How do I get Bitcoins? (For Beginners)

It might be a question for beginners, but the answer to how you can get Bitcoins isn’t obvious. Where you live, how technical you are, and what you want to do with your Bitcoins are all determining factors. We have plenty of people coming into the Bitcoin community each day, so WELCOME!

(For those wanting to learn more about how Bitcoin works, a podcast called Security Now did a great show a couple years ago that covers the basics. The explanation starts at the 42 minute mark and gets technical after about 10 minutes.)

There are 4 main ways to get Bitcoin.

Firstly, there are Exchanges, where you can buy and sell Bitcoin for fiat currency (which is Muggle currency like USD and Euros). There are many new options for buying Bitcoin, which will vary depending on where in the world you are. These are changing pretty rapidly, but the main players have remained pretty constant so far.

Second, Bitcoin “mining” remains a primary vehicle of attaining the currency. Bitcoin “mining” has proceeded to increase in difficulty. Currently, the value of BTC is more than keeping pace with this increase in difficulty, but the costs of entry in terms of hardware are high.

Thirdly, you can send and receive Bitcoin, for whatever reason, between individuals, using a Bitcoin Wallet. Again, there are many options for your wallet, which acts as you might expect from the name, as a place to keep and compartmentalise your Bitcoins. You will also need a Bitcoin wallet to spend your Bitcoin from once you have them. You can keep your Bitcoin wallet online (although it might not be as secure as on a piece of your own hardware), on your phone, or on your desktop.

Finally, you can make Bitcoin through content or services offered online. In order to do this, you will need a wallet, and you might choose to use a tool on your site that stores your wallet address as a QR code, to make payments from mobile phones easier.

EXCHANGES

Exchanges are places where you can buy and sell Bitcoin for fiat currency. Three of the main players in this space are Mt.Gox, BitStamp and CoinBase.

Regardless of where you live, Mt.Gox remains a good purchasing-point for Bitcoin, although their service is currently suffering from some holdups, they are still the largest of the BTC exchanges. Their prices are about $10 higher than their largest competitor, however, due to the difficulty in getting USD in and out of the exchange. If you are a first time buyer, check out BitStamp.

MtGox is, at the time of this writing (updated August 2013), is allowing the following funding sources:aurumXchangeBitInstant, Euro Bank Transfer, Bank Transfer, Liberty Reserve, OkPay

If you plan on transferring money from your bank, expect (4-5 business) days of wait time. For withdrawals in fiat currency (if you want to sell your BTC for Dollars, Pounds or Euros) Mt.Gox is currently painfully slow – they are in the process of changing banking partners, and are only allowed a very limited number of wire transfers per day. Expect to wait 3 weeks for your money, if not longer.

MtGox is, at the time of this writing (updated 2013), is allowing the following funding sources: aurumXchange, BitInstant, Euro Bank Transfer, Bank Transfer, Liberty Reserve, OkPay

If you plan on transferring money from your bank, expect (4-5 business) days of wait time.

Second largest of the BTC Exchanges, and quickly gaining on Mt.Gox, is BitStamp, who take wire bank transfers and usually operates at a lower USD purchase and selling price then Mt.Gox, due to the difficulty of getting USD in and out of Mt.Gox. BitStamp is based in Slovenia, and (currently) is able to operate relatively freely due to the EU’s ruling that Bitcoin is not money. This will most likely change as Germany’s decision to classify Bitcoin as “Private Money” becomes a precedent for the rest of Europe, but as Germany has treated Bitcoin in such a reasonable way, it’s unlikely to cause BitStamp users much disruption.

US citizens should also take a look at CoinBase, which offers simplicity and credibility as a business.  (Recently, it has received a large investmentfrom Silicon Valley venture capitalists.)  It is also faster than going through an intermediary to MtGox.  What you get in simplicity, however, you lose in terms of exchange rates which are currently at 1% at Coinbase.

Here is a list of Bitcoin exchanges worldwide: https://en.bitcoin.it/wiki/Trade#Currency_exchanges

Please be cautious and do plentiful independent research before choosing any exchange–as many have opened and closed over the last few years.

MINING

A note on “mining” (using computer hardware to generate) vs. buying Bitcoin:

Mining is always getting more computationally expensive per Bitcoin generated.  This is because fewer Bitcoins are generated over time and more people are trying to “win” them.

If you want to go ahead and mine them though, we’ll be setting up a

Opinion: Because fewer Bitcoins are being generated, this means fewer Bitcoins are being “dumped” into exchanges.  This means that, over time, downward pressure on the value of BTC has lessened.  I believe this scarcity is a contributing factor to the rising value of BTC.

WALLETS

Three of the most popular wallets recommended by Bitcoin.org are Multibit, for your desktop, and BitcoinWallet for the android, whilst those holding large amounts of Bitcoin might want to consider Armory for high security.

Be sure to set good passwords for any wallet that you choose.

ECOMMERCE

Receiving tips on your website is straightforward, once you have a Bitcoin wallet you just need to display your Wallet address.

For eCommerce, consider BitPay for your website shopping cart.

A NEW ECONOMY

Up until this point, the Bitcoin economy and its participants have been somewhat reliant on making money through mining.  It’s been some peoples’ hobby, others’ full-time job.

Another practical way to earn Bitcoins has become to provide goods or services to others. You know, like people do with a normal currencies.

So, where would you go to sell goods and services?  Get it listed on the Wiki Trade Page!

KEEPING UP WITH BITCOIN

If you are invested in Bitcoin, you should be hyper-aware of the news affecting the currency, especially considering how volatile it is.  I highly recommendwww.bitcoinnews.com.  For three years, it has offered pretty fair reporting on all things Bitcoin.  I also encourage you to sign up for the Bitcoin Bulletin newsletter, on the right hand panel.

 

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