How to buy bitcoin - the first step

The best way to learn about Bitcoin is to go in and have a little bit of it in your "pocket" to see how it works.

Despite the hype about how difficult and dangerous it is, getting Bitcoins is much easier and safer than you might think. In many ways, this is probably easier than opening an account at a traditional bank. And given what was going on in the banking system, it could potentially be safer as well.

There are a few things to learn: obtaining and using a software wallet, learning how to send and receiving money, and learning how to buy bitcoin from a person or an exchange.

Read Also: Bitcoin has reached a record high of $ 60,000

Preparation

Before you begin, you will need to acquire a wallet. And while I think you'll want one or more exchange wallets eventually, you should start with one on your computer to get a better feel for bitcoin and because the exchanges are still experimental in their own right. 

When we get to that point in the discussion, I will advise you to get in the habit of moving your money and coins outside of exchanges or diversifying across exchanges to keep your money safe.

What is a wallet?

It is a way to store your Bitcoins. Specifically, it is a program designed to store Bitcoin. It can run on a desktop computer, laptop, or mobile device (except for Apple so far) and it can also be manufactured to store bitcoins on things like thumb drives. 

If you are concerned about being hacked, this is a good option. Even the Winklevoss * twins, who have invested millions in bitcoin, put their investment in hard drives that they then put into a safety deposit box.

* It was the twins Winklevoss who came up with the idea of   creating a social networking site that became Facebook. They hired Mark Zuckerberg who took his idea as his and got very rich.

What is a wallet?

It is a way to store your Bitcoins. Specifically, it is a program designed to store Bitcoin. It can run on a desktop computer, laptop, or mobile device (except for Apple so far) and it can also be manufactured to store bitcoins on things like thumb drives. 

If you are concerned about being hacked, this is a good option. Even the Winklevoss * twins, who have invested millions in bitcoin, put their investment in hard drives that they then put into a safety deposit box.

* It was the twins Winklevoss who came up with the idea of   creating a social networking site that became Facebook. They hired Mark Zuckerberg who took his idea as his and got very rich.

What do you need to know about having a Bitcoin wallet on your computer?

Below you can download your original Bitcoin wallet, or client, in Windows or Mac format. These aren't just wallets, but they're actually part of the Bitcoin network. 

They will receive, store and send your Bitcoins. You can create one or more addresses with one click (the address is a number that looks like this:

 1LyFcQatbg4BvT9gGTz6VdqqHKpPn5QBuk). You will see a field where you can copy and paste a number like this from someone you want to send money to and return it directly to that person's wallet. 

You can also create a QR code that allows someone to take a picture with an app on their phone and send you some bitcoin. It's totally safe to distribute - the title and the QR code both for my donation page. Don't hesitate to donate!

Note: This type of wallet works as your wallet and as part of the Bitcoin system. The reason Bitcoin works is that every transaction is streamed and recorded as a number across the entire system (which means that every transaction is confirmed and made irreversible by the network itself). 

Any computer with the appropriate software can be a part of this system, it checks and supports the network. This wallet acts as a personal wallet and also as a support for this system. 

Therefore, you must be aware that it will consume 8-9 GB of your computer's memory. After installing the wallet, it will take a day for the wallet to sync to the network. This is normal, it doesn't harm your computer, and it makes the system as a whole much safer, so it's a good idea.

Bitcoin-Qt

The original wallet.

This is a full-featured wallet: create multiple addresses to receive bitcoins, easily send bitcoins, track transactions, and back up your wallet.

Beyond the time syncing takes, this is a very easy-to-use option.

Search Bitcoin Qt wallet download to find their site.

Armory

It runs on top of Bitcoin Qt, so it has all the same sync requirements.

Armory allows you to backup, encryption, and the ability to store your Bitcoins offline.

Search Bitcoin Armory Wallet to find their location.

If you don't want to use that much memory or don't want to wait for your wallet to sync, there are good wallets that don't let you sync your bitcoin history completely:

Multibet

Lightweight wallet that syncs quickly. This is very good for new users.

Search Bitcoin Multibit Wallet to find their location.

Electrum

In addition to being fast and light, this wallet allows you to recover lost data with a passcode.

Search for Bitcoin Electrum Wallet to find their location.

After setting up the wallet, took a few minutes to click around. Things to look out for:

o There will be a page showing you the number of Bitcoins currently in your wallet. Keep in mind that Bitcoins can be split into smaller pieces, so you might see a decimal number with lots of zeros after it. (Interesting note, 0.00000001 is Satoshi, named after the pseudonym of the Bitcoin creator).

o There will be an area showing your recent transactions.

o There will be an area where you can create an address and a QR code (like the address above). 

You don't need a QR code if you don't want it, but if you run a business and want to accept Bitcoin, all you have to do to accept payment is show someone a QR code, let them take a picture of it, and they'll be able to send you some money. 

You'll also be able to create as many addresses as you want, so if you want to track the source of the funds, you can have a named address separately from each one of their payees.

o There will be an area with a box that you can paste a symbol when you want to send money to someone or to yourself on a different exchange or wallet.

There will be other options and features, but to start with, these are the ones you should know about.

Get your first Bitcoin

Now that you have a wallet, you will of course want to test it.

This is a website that offers small amounts of Bitcoin to get people used to it. The original version of this was powered by Bitcoin's lead developer, Gavin Andreson. This site has been closed since then and this site works by posting one or two ads per month. 

You agree to receive these messages by requesting Bitcoins. Copy and paste your new Bitcoin address and enter the phone number where you can receive an SMS. 

They send out an SMS to make sure people don't come back constantly for more as it costs nothing to create a Bitcoin address. They will also post an ad once or twice a month to support their operations. 

The amount they send is minimal: 0.0015 BTC (or 1.5 BTC). However, they are processed almost instantly and you can check to see if your address and wallet are working. It also feels great to get this bit of bitcoin. (No disclaimer: 

I have no contact with this site nor receive anything if I use it. I simply think it's a good way to wet your feet.)

Congratulations! You have just entered the Bitcoin economy.

To make your feet wetter, you can search for gold. There are a number of services and websites that will pay you in Bitcoin for things like going to specific websites, filling out online surveys, or watching sponsored videos. 

These are not harmful, and you can earn a few extra bitcoins this way, but it is important to remember that these are the companies that get paid when people click on the links on their sites. They take back a portion of what they get to you.

There's nothing illegal, or even unethical, about this (you might like what you see and make a purchase!), But it is often glamorous and may not be entirely clear. All of the things I've tried (especially bitvisitor.com) paid as advertised. 

It's interesting to try these things, but even with the potential rise in Bitcoin's value, you won't become a millionaire doing it. So, unless you are addicted to ads, I recommend that you go ahead. If you want to try, just use Google "free bitcoins" or something like that and you will find many sites.

Buy Bitcoin by hand

Finally, this will be the true test of Bitcoin. Can people easily trade it back and forth? If this didn't happen, then there really wouldn't be a Bitcoin economy because retailers wouldn't be able to use it. 

If retailers can't use it, then what is a terrestrial good? Fortunately, that's not really a problem. The iPhone is a bit of a hold, but many smartphones have apps (portable wallets) that will read QR codes and allow you to send Bitcoin to whomever you want. 

You can also display a QR code for your address, or even carry a card in your wallet with your QR code to allow people to send you bitcoins. Depending on the type of wallet you have, you can then check to see if bitcoins have been received.

A couple of things to note:

When you set up your wallet, if you click a little bit, you'll see an option to pay a fee to speed up transactions. This money becomes available to the bitcoin miner as it processes bitcoin information. Miners create blocks of information that keep the system up-to-date and secure. 

The fee is an incentive for a miner to ensure that your information is included in the following block of information, and thus to "verify it". In the short term, miners make most of their money by mining new coins (see the What are Bitcoins section for more information on this). 

In the long term, as new coins are difficult to find, and as the economy increases, the fees will be an incentive for miners to continue creating more blocks and keep the economy going. Your wallet should be set to pay 0 fees by default, but if you like, you can add fees to prioritize your transactions. 

You are not obligated to pay a fee, and many organizations that handle many small transactions (such as those that deal with the gold described above) produce enough fees to keep miners happy.

When you click around your wallet, on the transactions page, or link to specific transactions, you will see a note about confirmations. When a transaction is made, this information is sent to the network and the network will send a confirmation that there is no double entry for that bitcoin. 

It's smart to wait until you've had so many confirmations before turning away from the person who pushed you. In fact, it is not very easy to deceive someone like this, and it is not very feasible for a criminal, but it can be done.