With the growing popularity of Bitcoin came a number of different methods for acquiring them. In this
chapter we will explain some of the most common methods for acquiring Bitcoins to bolster your
investments.
Purchase Bitcoins
This is obviously the most simple and straightforward way to acquire Bitcoins. All you need to do is to
use an exchange website such as Coinbase.com and in most cases you will be able to buy Bitcoins
using your native currency.
Some cryptocurrency exchanges have country restrictions so you need to do your homework here to
ensure that you can purchase in your country. There are some countries that have actually banned the
buying and selling of Bitcoin so if this applies to you then you will need to find a creative way around
this which is beyond the scope of this guide.
Sometimes a single Bitcoin can be worth around $10,000 so to make Bitcoin investment available to all
most exchanges will sell fractions. In fact a Bitcoin can be divided into 100 million units. Each of these
units is called a “Satoshi” after the founder of Bitcoin.
We will give you our view on using cryptocurrency exchanges in the next chapter when we explain
what you need to get started with Bitcoin investment. For now here is our view of the best
cryptocurrency exchanges for Bitcoin:
Coinbase
Coinbase is probably the best known cryptocurrency exchange. If you have used a stock trading
platform before then the interface of Coinbase will make sense to you. You can fund your Coinbase
account using bank transfers from the US or with credit cards. Basically you can exchange either US
dollars or cryptocurrency that you have for Bitcoin.
Each trade that you make with Coinbase will attract a small fee which at the time of writing this guide
was 1.5% for Bitcoin purchases and 0.25% for transfers. The biggest issue with Coinbase among the
cryptocurrency community is that you have to provide a lot of personal information.
Sometimes Coinbase will close accounts for a variety of reasons. There are people that believe the
website has a tie in with some major banks and will not use it because of this. Coinbase does
everything by the book as far as that is possible. This means that there is much less chance of site
closure than with other cryptocurrency exchanges.
Kraken
In 2011 Kraken was formed for the buying and selling of cryptocurrencies. You can by and sell Bitcoin
on Kraken as well as other popular cryptocurrencies. A good feature of Kraken is that it has a number
of currency pairings such as USD with Bitcoin, and it supports many more fiat currencies than
Coinbase. The fees are lower too.
Kraken has a very good reputation in the cryptocurrency community. If you are interested in trading
Bitcoin there are a number of good features such as margin trading. The biggest criticism of Kraken is
that the platform can be counterintuitive and confusing at times.
As a newcomer to Bitcoin investing we do not recommend that you use Kraken first. Once you have
some experience under your belt then it is a great platform to migrate to.
Poloniex
Poloniex is a cryptocurrency exchange based in the United States that has a high volume of trades. The
biggest problem with Poloniex is that it doesn’t accept fiat currency. Once you have some Bitcoin you
can use this exchange for trades as there is margin trading for more than 90 pairs.
Poloniex has very low fees typically below 0.25%. Unfortunately it has a pretty bad rap for customer
support and it is not that easy to withdraw funds from the exchange. They can also close your account
for any reason which is not good.
Bittrex
This is a no fiat currency trading platform. Bittrex holds most of its funds offline in a similar way to
Coinbase making it more secure. The customer service provided by Bittrex is very good but it is not as
beginner friendly as some of the other exchanges.
A lot of beginners start with Coinbase but you will have to provide a lot of personal details with this
exchange. If this doesn’t bother you then it is a good choice. There are many cryptocurrency
exchanges available. We recommend that you do your homework to see which support your country
and suit you the best.
Cash Exchanges
Cash exchanges are an alternative to cryptocurrency exchanges. Here you can pay with cash for your
Bitcoins and you will trade directly with the owner of the Bitcoins. A good example is LocalBitcoins
where you can trade in over 7,700 cities and 248 countries. You can buy and sell Bitcoins using this
cash exchange.
Another alternative cash exchange for the buying and selling of Bitcoins is Wall of Coins. Most cash
exchanges do not have expensive fees but sometimes you have to pay fees for successful trading. We
recommend that you use a cash exchange that provides an escrow service to protect your funds.
Other Cryptocurrencies for Bitcoin
If you happen to have other cryptocurrencies then you can trade these for Bitcoins pretty easily. One
of the easiest places to do this is at ShapeShift.io. An account is not necessary to make a small trade.
All you need to do to exchange your other cryptocurrencies for Bitcoin is to enter the amount for
trading or conversion, add your Bitcoin address and the refund address for your cryptocurrency. It just
takes a few minutes to exchange for Bitcoins.
Get Paid using Bitcoin
It is easy to be paid in Bitcoins. All that you need is your own wallet for Bitcoin and you can receive
payments. You can get a free Bitcoin wallet at Coinbase or at Blockchain.com. It just takes an email
address to get your wallet.
Once your wallet is set up you can receive payments in Bitcoin. You can generate a QR code and then
send this to the person that you will receive the Bitcoin payment from. There are a number of ways
that you can be paid in Bitcoins and here are some of the most popular methods:
Carry out Work for Bitcoins
You will find a number of different types of work that you can perform in exchange for Bitcoins. A lot
of these are online and popular with freelancers across the world. When you are paid with Bitcoin you
do not have to wait for a bank transfer which can take days to reach your account. You can have your
Bitcoins in minutes.
Employers or customers like paying in Bitcoins too as they do not have to pay high transaction fees
associated with bank transfers especially if their workers live in another country.
You can Sell Products and Services
Whether you own a conventional brick and mortar store or an online store you can receive payments
from customers in Bitcoin. With the growth of Bitcoin there are bound to be customers that hold
Bitcoin and see it as a forward thinking and convenient way to make payments.
It is easier for customers as well as they can just make the payment from their Bitcoin wallet. Of
course you will receive the payment in Bitcoin pretty fast too. This is a win-win for you and your
customers.
If you have an online store there are a number of scripts or plugins you can use to accept payments via
Bitcoin. You must ensure that you set everything up correctly because you don’t want your payments
ending up in someone else’s wallet.
For a brick and mortar business you can start accepting payments via Bitcoin simply by printing the QR
code of your Bitcoin wallet for customers to use. A customer can use their smart phone to scan the QR
code and then make the payment.
Be sure to tell all of your customers that you accept Bitcoin as a means of payment. Add your details
to Coinmap.org which will let Bitcoin users know that you take it as a form of payment. There are
similar websites you can post to as well.
Why not use Bitcoin as a way of receiving tips? This is easy to do online by setting up a Bitcoin
payment gateway. If you have a blog and provide useful content for example, some of your readers
will be happy to send you a tip using Bitcoin.
Websites that Pay in Bitcoin
There are many websites available that will pay you in Bitcoins (usually small fractions) for completing
certain tasks. Some of these tasks include:
• Completing surveys
• Downloading mobile apps
• Watching videos
• Play games online
• Click on ads
• Sign up for trial offers
• Shop online
• Answer questions
• Refer friends
Some of the websites just need the address of your Bitcoin wallet. Others will require you to create an
account with them. You can perform most of these tasks in minutes and earn fractions of Bitcoins. If
you value your time then you may not be interested in doing this.
Bitcoin Faucets
Most people have not heard of Bitcoin faucets. What they do is to give away fractions of Bitcoins for
free at specific times. This drives a ton of traffic as lots of people want these free Bitcoin fractions and
sometimes these faucets take a long time to load.
There are some Bitcoin faucets that just give away Satoshis. Other faucets require that you complete
some small tasks to earn your Satoshis. Before you get too excited by Bitcoin faucets you need to
know that they can steal a great deal of your time for fractions of Bitcoins.
Bitcoin Mining
We have mentioned how important Bitcoin miners are to the Bitcoin network. If miners didn’t exist
then there would be no transactions or new Bitcoins created. Bitcoin miners can find Bitcoins which is
their reward for their efforts.
When Bitcoin first launched it was fairly common for Bitcoin miners to receive 50 Bitcoins when they
mined a single block. But as every block was mined the number of available Bitcoins for rewards
diminished.
Now you will get a lot less Bitcoins for mining. However, with the prices rising some people still see
this as a worthwhile task. But Bitcoin mining is not an easy thing to do. You need some powerful
computers to be a successful Bitcoin miner.
It is now a lot more difficult to mine new blocks and solving the complex cryptographic functions is
really tough. There is also a lot of competition in Bitcoin mining now making the task even more
difficult.
These days most Blockchain miners work together in pools, and they split any rewards that they
receive for their efforts based on the amount of work that their computers have done. It is not cheap
to participate in Bitcoin mining these days. You need powerful computers to solve the cryptographic
functions.
Forget about using a high end desktop to perform Bitcoin mining. You will have to invest in some
serious hardware even to join a Bitcoin mining pool. It is recommended that you use an ASIC chip to
have any success with Bitcoin mining. These chips and high end computers also consume a lot of
power.
The other thing that you need is knowledge. To setup a Bitcoin mining system you will have to pay
experts to do this. We are not saying that it is not possible to be successful with Bitcoin mining over
the long term but you will have to make a significant investment to get started.
Although the blockchain technology that underpins Bitcoin is very secure, one of the biggest weak
points with Bitcoin is storage. Because Bitcoins have risen significantly in value over the years you will
not be surprised to know that the number of cyber criminal’s intent on stealing Bitcoins has risen too.
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