How to Buy Bitcoins

Bitcoin is an online alternative currency system, which acts as a form of digital money. Bitcoin is used both as an investment, and as a method of payment for goods and services, and is touted as a means to do so without needing to involve any third parties. Despite their growing

popularity, most businesses still do not accept Bitcoin, and their usefulness as an investment is both highly questionable and potentially risky. Before proceeding to buy Bitcoin, it is important to understand what it is, and its advantages and disadvantages

Understand Bitcoin basics.

Bitcoin is a completely virtual currency, that allows consumers a way to exchange money for free, without the use of a third party (like a bank, credit card company, or other financial institution). Bitcoin are not regulated or controlled by a central authority like the Federal Reserve and all Bitcoin transactions take place in an online marketplace, where users are anonymous and untraceable for the most part

Learn about Bitcoin mining.

To understand Bitcoin, it is important to understand Bitcoin mining, which is the process by which Bitcoin are created. While mining is complex, the basic idea is that each time a Bitcoin transaction is made between two people, the transaction is logged digitally by computers in a transaction log that describes all the details of the transaction (like the time, and who owns how many Bitcoins)

Gain familiarity with the legal issues surrounding Bitcoin.

Recently, the federal agency responsible for combating money laundering announced new guidelines for virtual currencies. The updated guidelines will regulate Bitcoin exchanges, but will leave the rest of the Bitcoin economy alone, for now.

Become aware of the downsides of using Bitcoin.

With traditional banking, if someone makes a fraudulent transaction on your credit card or your bank goes belly-up, there are laws in place to limit consumer losses. Unlike traditional banks, Bitcoin does not have a safety net in place if your Bitcoins are lost or stolen. There is no intermediary power to reimburse you for any lost or stolen Bitcoins

Understand the risks of Bitcoin as an investment.

One of Bitcoins popular uses is as an investment, and this deserves a special word of caution before proceeding. The main risk of investing in Bitcoin is it's extreme volatility. With prices moving rapidly up and down, the risk of loss is substantial.

Store your Bitcoins online.

In order to buy Bitcoins, you first need to create a storage site for your Bitcoins, and this is the first step to purchasing Bitcoin. Currently, there are two ways you can store Bitcoins online

Create a paper wallet for your Bitcoins.

One of the most popular and cheapest options for keeping your Bitcoins safe is a paper wallet. The wallet is small, compact, and made of paper that has a code. One of the benefits of a paper wallet is the private keys to the wallet are not stored digitally. So it cannot be subject to cyber attacks or hardware failures

Use a hard-wire wallet to store your Bitcoins.

Hard-wire wallets are very limited in number and can be difficult to acquire. They are dedicated devices that can hold private keys electronically and facility payments. Hard-wire wallets are usually small and compact and some are shaped like USB sticks

Choose an exchange service.

Obtaining Bitcoin through an exchange is the easiest way to obtain Bitcoin. An exchange works like any other currency exchange: You simply register and convert whatever your currency is into Bitcoin. There are hundreds of available exchanges, and the best exchange option depends on where you are located, but the more well known exchange services include: