For anyone new to Bitcoin, one of the first questions they ask themselves is; how to get bitcoins? There are mainly five ways to get bitcoin which are listed below (you will need an address (wallet) to receive bitcoin).
- Buy Online (Easiest option.)
- P2P (Peer-to-peer)
- ATM (Best option to buy/sell anonymously)
- Receive (By donation or a gift)
The easiest way to get your hands on some bitcoin is by buying it from a reputable exchange. For people living in the United States, the best place to buy is from Coinbase. They are one of the few exchanges that have never been hacked. Yes, their fees are the highest out there but it’s the route to go if you are looking to EASILY buy bitcoin at the current rate.
You do not need thousands of dollars to buy bitcoin. If you want, you can can buy five dollars ($5.00) worth of bitcoin, which would look like this in your account if you bought today (May 22, 2019): 0.00064
When I first started looking into buying Bitcoin. Almost every article and reddit post referred me to Localbitcoins.com, which is great if you don’t mind going through the painstaking process of doing a bank transfer and learning all the trivial little details. For me, and I think I speak for most people who simply want the easiest (quickest) way to obtain bitcoin, I want to buy bitcoin with a debit/credit card. When buying with a debit card on Coinbase, you get your bitcoin instantly and are able to send it to your wallet address right away. If you do not have a debit card, you can deposit via a bank wire by simply linking your checking and routing number of your bank account. Coinbase will then make two small deposits into your bank account, normally under 20 cents. Then it’s your job to verify the deposit amounts within your Coinbase account. This process takes about 5-7 business days to complete. Like I said before, if you are looking to buy immediately, just use a debit card.
If you are in a hurry and want to buy bitcoin without a wallet, go to Step 2.
The first rule, so important, is to never leave bitcoin that you own on an exchange. Exchanges are not like banks where you can leave your money (bitcoin) there and know that it’s safe. Crypto exchanges like Coinbase, Binance and Bitstamp should only be used to buy and sell bitcoin. Therefore, once you buy bitcoin from an exchange, it’s highly recommended to send it to your wallet immediately. Even up until 2019 (Binance hack), exchanges have been hacked and countless people have lost their bitcoin because they thought their bitcoin was safe.
So what is a Wallet?
A wallet is both a private and public key that stores bitcoin. First, the private key is multiplied to produce a public key. Then, the address to your wallet is produced by hashing your public keys twice (Yikes, that is confusing!). Lets focus on creating a wallet and not worry about the technical stuff for now. The two best wallets out there are the Ledger and Trezor hardware wallets. There are many apps you can download to your smartphone that will work as a wallet for your bitcoin, such as BitPay, but it’s far more risky. If you are seriously looking to move into bitcoin, highly consider buying a hardware wallet like the Ledger or Trezor.
Gone are the days of generating paper wallets (cold storage) and having to hide them in some deep dark corner in your house. We are still in the early development stages of bitcoin. As for now, bitcoin is a store of value like gold. A hardware wallet will act like a vault to keep your bitcoins safe and it’s capable of sending and receiving bitcoins on the fly. Eventually the day of mass adoption will arrive for bitcoin where users can spend and receive it on a daily basis all while being secure. Until then, buy and store. You’ll be happy you did 20 years from now.
What if I lose my wallet?
When you receive your wallet. All you need to do is memorize your 12 or 24 word seed phrase. A seed phrase is a random set of words generated by your device. If you lose your device and lose your seed phrase, your bitcoins are gone forever. So don’t do that. Keep it simple and select a 12 word seed phrase, it’ll be easier to remember than a 24 word seed phrase and it’s just as secure. Write down your 12 word seed phrase on a piece of paper and MEMORIZE it. Once mesmerized, completely destroy the piece of paper. If you lose your device, no problem. Simply order another device and restore the newly device with your 12 word seed phrase.
Once the wallet is setup, there will be a button or tab that reads, “Receive”. Select this button to activate a bitcoin address. A great benefit to having a hardware wallet, is that it can create an infinite amount of receiving addresses that point to the same wallet. It would be like having a checking account with your bank that could have multiple checking account numbers that lead to the same account. When receiving bitcoin from another address, always use a newly generated 34 character fresh address. To create a new fresh address, simply click on “Show new address”.
Before the device will let you use the address, it will ask you to confirm the same address on the screen of your hardware wallet. Both addresses should match. If they do not match, it’s a sign that your device or computer is corrupt. After confirming the address on your device, the address will show in full on your computer screen for you to copy and paste it into the exchange you want to send it from.
Step 2 – Photograph Identity and ID
Every website now offering bitcoins for sale requires a government ID to verify your identity. They do this because the sale and transfer of bitcoin now falls under the Anti-money laundering (AML) and Know your customer (KYC) laws. With the power the United States has to shutdown almost any website that does not follow their laws, most exchanges now require an ID in order to buy bitcoin. It’s still possible to obtain bitcoin without having to give your ID, but you will need to find an alternative method from an exchange.
How to Upload Your ID
Every crypto exchange uses the same similar process when confirming a user’s identification. Have your driver’s license or Passport ready. Grab a piece of paper and write down the current day’s date including your name and the name of the exchange. By using your computer’s camera, take a picture with a clear view of your face (do NOT wear glasses or a hat), your ID and the piece of paper.
Go to Applications > Photo Booth – Make sure that “Still Picture” mode is enabled. Once you click on the red button to take a picture, it will countdown to from 3 seconds which will give you enough time to bring your ID and paper into the frame. Once taken, go to File > Export to save the photo to your Desktop so you can access the photo when uploading to the exchange.
Go to Taskbar and search “Camera”. Then open the Camera App and select the Photo or Video Button. Once taken, the picture will be available in your Pictures folder.
Step 3 – Setup 2-Step Verification
At this point, it may seem like a hassle to obtain bitcoin. But just remember, when the internet first started (if you’re old enough to remember), dial-up took forever to get online and that seemed like a huge hassle. In time, bitcoin and its functionality will improve also.
2-step verification (Download for iOS or Android) is an app developed by Google that adds another level of security when accessing accounts and when making transactions. Most exchanges require 2-step verification when sending bitcoin to an address. Therefore, download the application to your smartphone to setup. It takes less than 5 minutes to complete and it’s very easy to use, even if you aren’t tech savvy.
Once the app is finished downloading on your phone, open it. A blue screen will appear. Click on Begin Setup > Scan barcode. Within Coinbase, go to the “Security” within your Settings menu and select Authenticator App. To enable, all you need to do is open the Authenticator App on your smartphone and scan the barcode on your computer screen.
Now when you login to Coinbase, you will be asked every time for the 6 digit number within your Authenticator App on your smartphone. Also, when sending bitcoin out of your coinbase account, it will ask for the 6 digit verification code for security as seen below.
Step 4 – Purchase Bitcoin
It’s important to follow the previous steps before purchasing bitcoin, that way once you purchase, you will have the knowhow to secure your bitcoin. There are two ways to purchase bitcoin on Coinbase, either with a bank account or a debit card. As of 2019, Coinbase stopped accepting credit cards as a form of payment. Want to use a credit card? Use BitStamp.
3 Ways to Buy Bitcoin
Due to many banks and financial services refusing to allow their customers to purchase crypto currency with credit cards, some exchanges like Coinbase have discontinued the option to purchase with a credit card. This could also be that because Coinbase is located and more regulated by the United States government, pressure from government officials was likely the reason. Bitstamp on the other hand, being located in Europe, still offers users to pay with a credit card and instantly receive their bitcoin.
Recently, Coinbase started using an API created by Plaid which allows users to connect their bank accounts’ with Coinbase immediately. Whereas before, in order to connect a bank account to buy bitcoin, you would have to submit your checking and routing number. Now, all you need to do is select the financial institution and enter your login credentials.
If a problem occurs using the Plaid method to link your bank account, you can simply do it the old fashion way and enter your checking and routing number. You’ll know when your bank account is ready to use when it appears under the “Payment Method” section within the Buy/Sell area. In the example below, this is what your dashboard will look like when your bank account is confirmed. As we can see, if we try to buy 1 bitcoin using our checking account, the bitcoin will not be available to send off of Coinbase for 5 days. But if you decide to use Coinbase’s trading platform called Coinbase Pro, you can start trading your newly purchased bitcoin right away.
Note: The price of bitcoin is locked in at the time of purchase. If after 5 days the price of bitcoin fluctuates, which it most definitely will, you’ll still receive the same amount of bitcoin as when you bought it.
A few reasons why it takes 5 days; Firstly, a bank transfer isn’t instantaneous. Exchanges want to see the deposit clear before giving you, precious, bitcoin. Secondly, Coinbase isn’t Fort Knox when it comes to holding bitcoin. As they have even stated publicly, when a customer buys bitcoin, they are merely the middle man as they seek elsewhere to buy bitcoin while charging you a nice hefty fee. Therefore, those 5 days also gives the exchange the time needed to go out and buy your purchased bitcoin.
Credit cards from the following banks and institutions will not work if you try to purchase bitcoin, or any cryptocurrency, from an exchange:
- Bank of America
- Capital One
- JP Morgan (Chase)
Note: These are just the main major banks that do not allow credit card purchases. There are more banks that also do not allow. Check with your bank for clarification.
If you do have a credit card from one of these major banks, you can still go ahead and give it a try. However, almost all the known exchanges have been flagged by the banks within their systems.
Two of the best exchanges to buy bitcoin with a credit card are:
- BitStamp – Accepts all domestic and international credit cards.
- Coinmoma – Currently only serving 40 states.
The following example shows how to buy bitcoin with a credit card from BitStamp assuming you already have an account.
Go to Deposit > Credit Card. There you have 5 options of crypto to choose from. Select BTC which is the abbreviation for bitcoin. If you are from the USA, select USD. If not, select EUR (Euro).
Below you will see price templates to choose from. If you want to enter in a customized amount, select the last template on the bottom right. There you can input a custom amount up to $1,500 dollars, which is the daily limit for most users. If you want to buy more, you’ll have to further verify your account to a higher tier.
Obvious as it may seem, it’s still worth the time to state; Debit cards are more accepted when buying bitcoin vs credit cards because the amount spent is limited to what is in the account connected to the debit card.
By far, the easiest way to buy bitcoin is with a debit card. This method is accepted by everyone whereas with a credit card, most financial institutions have shut down the ability to use them when buying crypto currency. And using a debit card does not take up your time having to go through the verification process as when purchasing with a bank account.
In this next example, we will show you how to buy bitcoin with a debit card using the services of Coinbase just like we did when showing how to purchase with a bank account.
If you have not already added a payment method, select “Add a New Account” to begin linking your debit card to your Coinbase account. On the next screen, select “Debit Card”. Notice, if you want to invest large amounts of money into bitcoin, it’s better to use a bank account as you can deposit more money with that deposit method.
To link your debit card, first enter in the billing address connected to the debit card as seen on the image on the left. Next, enter the name, card number, expiration, CVC and postal code seen on the card.
Finally, you’ll know the debit card is linked when you see it listed as a payment method. As we can see, the weekly card limit is $7,500. If we wanted to, we could repeat this buy on a weekly, daily or monthly basis by selecting the check mark in the lower bottom left of the image. On the right, you can see that the bitcoin will become instantly available once purchased. As for the fee, Coinbase takes a 3.99% fee of the total for large purchases.
Obtaining bitcoin P2P is the process of buying bitcoin from another person (peer). The process works similarly in fashion to the way people use eBay. Selling and buying P2P, bitcoin traders can use services like LocalBitcoins.com which acts like an escrow service and helps facilitate transactions between two people safely and securely. Below is a basic description about trading on LocalBitcoins.
- Buying and selling bitcoin is completely free. There is only a fee of 1% when completing a trade. It’s by far the cheapest place to buy, sell and trade bitcoin on the internet.
- Has ad filters to set trading eligibility criteria for buyers.
- Identity can stay anonymous when buying bitcoin.
- Website is very intimidating and looks difficult to use. Needs better instructions on how to use the site. However, once learned, it’s very easy.
- Extremely difficult to buy bitcoin as a new user. Many sellers require buyers to have a minimum set number of past transactions.
- Need to be cautious of scammers.
- No phone support. Only support via ticket (average response time 3-5 days)
Bitcoin ATMs are a great way to buy bitcoin with cash. The only two requirements needed is cash and a wallet address (QR code). Expect to pay HIGH bitcoin fees (10% +).
- Debit Card
1. Find an ATM Near Me
Below are the two best ways to find a Bitcoin (BTC) ATM near me.
Google Maps – The easiest option is to search “bitcoin” in Google Maps. Make sure ‘Location Services’ is turned on if you are using your phone or your computer.
Coin ATM Radar – A convenient website listing bitcoin ATMs near you, by city, by state, by zip code and address.
2. Bring QR Code
All bitcoin wallet apps on a smartphone and hardware wallets have a scannable QR Code available. When you arrive to the bitcoin ATM, it will need your wallet address. You want to avoid manually typing-in your bitcoin address because it’s very easy to make a mistake and it’s also very time consuming. In fact, some bitcoin ATMs don’t allow you to enter your bitcoin address.
If you have a hardware wallet like the Trezor or Ledger, it’s best to login to your wallet at home and print your QR Code on a piece of paper that you can bring with you to the ATM. If you have a wallet on your smartphone, simply bring your smartphone with you as you can display the QR Code on your phone. ATMs have a camera that are able to obtain your wallet address by scanning your QR Code.
3. Insert Cash
Once your QR Code is scanned, a wallet address should show on the ATM screen. Now, simply insert cash one bill at a time. The ATM machine will automatically detect the amount of the bill and it will show the conversion to bitcoin. Insert as many bills as you wish. When complete, push the “Buy Bitcoin” button to complete your purchase. When the transaction completes, you will have the option to print a receipt, which you should always do. Now, refresh your wallet to see the incoming bitcoin you just purchased!
Check out this video below to see it in action:
Receiving bitcoin can happen in a multitude of ways. Below are just a few examples of why it’s still a good idea to create a bitcoin wallet that can receive bitcoins even if you do not plan on buying bitcoin.
Sports Betting Payout
Average Withdrawal Timeframe: 48 hours
Because online sports betting is illegal in the United States, it’s always difficult when withdrawing your winnings. As of 2019, every major sports betting website now offers bitcoin withdrawals (and deposits). This makes it so much easier to get your money without having to wait weeks for a wire or months to finally see a check in the mail.
Many websites (including this one!) or non-profits that rely on donations in order to keep afloat, can accept bitcoin donations by showing a bitcoin address on their website. With websites such as this one, bitcoin donation links are normally found on the footer (bottom) of the website. Whereas with non-profits, donating via bitcoin can be done within their payment gateway system.
Accept from Friends and Family
If you are planning on traveling abroad, it’s a good idea to bring a bitcoin wallet. Either download an app on your phone or physically bring a bitcoin hardware wallet, such as the Trezor or Ledger (explained in Step 1 – Create a Wallet). Say you are in a foreign country and your belongings were stolen. In this scenario, you could have your family or friends send you bitcoin and all you would need to do is find a bitcoin ATM or a MoneyGram to get cash.
Mining bitcoin is the process of confirming bitcoin transactions to the public ledger with a (powerful) computer and rewarding the miner with bitcoin. In 2009, when bitcoin was released, it was easy to mine bitcoin with a basic desktop computer. Later, as mining bitcoin become more competitive and the network’s difficulty increased, it required special mining hardware called ASICs, which aren’t cheap, to even have a chance at successfully mining bitcoin. As of 2019, mining bitcoin is done in large warehouses full of sophisticated high powered hardware. If you can’t hold back and want to take part in mining, go ahead and buy yourself some equipment. Just know that you will not get rich over-night mining bitcoin from your bedroom.
If you are crazy about bitcoin like so many, it’s fun to learn how all this works. Yeah, you might not become a millionaire mining bitcoin from your parent’s house but it’s something new to learn and you never know where it could lead. For example, after a period of time: you may realize that you want to step up your game and start mining bitcoin commercially. For now, lets focus on the basics of mining bitcoin as a hobby.
As more and more miners join the bitcoin network, it becomes harder to solve the complex computations that decode a block. Solving a block has a lot to do with the speed and power at which your hardware can work, which is known as the hash rate. The higher the hash rate of your hardware, the better chance you have at solving a block. Typically, the higher the hash rate, the more expensive the hardware will cost.
What happens when a block is solved?
Each time a block is solved, a set number of bitcoins is released. In 2009, 50 bitcoins were released each time a block was solved. After 210,000 blocks are solved, the number of bitcoins being released decreases by half. So after the first 210,000 blocks were solved, 25 bitcoins were then released every time a block was solved. As of 2019, 12.5 bitcoins are rewarded after each block is solved. Blocks are solved at a rate of: about every 10 minutes. Once the block is completed, it gets added to the blockchain. Bitcoins will continue to be minted after each completed block until the 21 million cap is hit.
Who receives bitcoin after a block is solved?
Once a block is solved, within the block there is a recorded file (called a coinbase… sound familiar?) that details the addresses to whom the rewarded bitcoin should be sent.
Step 1 – Buy an ASIC (Application-Specific Integrated Circuit) Miner
For hobbyist wanting to mine bitcoin, the best affordable hardware on the market are ASICs. Shortly after the release of bitcoin in 2009, miners realized they could use their GPU cards (mainly used for gamers) to mine bitcoin faster. Soon GPU cards fell to the newly prized ASICs which are smarter, more-powerful and use less energy. Ultimately, it comes down to one thing; they are able to mine bitcoin at a higher hash-rate.
ASICs in 2019
The three most popular and trusted companies selling SHA 256 bitcoin miners are Bitmain, Halong Mining and Canaan. Due to the increase of mining farms from around the world, especially in China, these manufacturers are most often times sold out. However, they are being resold on other websites ranging from $60 all the way into the thousands.
- Bitmain Antminer T17 (40 TH/S) – $1,706
- Halong DragonMint T1 Miner (16TH/s) – $638
- Microbt Whatsminer M20S (70TH/S) – $3,500
- Antminer S17 (53TH/S) – $2,600
Step 2 – Setup Your Miner
Make sure the fan blades are in tact and not damaged. The fan blades are essential to the the performance as it keeps the system cool.
You will need the following items along with your miner:
- Power cable (may need two, depending on the miner)
- Ethernet Cable
- Power up the miner and connect the Ethernet. You may need to download IP search software to your computer in order to find the Miner’s IP address. Your miner and your computer both need to be connected to the same network to communicate.
- When accessing the miner’s interface, it will ask you for a username and password. For most new miners out of the box, the root and password are both: “root“.
- Once inside the miner’s interface, enter the pool credentials in order to connect to the pool. You will need the following:
- Server URL – The server URL is provided by the pool which can usually be found on its website.
- Username – The username is the name of your Miner.
- Password – A random password should be entered. It can be anything, but be sure to remember it.
Step 3 – Join a Pool
You will not solve a block on your own with your dinky bitcoin miner. If you want any chance at collecting bitcoin, you will need to join forces with other miners – thus joining a pool.
When a pool successfully solves a block, all the miners within that pool share the rewarded bitcoin in relation to their contribution. There are about 15-20 major pools out there that you can join once you get your rig up and running.
To join a pool, sign up for an account with one of the major bitcoin pools. Top 3 pools are as follows: