All posts by jcroy

How to buy and sell Bitcoins

Buying

Buying Bitcoins today is actually quite easy, first you need a bitcoin wallet to store your Bitcoins once you buy them, then you need to find an exchange to buy from which there are plenty of.  For newcomers to Bitcoin I recommend using Electrum because it is easy to use and easy to recover your bitcoins, there also is no waiting or down time.  Coinbase and Circle are two exchanges that function very well and are actually quite similar.

Most exchanges require you to verify your identity, it usually requires a bank account and an id.  Every exchange is a little different but overall it is an easy process, Circle and Coinbase require a bank account and the last four digits of your SSN (be careful which exchanges you give this out to, before I even added my bank account to Coinbase or Circle I did background research to play it safe.)  And all the reviews were great, usually you’ll notice if an exchange isn’t safe.

Once you buy your bitcoins you can either leave your bitcoins in your exchanges wallet, which makes it easy to sell them if the price changes.  But keeping your Bitcoins in a web-based wallet isn’t the best idea unless its insured or have top-notch security; as security for web based wallets are sometime lacking and they bigger targets for hackers.

The safer and more secure option is to put your Bitcoins in a wallet that is 100% by you, the downside is that if you forget your encryption key or lose your recovery seed then there is nothing you can do.

Selling

Selling Bitcoins is just as easy, just repeat the steps backward.  Send them to your bitcoin address that they provide and in a few minutes they will be transferred.  If you keep them in your exchanges wallet then it will be even easier to sell and there wont be a transaction fee.  A transaction fee is a small fee, the price of the fee varies depending on the size of the transaction.

Bitcoin Clients

There are a few options when it comes to picking a Bitcoin client, some are better for security while others are better for ease of use.  There are software wallets, hardware wallets and web wallets.

Software wallets

Bitcoin QT – One of the first Bitcoin clients, it’s a full client with lots of security features.  The downside is it takes up a lot of space and uses a large amount of memory.  I’ve never liked Bitcoin QT because of the incredibly painful loading time.  But if you use the Armory client with this it makes it much more enjoyable to use.

Armory  – An advanced client that requires Bitcoin qt to run.  Adds even more security features including multiple wallets, paper backups and offline wallets.  My most favorite feature of this client is the ability to create lifetime paper backups

Electrum – A lightweight client, it’s the fastest of all the desktop clients.  It is very easy to use and it has a lot of features, it’s fully portable, you can recover your wallet with a seed, there’s no downtime because servers download the blockchain for you and if you want to be super secure you can use it offline.

MultiBit – A lightweight client very similar to Electrum.  It is fast to connect and sync with the blockchain, as it only has to download a few megabytes of data instead of the usual 12GB.  Fully portable, encryption keys are stored locally, it also supports different wallets under one “account” to help manage your money.

My Choice – My favorite Bitcoin Client has to be Electrum, its easy to use and easy to recover your bitcoins.  The quick loading speed and no need to sync with the blockchain is the main reason.

Web Wallets – a word of advice, wallets and exchanges owned by a third-party can be insecure.  An example is Mt.Gox, they were hacked and all their customers lost their bitcoins.

Blockchain – a web wallet that has many features such as paper backups, offline transactions and wallet backups to your PC.  It is also very easy to use as and doesn’t require any software to run just login to your account from anywhere with an internet connection.

Coinbase – a web wallet and a Bitcoin exchange, its one of the best places to buy your Bitcoins and has great ratings.  By far the best part of using Coinbase is that they are insured so if anything happens to them you wont lose any money.  They also have a service called the Bitcoin Vault, the Vault is specifically designed for storing large amounts of Bitcoins for long-term use.

Circle – one of the newer wallets and Bitcoin exchanges, its my favorite place to buy and store Bitcoins.  Like Coinbase they are insured so you can rest in peace.  The best part is that Circle doesn’t charge any fees for buying or selling and its easy to buy and sell instantly unlike Coinbase.  The only downside to Circle is that they are invite only.  So if you can get invited its one of the best choices out there for ease of use and security.

My Choice – Circle;  they have a very easy to use interface, there are no fee’s when it comes to buying or selling your Bitcoins.  They have great customer support too, so if you have any questions they usually respond very fast.  The greatest part is that they have insurance so you Bitcoins are safe even if Circle gets hacked.  If your lucky enough to get an invite to they are giving out 10$ worth of Bitcoins which is quite nice if you want to test Bitcoin out.

I was using Coinbase – they were pretty good, but they don’t support debit cards and have a strange verification process which prevents me from buying and selling instantly which results in a 3 day delay.