What is Bitcoin?
Bitcoin is a digital currency that does not exist in physical form and is created and held electronically. Unlike fiat money that is controlled by central banks and governments, Bitcoin and other cryptocurrencies are not controlled and are produced by miners globally, embracing the concept of decentralization. Bitcoin came into existence in and was created by software developer Satoshi Nakamoto. Thanks to Satoshi, there are now a plethora of cryptocurrencies, but Bitcoin continues to be considered the master, despite the recent offshoots that have created Bitcoin Gold and Bitcoin Cash.
Cash can be used to buy Bitcoin and there are a number of ways to do this. LocalBitcoins is the most popular exchange that allows Bitcoin to be purchased by cash. The Bitcoin trade can be carried out in person or by way of a cash deposit.
LocalBitcoin locates a Bitcoin seller willing to accept cash and requests the prospective buyer to place the order for the number of Bitcoins wanted who then receives the account number of the seller for cash to be deposited.
Other companies that look to match cash buyers with Bitcoin sellers include:. Do note that buying and selling Bitcoins on LocalBitcoin and the other agents listed above are for smaller transactions. Buying a large number of Bitcoins is more difficult and Bitcoin ATMs will have limits that would require additional information for larger purchases.
When looking to buy Bitcoin, it is strongly recommended that the Bitcoins purchased are not stored on the exchange once purchased and that the Bitcoins are kept in a wallet created by the buyer. A wallet is essentially the same as a bank account and in very much the same way, allows the owner of the wallet to send, receive and hold Bitcoins. Software wallets are installed on a computer or mobile, with the owner of the wallet in complete control over the security of the Bitcoins held. Hosted wallets are created on 3 rd party websites and are considered much easier to create and use, the only issue is that the host would need to be trusted to ensure that adequate privacy measures are always in place.
For those looking to create a wallet, recommended sites include Coinbase and Blockchain. There are a number of ways to buy Bitcoin, the most common method being via a Bitcoin exchange.
Most exchanges have developed mobile phone apps to make it easier for those looking to buy and sell Bitcoin. Normally, for higher limits on Bitcoin exchanges, the buyer is required to provide bank account details, while debit cards can be used for lower limits on transactions. Using Bitcoin exchanges may be somewhat more long-winded in terms of completing all of the necessary details, but the transaction fees are much more competitive and would be the best way forward.
Recommended Bitcoin providers include:. There are many others and there will likely be restrictions on which exchanges you are able to purchase and sell Bitcoins depending on location, so it does require some amount of research. Exchanges will provide a number of enticing offers including bonuses, so it is worth having a look at the exchanges to see which are the most competitive, though it would be advisable to sign up with a reputable one.
If the sound of a Bitcoin exchange is off-putting, the alternative is to buy and sell Bitcoins via a Bitcoin ATM, though most will only accept cash for the purchase. As we discussed earlier, the two most common ways to buy or sell Bitcoin are either face to face with cash or on an exchange.
Face-to-face transactions are the small investor looking to buy and sell a small number of Bitcoins anonymously. In stark contrast is the OTC market, where particularly large amounts of Bitcoins are bought and sold, the buyers and sellers being referred to as whales within the crypto world.
The benefit of an over-the-counter trade for those looking to buy a substantial number of Bitcoins is that the entire transaction would be carried out at a negotiated price that is likely to be more favorable than an average price for Bitcoins bought through an exchange. Exchanges will have significantly less liquidity and Bitcoin buyers would need to break down the total number of Bitcoins to buy through smaller lots.
The issue here is that each purchase could push the price up and more so if there is a lack of liquidity, by the time the buyer purchases the final batch of Bitcoins, the price may have moved considerably. This is not only likely to be less cost-efficient, but also less time efficient. Get Into Bitcoin Trading Today. The commonality between face to face and over-the-counter transactions is that, in both instances, a counterparty is located for the trade.
The difference will be that there is unlikely to be a negotiation on price in a face to face trade, while OTC transactions will involve a negotiation on price.
Dealers will generally trade using their own funds, while brokers link buyers and sellers and negotiate on price for the buyer, whilst charging a fee. Bitcoin exchange OTC trading desks are used for the more sizeable transactions that go into the millions of dollars.
Unlike deciding which bank account or credit card to apply for, Bitcoin and the crypto world is unregulated, making it essential to ensure that the exchange chosen is not going to put your money or your Bitcoins at risk. The location of the exchange is the first consideration.
Where the buyer lives and the laws and regulations differ by geography, so it would be recommended to buy Bitcoins on an exchange that is in the same country as the buyer. Once the list of exchanges has been identified by geography, the next step would be to identify the most competitive and also the most widely used exchanges. Transaction fees vary across the exchanges and some may have additional fees.
While looking to find an exchange with competitive fees, it is worth paying a little more to use an exchange that has a sizeable order book. Exchanges that have a large number of customers will tend to make public their order book, which then shows how liquid the exchange is. Other factors to consider when deciding on the best exchange include:. Similar to the more mature financial markets, Bitcoin trading has become increasingly popular in recent years, as volatility and valuations have increased throughout this year in particular.
Traders will be looking to buy and sell Bitcoins to earn profits and with the OTC market becoming more widely used, at present there is little worry that there will be a lack of buyers for the Bitcoin trader. Spreads between bid and offer prices are also quite narrow, which makes the trading of Bitcoin all the more attractive.
Trading will tend to be carried out on Bitcoin exchanges, with the trader likely to be particularly concerned about fees and the time it takes for Bitcoins to reach the wallet and for funds to be received in the event of a sale.
Traders use their own accounts for buying and selling Bitcoin and exchanges also provide leverage of up to 20 times, with traders likely to be buying and selling throughout the day. Trading Bitcoin can be quite a nerve-racking experience, however. Looking at how Bitcoin has moved through the year is a reflection of how quickly a trader can lose significant amounts of money should they end up on the wrong side of a trade and significant care is needed in trading Bitcoin and other cryptocurrencies.
While the majority are looking to buy and sell Bitcoin to try to make a tidy return on investment, there are those that are looking to enter the world of mining.
Mining for Bitcoin is perhaps the most challenging of the mining environments within the cryptoworld, with miners needing significant computer power to be able to compete with existing miners. Bitcoin mining is the validation of transactions that take place on each Bitcoin block. The decentralized nature of Bitcoin means that transactions are broadcasted to a peer-to-peer network and once broadcasted, needs to be verified, confirming that the transaction is valid and then having the transaction recorded on the public transaction database, which is known as the Bitcoin blockchain.
Miners basically are the people involved in the processing and verifying of transactions before then recording the transactions on the Bitcoin blockchain. Miners will then receive transaction fees in the form of newly created Bitcoins.
Miners compete with everyone on the peer-to-peer network to earn Bitcoins. The faster the processing power, the more attempts are made by the hardware to attempt to complete the verification, etc. The speed of processing power in Bitcoin mining is referred to as the hashrate and the processing power is referred to as the hashpower of the hardware.
For miners, the key metric is hashing power and the more hashpower, the more money miners can make. For those looking to mine using a CPU or laptop, entering a mining pool will be of little value, since the mining income earned is proportional to the computer power contributed. Bitcoin cloud mining does provide a medium in which to receive newly mined Bitcoins, without the need to own costly mining hardware or even have any mining know-how, allowing the mining world to not only attract the technically minded but a far wider audience, who lack the technical knowledge needed to get into Bitcoin mining.
One of the major concerns over cloud mining is fraud, however. The purpose of Bitcoin ATMs is to facilitate the purchase and sale of Bitcoins on an internet connected machine. The ATMs allow you to insert cash to purchase Bitcoins or dispense cash in the case of a sale. For many, it is just a case of buying and holding on to Bitcoins in the hope that values will continue to rise.
Bitcoin traders will be looking for daily volatility to trade and book profits with a shorter term outlook on Bitcoin prices and the use of technical fundamentals for direction. With the scheduled launch of Bitcoin futures in December and the likely influx of institutional money, there will be more interest and the Bitcoin net will be widening.
Whether this is a Bitcoin bubble or something more sustainable remains to be seen, after all, even the dot. A multitude of new companies has been established that have begun fundraising through the Initial Coin Offering market, with the cryptocurrency world in a hurry to catch up with the more mature, traditional financial markets.
Certain countries have already begun accepting Bitcoin as a means to buy, Japan has been one of the first movers and this is likely to continue to evolve in time. Cash may be king, but knowledge is wealth. Going into Bitcoin at such levels requires both cash and knowledge, not to mention a resilience to noise and volatility.
After all, this is the only asset class that has left investors ruing an early sale when faced with adversity. Click here for more details. This article was originally posted on FX Empire. No matching results for ''. Tip: Try a valid symbol or a specific company name for relevant results. Finance Home. Markets open in 6 hrs 55 mins.
Bob Mason. FX Empire November 26, How to Buy Bitcoin? What is Bitcoin? Trade Bitcoin Conclusion What is Bitcoin? Key elements of Bitcoin include: Decentralized : Bitcoin does not fall under the control of any central authority and is under a network of computers across the world that verify transactions. Blockchain: Perhaps the greatest element of Bitcoin is the technology that drives it. The blockchain is a general ledger stored across all of the computers that mine Bitcoin and cannot be manipulated or edited.
It records each and every transaction in the order that transactions occur. Getting a Bitcoin Wallet When looking to buy Bitcoin, it is strongly recommended that the Bitcoins purchased are not stored on the exchange once purchased and that the Bitcoins are kept in a wallet created by the buyer. Where can I Purchase Bitcoin? Story continues. Get Into Bitcoin Trading Today The commonality between face to face and over-the-counter transactions is that, in both instances, a counterparty is located for the trade.
Other factors to consider when deciding on the best exchange include: How well known is the exchange? There are a number of forums on the internet where reviews are available on the exchanges and it is worth doing some due diligence.
How long it takes for Bitcoins to be received following a purchase and how quickly funds will be received in event of a sale. On this note, it would also be important to make sure that prices are locked in at the time of purchase or sale and not on the day on which the Bitcoins are received or funds are remitted. Exchange security is of significant importance.
Exchanges and Types
We are committed to researching, cehap, and recommending the yahio products. We may receive commissions from purchases made after visiting links within our content. Learn more about our review process. The cryptocurrency markets have calmed down a bit since that record high, but many Bitcoin evangelists still claim Bitcoin to be the currency of the future. Follow along to learn more about how Bitcoin works and the best places to buy Bitcoin. First of all, need some background information about what Bitcoin is? It's a digital currency used mostly for online purchases and as an investment, albeit a very risky one.
Download a wallet
Satoshi Nakamoto created the first Bitcoin in In the years since then, Bitcoin has changed the way the world thinks about money. Today, all the Bitcoins in the world are worth more than billion US Dollars! Buying your first Bitcoins can be a confusing experience. There are a lot of different places to buy Bitcoin. All these places offer different ways to buy Bitcoin. Each method of buying Bitcoin will have its own fees. Some of the things that can affect the fees you pay are;. In this guide, I will tell you about the cheapest way and the best place to buy Bitcoin. I will include: the best site to buy Bitcoins, the cheapest Bitcoin exchange and how to buy Bitcoin without fees.
Get in on the latest craze of digital currency
We suggest using the exchanges listed below or doing research before buying from any exchange. Archived from the original on 20 December Retrieved 31 March But as you comprehend now, public Internet governance, normalities and rules what app to buy bitcoin for cheap yahoo answers regulate how it works present inherent problems to the user. Most day traders follow Candlestick, therefore it is better to have a look at books than wait for order confirmation when you believe the price is going. How do you buy and sell it? The simplest place for a newbie to buy some bitcoins is Coinbase, which was an early leader in bitcoin-buying and remains the most popular mainstream option. Unlike deciding cgeap bank account or credit card to apply for, Bitcoin and the crypto world is unregulated, making it essential to ensure answere the exchange chosen is not going to put your money or your Bitcoins at risk. Encrypted communication available. I have a very fast computer and I want to mine bitcoin and other currency. Retrieved 24 September Especially now that Segregated Witness SegWit, the soft-fork aimed at fixing the malleability problem and providing many other improvements could be activated, allowing also for an effective block size increase. How can something that does not exist in the material world have a monetary value? If you're still a bit confused, that's okay. The code that runs the bitcoin network is open source.