com/
http://howdoyoubuybitcoins.com/with/credit-card/


3. Ukash/Cashu
'Ukash' is a voucher-based payment system sold throughout most of the world.
https://www.ukash.com/en-gb/
http://en.wikipedia.org/wiki/Ukash
It can be purchased for cash from thousands of locations.
(Pretty damn definitive list here: https://www.ukash.com/en-gb/where-to-get/ Just enter your country and city)
Several merchants will accept Ukash payments (either directly, or via the Cashu service) in exchange for Bitcoins. In some countries, though, Ukash vouchers issued cannot be used internationally, and thus cannot be used for Bitcoin.
List of Ukash-accepting merchants and ways to tell if the voucher can be used internationally here:
https://en.bitcoin.it/wiki/UKash

(Note: It is possible to buy Ukash online - but most of the sites offering this are scams. All legitimate sites are listed here:
http://www.ukashreselling.com/aurlocator.htm
The most reliable is generally regarded to be http://www.pcgamesupply.com/buygames/ukash-voucher-online/ )


4. Cash/money transfer/moneypak/etc. etc. etc.

A fairly comprehensive list of other means of purchasing bitcoin can be found here:
https://en.bitcoin.it/wiki/Buying_Bitcoins_(the_noob_version)


(Numerous new, convenient options for purchasing Bitcoin are appearing all the time. The Canadian company 'Cointap', for instance, has announced plans to start selling Bitcoin 'Gift Cards' in department stores by the end of 2013)
https://cointap.co/
http://www.coindesk.com/cointap-is-a-canadian-startup-offering-bitcoin-gift-cards/



STEP 3: SPENDING BITCOINS

Most (if not all) Wallets have a simple GUI that allows you to send a certain amount to a particular address.
Look for the 'Send Money' (or similar) button, and copy in the address that you want to send the money to and the amount to transfer.
It's VERY IMPORTANT that you write in the correct address since all bitcoin payments are irreversible. Keep in mind that addresses are CASE-SENSITIVE (meaning that it's important whether the letter is a capital or not).
It is HIGHLY recommended that you copy-paste the address in, rather than attempt to remember it.

Keep in mind that Bitcoin payments are usually not instant, and can take anywhere from 10 minutes to a few hours. Some GUIs give you the option to add a fee to your payment - this is not generally essential, but can be a good idea. Adding a fee of the equivalent of a few cents (or even a fraction of a cent) can significantly speed up your transfer time. Generally, the higher the optional fee you pay, the higher the priority the system will place on it.
https://en.bitcoin.it/wiki/Transaction_fees




STEP 4: EXCHANGING BITCOINS BACK INTO CASH

If you're left with excess bitcoin, or you've earned some more (well done!), you can turn it back into cash using various exchangers and methods (Though keep in mind that most, if not all will charge a fee to do so)
https://en.bitcoin.it/wiki/Selling_bitcoins

(Note: If you've signed up with Coinbase, they can help you with this too...)




FURTHER READING:

https://trybtc.com/
- VERY easy to understand tutorials. Gives you a little bit of free bitcoin to experiment with and shows you how to use it.

https://blockchain.info/wallet/bitcoin-faq
- A good general guide.

https://en.bitcoin.it/wiki/Anonymity
https://en.bitcoin.it/wiki/Mixing_service
https://blockchain.info/wallet/send-shared
- Anonymity is a major concern with bitcoin, since bitcoin has the potential to be either the most or the least private form of payment, depending on how you use it.

http://www.splitbrain.org/blog/2011-07/29-bitcoin_for_beginners_like_me
- A good tutorial from a first-time user.

The Bitcoin Wiki
https://en.bitcoin.it/wiki/Main_Page

The BitcoinTalk forums
https://bitcointalk.org/
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odolvlobo
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October 30, 2013, 08:31:49 PM
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Quote
Bitcoin is an online virtual currency, accepted at thousands of places worldwide.

That is the typical one line explanation, but it is not accurate. I prefer this:

  • Bitcoin is an online payment system (with its own currency).

Also, you forgot to mention LocalBitcoins.com. LocalBitcoins gives a person the ability to buy and sell bitcoins with their local currency using a variety of different payment methods, and it is available globally.

Buy bitcoins with cash from somebody near you: LocalBitcoins
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October 30, 2013, 08:35:11 PM
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Nice post OP, this wil help newbies a lot Smiley

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birkomester
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November 06, 2013, 06:40:55 PM
 #4

Great guide for beginners.

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Leanna
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November 06, 2013, 07:31:02 PM
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Thanks for the guide! I know a couple of people I can refer to this!

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CallmeAbe
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November 06, 2013, 08:27:00 PM
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Thanks for the guide !! 
DAN444
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November 07, 2013, 08:47:56 AM
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Nice
thx

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