When Austin and Becky Craig, a newly wed couple from Utah, decided to make a documentary film about living 90 days on Bitcoin, we followed their journey on Facebook. In that 90 days there sprang up a small community of happy and helpful bitcoiners that were able to hold our hands, show us to reputable services and teach us about extra security measures, until we were finally confident and able to buy our first few bitcoin.
We are by no means experts or even very competent, but at least we know how to buy, trade and sell. I have a feeling that getting started is the hardest part, so for all the email grannies and crypto-currency infants out there, I want to at least explain a little about what crypto-currencies are and how to get set up. The information I give may not be the best and some may even be completely wrong. I'm new at this.
What is it?
Bitcoin is a digital currency that is unregulated by governments or banks. The software that supports Bitcoin is not even hosted on a central server, but runs on each individual user's hardware (phone, computer, etc.). Together these devices, linked through the web, create a peer to peer network. Trading bitcoin is a direct me-to-you system. No middle man, bank or central website getting involved is needed, but there are a host of online services you will probably use along the way that will aid in buying-in and trading-out of bitcoin. The code itself is open source, so nobody even actually owns it or is in control of it. All of the functions are built into the program and it just does what it does, calculating and making transactions possible. It's artificial intelligence. It really is amazing.
How do you get bitcoin?
For some reason this was difficult for me to figure out. Partially because I was nervous about putting my personal and financial information, as well as my hard earned money out into the unknown webscape, but with some advice and guidance from some nice bitcoiners the process was pretty easy. I'm sure there are other ways to do this but this is what I did.
First, Go to Coinbase.com and set up an account. (Login/Password). Use a new password that is different from your email account and other personal accounts. The most secure passwords have a few random, unrelated words that have spaces in between them. I didn't know that spaces worked in passwords, but it's becoming more common. Turns out spaces make a pretty rock solid password.
Before you enter your bank account information into the Buy/Sell>Payment Methods tab, set up Two-Factor Authentication in your Account Settings. If you don't know much about two factor authentication, you really need to do some research on it because within a year or so it will be standard on all of your sensitive online accounts. You can set up 2FA to be sent to your cellphone (text or call) and there are also apps for this. I use one called Authy. Google makes one called Google Authenticator. Don't skip this step because this makes your account info extra secure. See a Coinbase account being set up in this video.
After securing your account click on "+Link A Bank Account" and follow the instructions and fill out the information. Coinbase will make two small deposits, of secret amounts, into your bank account. When you see the secret amounts deposited in your bank you can enter these amounts into Coinbase. This is another way Coinbase is keeping everything secure. It will take a few days for Coinbase to link up with your bank and then you're ready to buy some bitcoin.
Sometimes the cost of bitcoin fluctuates pretty drastically throughout the day. So if you want to try to buy your bitcoin on the low end of a swing. Check BTC-E.com and look at the chart for the day. You'll be able to see what's been going on and you'll have to make a guess at what will happen next. When you think the time is right, buy the bitcoin at Coinbase. You'll notice the prices between Coinbase and BTC-E are different by around $40. Don't worry too much about that at this point. Even though the amounts are different, The highs and lows pretty much mirror each other. It will take a week or two for the transaction to finalize and for the bitcoin to appear in your Coinbase Account.
While you're setting up accounts and 2FA, you might as well set up an account with BTC-E.com because you'll eventually want to know how to swap your bitcoin for other crypto-currencies like Litecoin and Namecoin. But more on that later. This just gets you started.
Also Read: The True Value of Bitcoin