How to Use Bitcoin?
Bitcoin is not as scary, difficult or confusing as it might seem at first glance. To use Bitcoin, all you need to do is figure out the three main questions:
- Where to store it?
- How to get it?
- How to use it?
That said, the question “Why do we need Bitcoin?” can be answered right away – to pay for goods and services or to accept appropriate payment. In both cases, the user of Bitcoin, as a system, is an individual, even if he represents business interests. Accordingly, the process of using both the system and the coin will be the same.
There is also the option of using BTC as an investment, but that is still not its direct purpose.
Where to Store Bitcoin?
To store BTC, you need an appropriate wallet. There are several types of them.
This type is also referred to as a “desktop” wallet. It is a program that must be installed on a computer or laptop.
There are two types of software wallets: thick and thin. The first ones store all the information on the hard drive, which requires a lot of storage. For example, Bitcoin Core, the first and most popular Bitcoin wallet, is a thick one and requires a minimum of 145 GB for one type of cryptocurrency. Another popular thin wallet is Exodus.
Thin wallets store information on third-party servers, acting as a management tool. The use of third-party platforms is a potential weakness of such wallets because the data is transmitted to “third parties” and is theoretically vulnerable to interception or theft. So far, however, no such incidents have been reported as the data is securely encrypted. Popular thin wallets are Electrum and Multibit.
A mobile wallet in the form of an app on Android or iOS is a convenient and easy way to use BTC. However, if you choose this type of wallet, you should be concerned about protecting the mobile data itself so that if it is lost, control over the wallet will not get into the wrong hands.
Top apps for using Bitcoin:
- Bitcoin Wallet
- Trust Wallet and others
The list contains the most functional mobile wallets that support the Russian language.
Online wallets involve registration on a specialized website providing a similar service. The advantage of this type of wallet is the ability to access it through a browser on any device connected to the Internet. A potential danger is the data leakage occurring after attacks on cloud storage services and the possibility of the user stumbling upon phishing sites and giving the attackers his personal data.
There is a common opinion that such wallets are suitable only for single transactions or storing minimal amounts of money. The oldest and most proven service is Blockchain, similar sites are Coinbase, BitGo, StrongCoin and others.
This type of wallet is a separate device resembling a flash drive. Data is stored on them even without an Internet connection – these are so-called “cold” wallets («hot” ones, respectively, do not work without access to the Internet). This is the most expensive way to store BTC – the device’s price ranges from $16 to $160. At the same time, this type is the safest – it is not afraid of viruses or hackers because such wallets are connected to the network only when making a transfer. The main thing is not to lose your PIN code because hacking such a wallet will not be possible, no matter how hard you want to.
Popular models of multi-currency hardware wallets with the Russian language interface are Ellipal Titan, Keepkey, CoolWallet S, Arcos and others. Due to the growing popularity of cryptocurrencies, new offers regularly appear on the market.
This is an almost unused type of wallet that assumes that the data required for a transaction (private and public keys) is recorded on a printed sheet of paper or written down by hand. Such wallets were actively used in 2011-2016, and today they have practically died out due to their lack of practicality: a piece of paper can be lost, easily damaged or destroyed, it is short-lived, etc. Using such wallets is not recommended.
How to Get Bitcoin?
Once the appropriate type of wallet is chosen, the process of its installation, creation, activation or registration is passed (as a rule, it is enough to follow the instructions, securely fixing all the data possible to forget) – you can get BTC.
You can do it in several ways:
- buy BTC directly from another user on the stock exchange;
- exchange other types of currency for Bitcoin on the exchange;
- generate BTC by mining.
Mining is a separate topic, but buying Bitcoin through stocks and exchanges can be discussed in more detail.
Buying on an Exchange
It is believed that the easiest and most convenient way to buy crypto is to do it directly on the exchange. As a rule, the main difficulty arises in choosing the exchange, not in the purchase itself.
What to pay attention to when choosing the exchange:
- The lifespan of the exchange. The older the platform, the better.
- Reviews about the platform. You should look for the negative reviews first but check their credibility and details.
- The content update on the site. Fresh news is a sign that the exchange is alive and actively working.
- Technical support availability. You can ask any question – if support answers quickly, politely and thoroughly, it is a good sign.
- Partnerships with major companies and payment systems, such as Visa and Mastercard. As a rule, they thoroughly check the sites with which they cooperate.
- Detailed instructions for use. Platforms that care about customers, prepare the most detailed instructions for their services, and all additional questions are readily answered by technical support.
Choosing a suitable platform, you should pay attention to two other points:
- Exchanges usually charge a fee for using their services, which ranges from 2% to 7%. Other things being equal, the fee amount can play a decisive role when choosing an exchange and allow you to save on transactions in the future.
- Choosing a platform, you should not immediately make purchases in full, especially if we are talking about considerable sums. Instead, you should test the local system, get acquainted with the functionality, withdraw the purchased BTC to your account, and entrust more substantial amounts to the exchange if everything is fine.
Buying on an Electronic Exchange
Electronic exchanges allow you to exchange all kinds of digital money with each other, including transactions with Bitcoin. For example, you can exchange Bitcoin for UAH or USD, withdrawing money immediately to your bank card.
To avoid searching for an exchange on your own, it is better to use monitoring services (e.g., bestchange.ru) – there you can find the most attractive rates, feedback from users on specific sites and statistics on the activity of these sites. The administration of monitoring platforms also monitors service ratings, not allowing questionable services.
A fee for using services reaches 10%, but there is an opportunity to choose the exchanges with a lower fee or the best combination of rate and commission.
The algorithm on the exchange is approximately as follows:
- Choose what you want to exchange. For clarity, we will assume that you exchange USD for BTC.
- Specify the amount of USD to be exchanged. As a rule, when you specify the amount to be exchanged, in the corresponding window you will see how much in BTC (or SATS) you can buy for this amount at the current exchange rate.
- Specify the card details from which USD will be withdrawn and the Bitcoin wallet details to receive the funds after the exchange.
- Confirm the correctness of the previously indicated data and confirm the withdrawal of funds from the card.
BTC is not transferred instantly because the transaction requires at least three confirmations from the system. This can take 10-15 minutes, and in cases of peak load on the system – up to an hour.
Many exchanges today require you to create an account and verify your payment card, for which they ask you to take a picture of it so that you can see the first and last 4 digits of the account number. That’s fine. But never, under any circumstances, do not specify the CVV2 card number! If the exchange asks you to do such a thing, it’s definitely a fraudulent site.
How to Use Bitcoin?
Once you have BTC in your account, you can use them as you see fit. For instance, you can pay for goods and services. Or you can leave them in your account, waiting for them to go up in value so that you can sell them later at a profit.
You can transfer BTC to other wallets. Transfers of Bitcoin to other wallets are carried out through functions of the wallets themselves. For this purpose, it is necessary to specify the public number of a wallet where it is planned to make the transfer, the sum of the transfer, and confirm the chosen action.
It is important to remember that transactions in the Bitcoin system are irreversible, so it is necessary to check all entered data carefully when carrying out transactions.