Everyone is talking about Bitcoin. You know little about it, but enough to understand that this cryptocurrency is changing the way we think about money, and now you want to know how to get Bitcoin.
Am I right? I thought so…
There are a few different ways how to get Bitcoin. You can buy Bitcoin from an online Bitcoin exchange and pay with a credit card. Or you can meet a seller in person and buy Bitcoin with cash. You can even create your own Bitcoin through a process called mining!
In this guide, I will teach you about what Bitcoin is, how it works and where to find it. I’ll also teach you the right way to store all the information you need to access your new Bitcoin safely.
The first things all beginners need to know are; what is Bitcoin and how does Bitcoin work? So, let’s get started…
Table of Contents
What is Bitcoin?
- Digital currency: It’s money that only exists digitally
- Peer-to-peer: It’s sent from one person to another. There is no bank or PayPal — these are called middlemen or third parties. Bitcoin has no middlemen or third parties
- Public: All Bitcoin transactions are recorded on a public ledger called a blockchain. All users with access to the internet can view the Bitcoin blockchain and all the Bitcoin transactions that have ever been made.
- Encrypted: Transaction information is encrypted using cryptography. This means that special codes are used to hide the account information of users. Crypto means hidden so Bitcoin is hidden money!
- Decentralized: Bitcoin has no center. It’s controlled by its users and computer algorithms. No one person, group or government decides how it works.
- Distributed: This means that the Bitcoin blockchain is stored on thousands of computers (or nodes) around the world. This makes it very difficult to hack.
- Immutable: This means that once a transaction is added to the Bitcoin blockchain, it can’t be changed or deleted. Ever!
So, now if anyone asks you, “What is Bitcoin?” You can tell them it’s a decentralized peer-to-peer digital currency which uses a public ledger called a blockchain to record all its transactions. This is what Bitcoin is, but how does Bitcoin work?
The answer to this question is a very important part of Bitcoin. It’s also the first on our list of how to get Bitcoin. It’s called mining — so let’s get digging, shall we?
How Does Bitcoin Work?
Let’s use an example to make this a bit more fun…
Dionne owes Warwick 10 US Dollars (USD). Dionne doesn’t have any money in her account but she tries to send 10 USD to Warwick’s account anyway. The staff at the bank check to see if Dionne has 10 USD in her account. They stop the transaction from happening when they realise that Dionne doesn’t have any money to send.
This is called verification. It’s one of the most important jobs a bank has. Bitcoin also needs to verify the transactions on its blockchain. This makes sure all the transactions that get added to the blockchain are real and valid. Bitcoin has special users called miners who verify transactions. This is how it works using the example of Dionne and Warwick;
- Dionne has 10 BTC that she wants to send to Warwick
- Miners encrypt this information and add it to other transaction information. They keep doing this until they have enough information to form a block.
- The new block needs to be given a code number that will connect it to the rest of the blockchain. All the miners work really hard trying to guess what that number is. It’s like a lottery!
- When the winning number is found, all the other miners check the information in the new block against the information that already exists on the blockchain. If the information is valid, the new block can be added to the blockchain.
- Warwick receives 10 BTC from Dionne.
Bitcoin doesn’t pay miners to do this job like a bank pays its employees. Instead, the miner that guesses the code number of the new block wins new Bitcoin. A reward of 12.5 BTC is given to the winning miner of each new block of transactions that is verified and added to the blockchain.
As you can see, becoming a Bitcoin miner is a great way how to get Bitcoin!
Bitcoin miners need very powerful computers to do the work involved in verifying transactions and adding new blocks to the blockchain. More powerful machines have a higher chance of guessing the winning code number than home computers like laptops and PCs.
Most Bitcoin miners use special equipment called ASICs which are designed to do one job, mine Bitcoin. ASIC miners aren’t cheap! Let’s have a look at some prices;
The reward for each block mined is 12.5 BTC. That’s worth about one hundred thousand US Dollars! However, ASIC miners are expensive, noisy and get very hot! And even with an Antminer S9, your chances of guessing the code number by yourself are quite low. This is why most miners join mining pools. So, what are Bitcoins mining pools?
Mining pools are groups of Bitcoin miners who use their combined computer power to mine Bitcoin. Miners then share the reward when new blocks are mined. You don’t even need to buy any mining equipment. You can rent mining power from a pool on sites like HashFlare. This means you get a share of the reward without any of the hard work!
Whichever way you choose how to get Bitcoin, you’re going to need a place to store the information you need to access your Bitcoin. This storage is called a Bitcoin wallet. Wallets are pretty important so let me tell you more…
A Bitcoin wallet contains two kinds of information. They are; private key and public key. Think of a Bitcoin wallet as being like your email address.
When someone wants to send you an email, they use your email address, right? Well, when someone wants to send you Bitcoin, they will use your public key. You can share your public keys with anyone.
If you want to read your emails or send a new email, you use your password to open your account. Your private keys are like a password for your Bitcoin. This means that only you should see your private keys! There are different kinds of Bitcoin wallets. Bitcoin wallets can be;
- Mobile: You can use a mobile phone to access your Bitcoin. Copay and Airbitz both offer mobile Bitcoin wallets for iOS and Android phones. Using a mobile Bitcoin wallet will give you a very good reason not to lose your phone!
- Desktop: This is a software wallet that you install directly onto your laptop or PC. Electrum is a popular desktop wallet available for Mac, Linux and Windows systems. Other desktop wallets worth thinking about are Exodus and Armory. Desktop wallets are only as safe as the computer they’re installed on.
- Online: This kind of wallet is usually offered by Bitcoin exchanges (and I will talk about those in a moment!). Online wallets can be useful when buying and trading Bitcoin. You should never leave your Bitcoin in an online wallet though.
- Hardware: You can store your keys on a removable hardware wallet. These are like USB sticks for Bitcoin. They can be expensive but are also very safe. Top brands include the Ledger Nano S which you can buy for 80 USD or the Trezor wallet which is around 100 USD.
- Paper: One of the safest ways to store your Bitcoin is with a paper wallet. These are printouts of your public key and private key. You can make a paper wallet for free here. The good thing about paper wallets is that they are very safe. The bad thing is that they’re made of paper! Don’t get them wet or let your Aunt’s dog play with them!
Each kind of wallet has pros and cons. This is why it’s important to have more than one. Wallets that are connected to the internet are called hot storage. Wallets that are offline are called cold storage. The best way to store your public and private keys is in a mixture of hot and cold wallets. And whatever wallet you use, keep them away from that dog!
Now let’s look at some other ways how to get Bitcoins to put in your wallets…
How to Get Bitcoin: Buying Bitcoin Online
The easiest way how to get Bitcoin is to buy some. The most popular way to buy Bitcoin is on a Bitcoin exchange. So, what are Bitcoin exchanges?
Bitcoin exchanges are online marketplaces where you can buy or sell Bitcoin. Different Bitcoin exchanges offer different services. Most will require users to register with personal information. Bitcoin exchanges also charge fees for their services. Here’s a few of the most popular exchanges for you to try;
- Coinbase is an online broker exchange which means that it buys Bitcoin for you at a set price. Coinbase is a very popular platform for users who are buying Bitcoin for the first time. It is a quick and easy way how to get Bitcoin. It also has great security features which include its own online wallet. Users can buy Bitcoin with fiat currencies and other cryptocurrencies like Litecoin or Ether.Note: Fiat currencies are the official currencies of countries. They are backed by national governments. Examples of fiat currencies are the Japanese Yen (JPY), the Canadian Dollar (CAD) and the Polish Zloty (PLN).
- Bitfinex is an online trading platform where buyers and sellers can trade Bitcoin for different prices. Users can buy and sell Bitcoin with fiat currencies and other cryptocurrencies. Bitfinex offers users more advanced trading features with lots of different coins being offered for trading like Ripple, EOS, Dash and Monero. This can make the exchange more difficult for new traders to use.
- Bittrex is another online trading exchange which offers a huge selection of cryptocurrencies for trading. However, it doesn’t offer fiat currency trading. This means that it’s not a great way how to get Bitcoin unless you already own other cryptocurrencies. Newbies should avoid exchanges like Bittrex until they have more trading experience.
If you’re thinking about how to get Bitcoins online then Coinbase is the best place for you. It’s the perfect site for crypto newbies to buy Bitcoin quickly, safely and cheaply.
Maybe you want to get out of the house and buy Bitcoin with cash? Then you need to know how to get Bitcoin in your local area!
Buying Bitcoin… in the real world!
The best place to visit if you want to know how to get Bitcoin in your local area is LocalBitcoins.com. This website will help you find people in your hometown who want to sell Bitcoin.
LocalBitcoins is a peer-to-peer exchange and has traders willing to sell Bitcoin in more than 15,000 cities in 248 different countries. LocalBitcoins is a great way to meet the crypto community and buy Bitcoin at the same time! The price you pay for Bitcoin peer-to-peer may be higher than you’ll pay on crypto exchanges though.
Top Tip: Always take care when buying Bitcoins peer-to-peer. If you meet a seller in person, take a friend and always do it in a public place!
If you feel like going for a walk but don’t feel like joining the crypto community, there is another option for you; Bitcoin ATMs. What are Bitcoins ATMs though?
Well, Bitcoin ATMs are like normal cash machines, but you send Bitcoin to a wallet instead of withdrawing cash. Coin ATM radar will help you find a Bitcoin cash machine somewhere near you. The site lists Bitcoin ATMs in over 60 countries so take a look.
All you need is a bank card, a Bitcoin wallet and a map! However, you should remember that Bitcoin ATMs are quite an expensive way to buy Bitcoin.
Now you know how to get Bitcoins with mining, online exchanges, cash and even ATMs. Next, I want to tell you about a few other ways how to get Bitcoin…
One great way how to get Bitcoin is by earning it. It’s becoming easier for people to accept Bitcoin as payment for work they do. So, if you run a business or you’re self-employed simply ask your customers to pay you in Bitcoin. There’s plenty of help available for businesses that want to be paid in Bitcoin. One service that’s highly recommended is BitPay.
Another way that everyone can use to earn Bitcoin are Bitcoin faucets. So, what are Bitcoins faucets? Bitcoin faucets are websites or apps that reward users with Bitcoin for completing a captcha or task. It can be as easy as watching advertisements, but it can also be as boring as watching advertisements!
Cointiply and AirDrips let users earn Bitcoin by filling in surveys and playing games. Some critics think that Bitcoin faucets are scams so be careful. You could be doing tasks for hours and not get paid anything!
Now you know how to get Bitcoin. Next, all you need to do next is decide which way is best for you. Choose a service that you feel comfortable using.
Some crypto newbies have got great tech skills. They might want to try Bitcoin mining. Others might be great at getting out and making friends. For them, peer-to-peer exchanges might be the best place to get Bitcoins.
For most crypto newbies, online Bitcoin exchanges will be the best places to get Bitcoin. Sites like Coinbase and Bitfinex are cheap, easy to use and safe.
Now you know how to get started on your Bitcoin adventure. How will you get Bitcoin? Whichever way you choose; stay safe and let me know how you’re doing!