The Basics Of Bitcoin
You’ve heard of it. Now you’d like to be part of it. Here’s how
BY Hyder Albar | Feb 9, 2018 | Money & Career
Okay, so let’s cut to the chase. You’ve seen the articles on bitcoin’s meteoric rise. Over the past two months, you’ve found yourself increasingly surrounded by friends, colleagues, family members who suddenly either “have some bitcoin” or are in the market for some.
You don’t really know what it is, how to get some, or where to put it, but you’re lusting over it like an 18-year-old in heat. You realise you should have listened to Ming Lian from the IT department when he got hammered at the company D&D four years ago and told his boss to suck it because he was going to be a bitcoin billionaire.
So, in place of the interview with the founder from TenX, as previously promised, I’m going to break down the basics of purchasing cryptocurrencies like bitcoin FAQ style.
What are bitcoins?
They are a form of cryptocurrency. There are more than 1,300 cryptocurrencies now. Bitcoin, is the most popular, followed by Ethereum.
Why are they valuable?
People work in mints that print our money. Mints embed technology in our money to prevent forgery. This gives us the assurance that our money is authentic. The serial numbers on our money ensure that there are no duplicates so the same dollar cannot exist twice. These are the principles that make it possible to believe that paper, metal and plastic have value beyond the cost of their materials.
In the case of bitcoin, people mine the blockchain that generates bitcoins. The blockchain ensures that each coin is authentic, and that the same coin cannot exist twice. This is also true for other cryptocurrencies. You can see how this makes for a perfect store of value, just like the money we use today. If you want to know how this process happens, hit me up on e-mail (firstname.lastname@example.org).
How can I store it?
Digital currencies have digital wallets. There are three types of wallets: online, cold (offline wallet) and hardware. An online wallet is usually a wallet that you automatically get from the service that you use to buy your cryptocurrency. It is less secure but easier to set up.
A cold wallet is a wallet that you usually keep on your computer hard drive. The wallet works best if the computer has no way to connect to the Internet. It is a lot more secure, but a bit more of a hassle to set up. (However, I recommend this option.) A hardware wallet is the most secure device that you can keep your cryptocurrency on. It’s basically a physical storage unit that you can carry around.
Where to buy it?
You can kick it old school by paying cash and having the seller transfer the coins to your wallet. The more common option now is purchasing it on a marketplace. If you’ve never used trading software before, just think of it like an e-commerce site with a lot of charts that show you how much that pair of pants you bought/want to buy is worth. Here are some examples of markets that I use: Kraken, CEX, Etherdelta.
What if I can't afford one bitcoin?
You don’t have to buy one bitcoin. You can buy 0.1, 0.02, whatever you want.
Go to coinmarketcap.com (a crypto market trading website); Boxmining (a YouTube channel that reviews the tech behind new cryptos); Banking on Bitcoin (a Netflix documentary, great primer); and search for and join Reddit groups focused on bitcoin, where people are mostly friendly.
If you can, read the white papers, they are heavily technical, at least the good ones are, but they provide great context for what you’re buying. If you join Slack groups, don’t ever give anyone access to any of your account information. There are a ton of hackers preying on noobs there.
As with anything, you want to get good at it. Put in the time, do your research and make friends in the community.
Let’s run an experiment: If you found this column useful, make out a crypto transfer to me and leave a note via e-mail. Send over your BTC or Ether wallet address; it works just like an account number. I'll do a shout-out to the people with the top five transfers in my next article.
Otherwise, do me a solid and share this if you found this article useful. Disclaimer: in no way am I saying, “Hey, go and buy bitcoin.” I am not a financial advisor and none of this constitutes financial advice. Think of this as the conversation you could have had with Ming Lian four years ago… well, maybe not exactly the same one. Apart from the price, very little has changed.