You can buy Bitcoin easily, in a process as simple as signing up for any mobile app.
First,
Sign Up for a Bitcoin Wallet
Before you buy Bitcoin, you need to download a Bitcoin
wallet by going to a site like Block chain.info,
or to a mobile app such as Bitcoin Wallet for Android or Block chain Bitcoin Wallet for I O S,
and filling out an online form with basic details. This shouldn't take more
than two minutes.
This is what your account page would look like if you were to sign
up for a Bitcoin wallet on Coinbase. As you see, it looks kind of like the
online banking software that most traditional commercial banks use for their
customers:
Use
Regular Money to Buy Bitcoin
Once you have a Bitcoin wallet, you use a traditional payment
method such as credit card, bank transfer (A CH), or debit card to buy Bitcoins
on a Bitcoin exchange (example: Coin base). The Bitcoins are
then transferred to your wallet. The availability of the above payment methods
is subject to the area of jurisdiction and exchange chosen.
Here is a
screenshot of the Bitcoin interface showing how to buy and sell not just
Bitcoin but also Ethereum
and Litecoin,
which are other popular virtual currencies. As you see, it's as straightforward
as clicking on the "Buy" tab if you want to buy, and "Sell"
tab if you want to sell. You select which currency you are buying/selling and
which payment method (your bank account or credit card) you want to use.
Remember that "Bitcoin exchange" and "Bitcoin wallet" need not be the same. Bitcoin exchanges are kind of like forex exchanges--places where you can trade Bitcoin for a fiat currency, say, BTC for USD and vice versa (in U.S. for example). While exchanges offer wallet capabilities to users, it’s not their primary business. Since wallets need to be kept safe and secure, exchanges do not encourage storing of Bitcoins for higher amounts or long periods of time.
Hence, it is best to transfer your
Bitcoins to a secure wallet. Security must be your top priority while opting
for a Bitcoin wallet; always opt for the one with multi-signature facility.
There are many well-established exchanges that act as a one-stop
solution by offering high security standards and reporting. Due diligence must
be exercised while choosing a Bitcoin exchange or wallet.
A
Bitcoin Wallet is for Your Private Key, Not for Storing Bitcoin
The common assumption that Bitcoins are stored in a wallet is
technically incorrect. Bitcoins are not stored anywhere. Bitcoin balances are
kept using public and private “keys,” which are long strings of numbers and
letters linked through the mathematical encryption algorithm that was used to
create them. The public key (comparable to a bank account number or IBAN)
serves as the address published to the world, and to which others may send
Bitcoins.
The private key (comparable to an ATM PIN) is meant to be a
guarded secret, and only used to authorize Bitcoin transmissions. Thus, it’s
the “private key” that is kept in a Bitcoin wallet. Some safeguards for a
Bitcoin wallet include: encrypting the wallet with a strong password and
choosing the cold
storage option, i.e. storing it offline. In the case of Coin base,
they offer a secure "multistage vault" to host your keys, which you can
sign up for.
The number of places where Bitcoins can be spent is increasing
rapidly and includes some big retail players as well as many small businesses
and retailers. The increased acceptance is boosting its footprint across the
globe and is helping it secure an official recognition as a mode of payment.
Japan has recently accepted Bitcoin as a payment mode.
The
Bottom Line
The changing regulatory stance, increasing adoption and
acceptance, investments in Bitcoin start-ups and products being launched around
it have cumulatively raised the confidence in Bitcoin. However, it’s still in a
nascent stage and thus one must be aware of the price volatility issues,
taxation aspect and legality angle before buying Bitcoins.
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