If you’re like the millions of other investors out there, then you have seen the benefit of bitcoin and want to join in on the action. But how do you buy your very first bitcoins and become part of the vibrant bitcoin community? Read this BitCoin Trader review to find out.
Get a Bitcoin Wallet
This is the very first step you have to take before you can ever own a single bitcoin. Bitcoin wallets are available for free on numerous platforms and from numerous providers, such as Blockchain.info, or the Blockchain Bitcoin Wallet for iOS and the Bitcoin Wallet for Android. It should only take a couple of minutes to download and install the wallet.
The interface is pretty simple and some of them, such as the bitcoin wallet from Coinbase, look like any regular banking software you would expect to see from a traditional bank.
Swap Your Fiat Currency for Bitcoins
Once you have a wallet with you, you can use any of the traditional payment methods to buy some bitcoins on an exchange, such as bank transfer, debit card, or credit card. Once you make the payment, the bitcoins will then be transferred directly to your wallet.
The various payment methods will be available depending on the jurisdiction within which you reside and the exchange from which you choose to buy your bitcoins. Other popular cryptocurrencies you can buy from exchanges include ethereum, litecoin and bitcoin cash. If you already have these other cryptocurrencies, you can exchange them for bitcoins on an exchange like a regular foreign exchange (forex) transaction.
Remember that a bitcoin wallet and a bitcoin exchange aren’t the same thing. While many exchanges offer a wallet as part of the deal, not all of them do. The fundamental purpose of an exchange is to allow you to swap out one currency for another. Providing you with a wallet is not their main business, and they usually only offer it as a bonus. That said, the exchanges discourage you from storing large amounts of bitcoins online for lengthy periods of time. The security of your funds should be your number one priority, and you should always have a cold storage option for storing the bulk of the bitcoin you own. You should also go for a multisignature option when deciding between various wallet options.
Many exchanges present themselves as a one-stop solution to all issues crypto and offer high standards of security and reporting. You should, however, exercise your due diligence when picking either a wallet or an exchange.
What Is the Purpose of a Bitcoin Wallet?
Most people assume that, since it is called a wallet, it is the place where your bitcoins are stores. That isn’t technically correct. Bitcoins aren’t physically stored in any location. The only information relating to your bitcoin is your balance, which is kept on the bitcoin blockchain using a combination of public and private keys. The public key, which is like your account number, is your wallet address, which the rest of the world can see.
Your private key, on the other hand, is like an ATM PIN and should be kept secret at all times. It is this private key that is stored in your wallet. You can then encrypt your wallet and explore cold storage methods to safeguard the information in that wallet.
As a bitcoin user, you use your private key top make payments for products and services both online and offline.