Upon starting the second revision (third edition) of Bitcoin Decoded, the authors realized that many of their readers wanted to get started quickly in buying their first Bitcoin without having to read the entire book. (Because you found this page, you can receive a full copy of the book for FREE instantly, simply by requesting it.)
This chapter was added to the book to help you make your first purchase with Bitcoin without any prior knowledge or understanding. Subsequent chapters go into greater detail explaining what Bitcoin is. So if you are ready to buy Bitcoin, let’s get started.
There are four steps you will need to complete to purchase Bitcoin, and then to receive Bitcoin and send it to others.
Step 1. What is Bitcoin?
Bitcoin is a new form of currency, an Internet currency (also known as cryptocurrency). It allows one person to send another person payments directly. The payments do not go through a third party (ie., PayPal, a bank, or a traditional merchant network). Bitcoin exists only on the Internet. Without the Internet, there would be no Bitcoin. Bitcoin derives its value through the market forces of supply and demand. The collective actions of the marketplace are what create its value.
Step 2. Get Yourself a Bitcoin Address
Bitcoin payments operate like bank transfers. Each person has his or her own private “account,” which is called a Bitcoin address. A Bitcoin address is 26 to 35 alphanumeric characters beginning with the number 1 or 3. This address represents a destination for a Bitcoin payment. A person possessing an address can receive Bitcoin in any amount from another person anywhere on the planet, even in outer space, in seconds. A person can have multiple addresses that are stored together in an electronic version of a wallet, called a digital wallet.
The authors highly recommend using the USA-based company, Coinbase. Coinbase has been in operation since 2012 and has a fantastic track record in exchanging digital assets like Bitcoin securely and without any major hassles. Located in San Francisco, Coinbase exchanges fiat currencies (i.e., U.S. dollar) in 32 countries and facilitates Bitcoin transactions and storage in 190 countries worldwide. The authors have no financial interest or gain in recommending the company. There are other wallets you could use, simply Google “bitcoin wallet.”
(Beware of using a wallet or exchange service that does not have a vettable track record, as you can lose your Bitcoin to a breach or hack. One of the authors experienced this early in his Bitcoin ventures.)
You can set up your account at Coinbase: www.coinbase.com
Setting up an account with Coinbase is fairly easy. As part of the process of setting up your account and removing deposit and spending limits, you’ll need to complete an identity verification process. The process is no more difficult than opening a bank account here in the USA. But be aware, the process is more than just creating a username and password, primarily because of the need for security.
Coinbase starts you off with several different wallets. For the purpose of buying your first Bitcoin, you’ll focus on the default Bitcoin wallet.
With your address and wallet setup, you are ready to move to Step 3.
Step 3. Buy Bitcoin
Using Coinbase or another digital asset exchange, you’ll purchase Bitcoin by using your debit / credit card, or a bank or wire transfer of your fiat currency (i.e., U.S. dollar). Then, Coinbase will convert your fiat currency to Bitcoin for a small fee. Bitcoin is divisible up to 8 decimal places, so you do not have to buy a whole Bitcoin. You can buy small fractional amounts that correspond to your fiat currency budget.
Here is an example of a way to buy Bitcoin on even a very small budget, and how it can appreciate in value quickly.
From June through August 2017, we set up an automated buy of Bitcoin through Coinbase every two weeks. On each occasion, we spent $16.67 in U.S. dollars, and each time, it bought a slightly different amount of Bitcoin, due to the cryptocurrency’s price volatility. Each purchase included a small fee for Coinbase, and ended up at $16.91.
The five purchases totalling $84.55 brought .031869 Bitcoin into our Coinbase Bitcoin wallet. Just a few weeks later on August 21, 2017, that Bitcoin purchased for $84.55 had a value of $124.70, or a 47 percent increase in a short period of time.
Please note, this is not a guarantee of asset appreciation. You should study the history of Bitcoin’s value and make your own decision. The primary points of this example are that you can purchase fractions of Bitcoin and experience the same potential for appreciation as individuals who own whole Bitcoins. Cryptocurrencies are not only for the wealthy. Anyone can get involved, as the example above illustrates.
If you decide not to use Coinbase, the steps to buy Bitcoin are different for each exchange. Simply follow the process created by each exchange.
Some Bitcoin purchases are instant with Coinbase. If you have gone through simple identify verification and linked a debit/credit card with Coinbase, purchase show up in your digital wallet in seconds. Bank transfers generally take five to seven days before you have access to your Bitcoin. You lock in your conversion price the moment you make the purchase, which could work to your advantage in a rising Bitcoin market or a disadvantage if Bitcoin price decreases.
Given Bitcoin’s current volatility, if you are buying a service or product with Bitcoin based upon a fiat price (i.e., pricing the item or service in U.S. dollars), you might need more or less Bitcoin for the transaction, depending on the moment in time. It’s always good to have extra Bitcoin to take care of price movement if you are paying for thing based on fiat value.
Step 4. Make a Payment
Remember your Bitcoin address from Step 1? To make a payment to someone else, you’ll need his or her unique Bitcoin address. Then you’ll need to know how much you need to pay. Assuming you have funds in your Bitcoin wallet, you are ready to send payment.
It might be as easy as sending .0013000 Bitcoin to 1MauqJEVKx7mohEXXaHXnn96RFvLEGnVjV, or a bit more complicated, as sending 123.12345678 Bitcoins to 1MauqJEVKx7mohEXXaHXnn96RFvLEGnVjV. As you most likely will be doing this on your computer, it is a much better idea to just copy and paste the destination address instead of trying to type it in. (Don’t send anything to that Bitcoin address as it is used for illustration purposes.)
Go to Coinbase or other Bitcoin wallet provider, and find the location where you can input your recipient’s Bitcoin address and amount and send the payment.
We highly recommend copy/pasting information like the payment address with the final step of triple-confirming the Bitcoin address you are sending to. One typo could result in entering an incorrect Bitcoin address, and your Bitcoin being sent to some unknown wallet. If that happens, you can kiss it goodbye. There is no way to recover it.
We have oversimplified the process here. But if you use Coinbase, it is very easy to set up everything properly with the basic instructions outlined here. You should be able to send Bitcoin reliably and quickly.
Read the Bitcoin Coaches’ book, “Bitcoin Decoded,” for everything else you need to know about Bitcoin, including its past and future. Don’t forget — the lucky people who found this page can receive a FREE copy instantly simply by requesting it here.