I recently started playing around with Bitcoin, being new to it all I had no idea where to start.
First questions which pop up are
- Where to buy
- How to Sell
- Phone apps
- Backup your coins
Just to list a few. So I thought Id document the process which I used to get started.
I bought my coins from the location news agent. The www.bitcoin.com.au site allows you to buy and sell bitcoins from many different locations. It has a map which lists all the sites.
So to start with you need a phone app (thats the easiest option), I used the stantard bitcoin app located on the Android app store. The app is also refereed to as a wallet. Lose your wallet, lose your money too!
The application itself has several levels of security, some are standard and some need to be setup.
- You can set a password or pattern for accessing the application while your phone is unlocked. This helps for when your phone is stolen while unlocked or when your kids get it and start playing around with your applications.
- Pin for sending funds. This complements the first option. Also stops you sending your coins by accident because you need to go to the extra effort of entering a different pin.
- You wallet is on your phone, so if you phone gets lost your wallet is also gone. So you need to backup your wallet on a regular basis. When you backup your wallet you also password encrypt it.
After taking all these three options into consideration you realise your money is much safer than your physical cash in your physical wallet. Just dont forget your passwords!
Also I should mention what there are two types of wallets, online and offline. The above mention method is offline, this means that all the coins a located on your device. No one online can take them nor do they have power of when and where you use them. The online method is when your wallet is on a server and you simply use it, as a managed service. The benefit to this is security that if your device gets stolen your coins are safe, the disadvantage is that if the site/server gets hack, so do your coins.
When you hear about millions in stolen coins online, thats what they mean. You can go one step further and transfer your coins to an wallet which you store on a usb stick and sits in your safe, this is a completely offline method and considered to be the safest.
Next is our buy method. I purchased my coins from www.bitcoin.com.au, its reputable and safe. One thing to take into consideration when buying bitcoins is the fees and charges, they are insane. I purchased $1000AUD and when it finally arrived in my wallet it was around $800AUD. When transferring funds there is also the network transfer fee, which is a percentage of your transfer amount.
So once your coins arrive in your wallet, BACKUP!!! Be careful, once you run the backup function on the application it will ask you where you want to copy the backup. Alot of people will email it to themselves or copy it to your dropbox account. Im not going to judge, but remember security is only as good as your weakest link. If a hacker gets your email details or dropbox details they also have your money. My recommendation would be to copy it to a memory stick which you keep in a safe place at home. Its the safest option.
On your bitcoin application there is a section called “Your Address”, there are a number of hashed codes lined up. They are the codes you may give to people to send you coins. They are completely harmless, no one can do anything with them other than send you coins. These are the codes you see posted on some sites when requesting donations.
I use an application called CoinCap, it allows you to see the exchange rates for most of the bitcoin currencies. Also displays the trends over periods like days, weeks and years which makes you cry a little thinking about what life would be like if you bought at the beginning.
I found that putting all your money into one currency was a little boring, you can exchange your bitcoins for other currencies like Ethereum or Monero. You make the exchange using an app called Shapeshift.
I did find that once one of the currenecies stopped growing, another would go through the roof. If you quick enough you can make some cash. The other days Bitcoin stopped, so I put it into Ethereum which continued to grow. But you need to take the transfer fees into account.
You need to keep in mind that there are additional processing fees and that Shapeshift can takes Minutes, Hours and even days to process your requests.
Also need to understand that you may need a different wallet based on the currency your converting to. So you will need to visit your app store and search for the currency your trying to trade with and download the wallet.
Shapeshift will then issue you a bitcoin address you need to deposit the fund into and a wallet address of the intended currency you wish to buy into.
As far as converting Bitcoins to cash, I have not done that yet. But the bitcoin.com.au site has the option available and allows you to specify your BSB and Account number. So the fund will be put back into your banking account. Im not sure about the fee which will be charged or the time it will take. Id assume it would take a few days.