Assuming you already know what Bitcoin is, you should also know the different ways in which you can use Bitcoin. In many ways, it is very similar to currencies that exist today. You can store Bitcoin, spend Bitcoin and accept Bitcoin. The primary difference from how Bitcoin works compared to today’s currencies is how you are able to use Bitcoin. Although it may seem as easy as using a credit card on the surface, there are a lot of ways in which Bitcoin can be more difficult to use for simple tasks like buying a cup of coffee or making a seemingly simple purchase online.
Choose a Wallet
Even before you start thinking about owning Bitcoin, you need a place to keep it. Just like traditional fiat currency, you need a wallet for your Bitcoin. But not just any wallet. You need a digital wallet either on your mobile device, on your desktop, on the web, or externally on cold storage.
Buy Bitcoin
Once you have your wallet squared away (and you have read up on everything you need to know about cryptocurrency), you are ready to buy your first amount of Bitcoin. Some years ago, it would have been near to impossible to find a common place to buy Bitcoin, but today there are many more services and exchanges. What you will likely need is some identifiable form of identification for KYC (know your customer), a bank account or debit card, and the ability to transfer funds from your personal accounts to the third party service. Other ways of buying bitcoin include OTC (over-the-counter) which does not require you having to transact via third party exchanges.
Get Paid in Bitcoin
Did you know that you can now get paid in Bitcoin? It’s true. Even if you work with an employer who doesn’t have a clue what Bitcoin is, you can ensure that your paychecks are paid out in Satoshis and not dollars. “How can I do this right now?” you might ask. Well, we have started looking into this too and that’s when we discovered Bitwage. Today individuals and companies are using Bitwage to transition to a different type of payroll.
Send Bitcoin to Your Wallet
Now let’s say you have bought your very first Bitcoin. Congratulations! The next step is to protect it and HODL (hold on for dear life). Probably the number 1 rule in Bitcoin is to not keep your Bitcoin on exchanges. As the old saying goes “not your keys, not your coins”. The Bitcoin network has never been hacked, but Bitcoin and cryptocurrency exchanges historically have.
There are other reasons you may want to get your Bitcoin off of exchanges too. Either way, you will need a wallet that only you have the private keys for to send the Bitcoin to. In order to send Bitcoin to your wallet that exists external from the exchange, follow the support/directions provided by the third party exchange you are using. Make sure the wallet address you send your Bitcoin to is correct (every single character), because with Bitcoin, there is no reversing a transaction like you have with credit or debit cards.
Spend your Bitcoin
So, you have moved all of your Bitcoin to your wallet where you only know the private keys. This likely the safest way to store your Bitcoin. But as time moves on, more and more merchants both online and offline are going to continue accepting Bitcoin. In order to spend your Bitcoin to buy things, you will need to identify merchants that accept the currency. Once you have done this, it’s recommended to move a small percentage of your Bitcoin from your cold storage wallet to another wallet especially if you are out-and-about looking to transact at a physical location. You do not want to take all of your Bitcoin with you everywhere you go.
With some merchants who accept Bitcoin via the lightning network, you can move your Bitcoin to a lightning network wallet on your mobile device. After you have finished shopping and are ready to checkout, typically the vendor/merchant provides a QR code for you to scan with your mobile device in order to pay for your items. In the background, what’s happening is you are simply moving some of your Bitcoin to the merchant’s wallet and all of it is recorded on the Bitcoin blockchain.
Accept Bitcoin
If you are a merchant who has an e-commerce store, a physical store, or both you should know there a number of services and ways you can use to accept Bitcoin. For online stores, we recommend using BTC Pay. It has a number of integrations including WordPress and WooCommerce. Add in Point of Sale functionality and then you can use the same system for customers to check out at your brick-and-mortar location.
Exchange your Bitcoin
Maybe you are not the everyday hodler and instead you are looking to exchange your Bitcoin for a different currency such as LTC, XRP, ETH or a stable coin like USDT, USDC, or DAI. To each their own. In all likelihood, you are going to need to send your Bitcoin from whence they came. That is your Bitcoin wallet on your go-to crypto exchange. Once you send them to the exchange of your liking, find the the coin or coins you want to exchange for your Bitcoin (or vice versa) and execute the trade.
Store your Bitcoin
We have already spoken about this subject a bit in this article, but it really can’t be overemphasized enough. Storing your Bitcoin is the most important thing you should take away from this article. We can’t tell you the number of horror stories that have been written to date about folks who have lost their private keys, or threw away their computers, or had their Bitcoin stolen from them because they were not sufficiently protecting and safeguarding their Bitcoin.
Cold storage and private keys are your best friends when working with Bitcoin. These two things will save you a headache in the long-run. After you buy your bitcoin on an exchange, get it off of there as soon as possible and into a cold storage wallet. Do not trust 3rd parties with your money. Be responsible and remember, if they are not your keys, then it’s not your wallet, and the coins in it are not really your coins.