Getting Started with Bitcoin
Bitcoin is the first decentralized peer-to-peer network for transmitting value across the internet. It uses something called a Blockchain that records and maintains a record of the transactions in order to keep an immutable record of bitcoin transactions. Bitcoins are the unit of account on the blockchain and act as a currency like cash on the internet. Bitcoin is the first crypto currency but not the only, there are >500 currently and that is growing. Generally each crypto currency has is own blockchain however some currencies/tokens are built on top of other blockchains, like Counterparty for instance.
Getting your first Bitcoins
There are many ways to acquire bitcoins. Here is a list ranging from simplest to more complicated:
1.Bitcoin ATM (use coinatmradar.com)
2.Bitcoin Exchange (see buy/sell)
3.Localbitcoins (In person exchange)
4.Earn for goods/services
5.Bitcoin Faucets(generally small payouts)
In order to store your bitcoins you will need a wallet. I recommend Mycelium for mobile and Electrum for PC/Laptop. IMPORTANT: When you first create your wallet it is essential that you write down on paper your mnemonic/seed. I cannot stress enough how important this is because if you lose your phone or laptop then this will be the only way to recover your bitcoins. The mnemonic/seed is a representation of your private key and gives you control of the bitcoins at your public key(s). (If this is seeming complicated try watching some of the videos at the bottom of this post) The bitcoinwiki is a great resource as well as bitcoin.org for more information on these fundamentals.
Once you have created your first wallet you will need to find your public key, generally found under the receive tab. It will look like a string of numbers and letters and probably be accompanied by a qr code which is a representation of that public key. To receive bitcoins you will need to send that to the person paying you or to the exchange you are withdrawing from.
To spend bitcoins or to send them, you will need to find the public key for the person/place/thing you are sending to. Simply copy and paste that into the send field or scan the qr code with your device.
You can also purchase a bitcoin debit card if you want to spend your bitcoin at merchants that don’t yet accept it. For a list of cards see Resources
I highly recommend purchasing a cold storage device to keep your bitcoins secure from hackers, loss of devices, theft or other catastrophic situations. You can buy one here: mytrezor.com. Otherwise you can store your bitcoins on paper wallets or use another method(more complex). Paper wallets or a cold storage device is adequate.
As a general rule of thumb if you do not control your private key aka have your bitcoins on a device or wallet you control, you do not have your bitcoins.
Miner Fees/I thought bitcoin was free!!
Miners fees are attached to transactions that you are sending and are paid to the miners/computer who secure the bitcoin blockchain. They are generally very small however currently with the growth of bitcoin they are higher because of the amount of people using the network. They act as the economic incentive to relay and secure bitcoin transactions and therefore miners will process transactions with higher fees first. Most wallets will calculate the fees for you but you can adjust that calculation in order to ensure quick confirmations. The miners fee is paid once per transaction and does not limit the amount of value you send ie: it costs the same to send $5 as it does to send $5million. It is free to receive bitcoins.
General Rules of Thumbs
- If you do not control your private keys you do not control your bitcoins. Use cold storage to avoid this.
- Always encrypt your wallets with secure passwords.
Keep only what you need on your mobile or computer, the majority of your bitcoin should be kept in cold storage. Syphon off what you need to only when you need it. Aka send some bitcoin to your wallet on your phone of other method for spending
- Do not tell people how many bitcoins you have EVER, they are likely to be highly valuable in the future and you should not take unnecessary risks.
- Use different passwords for each exchange/wallet in order to increase security.
- If you are unsure of something don’t hesitate to ask the community, it is generally friendly. However beware of trolls as there are many.
What is Bitcoin?
I will continue to update this document to keep it as up to date as possible. If you find errors or fallacies please do not hesitate to comment and inform me. To the best of my knowledge this guide should empower you to get a basic grasp of bitcoin.
You can always reach me on telegram: @therealninza but please keep the questions concise and don’t troll too hard.