How do I use Bitcoin?

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.

Frequently Asked Questions

While Bitcoin can be used for everyday purchases, it's important to note that its adoption as a mainstream payment method is still limited. However, there are online platforms and businesses that accept Bitcoin, ranging from e-commerce websites to travel agencies. Additionally, some Bitcoin debit cards allow you to convert your Bitcoin into traditional currency for easier spending.

To send Bitcoin to someone, you will need their Bitcoin address. This is a unique alphanumeric code that serves as their wallet's identifier. In your Bitcoin wallet, you can choose the option to send Bitcoin and enter the recipient's address, along with the amount you wish to send. Once you confirm the transaction, it will be broadcasted to the Bitcoin network and included in a block for verification.

Yes, Bitcoin is divisible, and you can send even small fractions of a Bitcoin. The smallest unit of Bitcoin is called a satoshi, named after the pseudonymous creator of Bitcoin. One Bitcoin is equivalent to 100 million satoshis, so you can send any amount down to eight decimal places.

The time it takes to send Bitcoin can vary depending on network congestion and the fee you attach to the transaction. Generally, Bitcoin transactions are considered confirmed after being included in a block, which takes approximately 10 minutes on average. However, in some cases, it may take longer for the transaction to be confirmed if the network is busy.

While Bitcoin offers many advantages, it's important to be aware of potential risks. These include volatility, security, and scams or fraud. Bitcoin's price can be highly volatile, which means its value can fluctuate significantly in a short period. This volatility can impact the purchasing power of Bitcoin. While Bitcoin itself is secure, the security of your Bitcoin depends on how well you protect your wallet and private keys. It's crucial to use reputable wallets, enable security features like two-factor authentication, and keep your private keys safe. The decentralized nature of Bitcoin makes it attractive to scammers. Be cautious of phishing attempts, fake websites, and fraudulent investment schemes that promise unrealistic returns.