Bitcoins For Absolute Beginners, How To Buy Bitcoins

Bitcoins are all the rage in the media these days. You've probably been inundated with stories about Bitcoins used on Black Markets, the rise in the value of Bitcoins, articles about the theft of Bitcoins. Maybe you have an interest in Bitcoins or other Crypto currencies. It can be confusing knowing where to start or even just wrapping your head around the idea of Bitcoins, what are they, how do you hold them, how do you buy them, and how are they used. In this article we are going to explain Bitcoins to you in a way which is easy to understand. Tell you how to hold Bitcoins, how to send and receive Bitcoins, and how and where to purchase Bitcoins with US Dollars. I don't claim to be the foremost expert on Bitcoins but I have done a lot of research, have been using them for a while, and had a hard time understanding them myself so I feel I can explain them in a way which is easy to understand for absolute beginners.

What Are Bitcoins?

I won't get into the whole history of Bitcoins and who created them, there's plenty of places to research that if your interested. I just want to explain what Bitcoins are and how they work. Bitcoins are a virtual electronic currency. They are not a tangible or physical thing you can hold. You can't have a Bitcoin or a note in your pocket, it's strictly electronic and strictly online.

Bitcoins are what's referred to as a Crypto Currency. There are a number of competitors out there like Litecoins, Feather Coins, Crypt Coins, and many more. Bitcoins are by far the most valuable and also the most widely accepted and well known. If you have an interest in the other crypto currencies and want to diversify and hold a bit of each you generally have to buy Bitcoins first and then you can go to an exchange and swap those for Lite Coins or Feather Coins or Peer Coins or any other coins you want.

Some unique things about Bitcoins is it's not a currency of a country like we generally think of currency. It's basically the currency of the internet, though more and more brick and mortar stores, restaurants, and shops are now accepting them.

Bitcoin transactions cannot be reversed. If you send to the wrong address there is no calling them back. It's argued this is both good and bad. It's good in the sense people can't open a Paypal case or do a credit card chargeback and wind up keeping someone's product or service and getting their cash back. It can also be a downside in that if you send to the wrong address or put a decimal in the wrong place there's no reversing a transaction. Some people view this as a positive, others claim any legit banking system needs a way to reverse mistakes. Many sites which accept Bitcoins however use an escrow service so Bitcoins are held until both parties are satisfied with a transaction.

I know it can be hard to wrap your head around the idea of Bitcoins but it's really no different than sending money via Paypal or online banking, it's actually much simpler than you think. The confusing parts can be how do I hold Bitcoins if there's no physical coins. You can't put them in your pocket or a safe in your house for example. Also, how do I send and receive Bitcoins as well as how do I buy them. These things can be confusing to a newbie so we'll address those below.

How Do I Hold Bitcoins?

You can hold your Bitcoins either through a third party service like Coinbase, which just happens to be a place you can buy Bitcoins from your bank account as well as hold them. There's also other third party services out there which you can buy Bitcoins from and which can also serve as Bitcoin wallets. Another way to hold Bitcoins is in a paper wallet. A paper wallet is basically a program you download onto your computer which is on your computers hard drive, NOT online. This is a more secure way of holding your Bitcoins and you have more control of them.

CoinBase is a great place to buy and maybe keep a small amount of Bitcoins in, however I would not recommend keeping your holdings in a third party online wallet. If they are hacked or seized by the Government or anything you potentially lose your Bitcoins. In a Bitcoin wallet you have a wallet on your computers hard drive which is encrypted and password protected where you can hold Bitcoins.

One confusing thing is you don't really setup an account with a paper wallet like you do with a site like Bitcoin. I had a hard time understanding this. With most things you have to setup an account which is hard to change, your locked into a username and email, etc. With a paper Bitcoin wallet literally within one click you create a new wallet and can easily add or delete wallets. Technically you could use a different wallet for every single transaction you do. You add a name to your wallet, you have the option of adding a password, and you can also keep the details on a zip drive for safe keeping. The paper Bitcoin wallet may seem confusing at first but it's actually a very simple menu and very simple to use.

Each wallet has a unique address which is basically random letters and numbers. Your wallet also has a QR code which can be scanned to send you Bitcoins as well.

I would recommend having an account with Coinbase or a similar site as well as a paperwallet which you'll actually use to store your Bitcoins. Next we'll address how to send and receive Bitcoins.

How To Send & Receive Bitcoins?

It's actually surprisingly simple. Either from a paper wallet or an online wallet it's very easy to send Bitcoins. Most people use the actual address vs the QR Code but both are options for you. The nice thing because transactions aren't reversible wallets have a copy to clipboard feature and don't allow you to highlite, copy and paste as you could leave off a letter. They basically force you to be accurate in getting your Bitcoin address to give to someone else. If you want to receive money all you do is give them your address, they send to you and within a minute or a few minutes you receive the Bitcoins.

If you want to send Bitcoins all you need is that persons Bitcoin address, click send Bitcoins, and paste in their Bitcoin address. Whether through an online wallet or a paper wallet this is very easy and straight forward.

Where To Buy Bitcoins?

Many people wonder, where do I buy Bitcoins? It's actually somewhat difficult to buy Bitcoins. Nobody wants to accept Paypal or Credit Cards understandably because once you give away the Bitcoins you cannot get them back and some bad people could do credit card chargebacks or Paypal disputes, get their cash back and they have your Bitcoins.

There are a few sellers on eBay and some on other sites who will take Paypal but it's generally at a huge markup and in small amounts like $50 or less.

I'm going to share with you my favorite and easiest ways to buy Bitcoins. These methods are what I consider to be more reputable sites or people or more secure ways of buying them as well as the easiest.




CoinBase.Com
Coin Base is a known and trusted supplier of Bitcoins. It's one of the few if not the only place you can buy directly from your bank account. Some people don't like the idea of linking a bank account but the site is very secure and in addition to having a password by default it's setup to send you a text message at each login which you have to verify a code. It's a pretty secure system in my opinion.

You link a bank account and can transfer Bitcoins easily with a relatively small fee, the only downside it's about a week for the coins to clear to your wallet. This is probably the easiest and most straightforward way for a newbie to buy Bitcoins. Even if you'd prefer to buy on Bitlocal or Craigslist or something give these guys a try if even for a small amount just so you can get your feet wet and figure out how to transfer from CoinBase to your paper wallet. Also, though it doesn't have to be CoinBase you will need Coin Base or another site to convert your coins back to dollars unless you want to sell to an individual on Craigslist or something like that.



LocalBitCoins.Com
This site basically connects buyers and sellers. You can buy from and sell to people remotely and deposit money directly into their bank account. Some users accept bankwires or Moneygram or Western Union. It's basically setup on an escrow system so the Coins are held until the seller can provide you with a secret code. Once they provide this to you, you know they sent the Bitcoins.

You can also meetup with people locally and pay cash, they do allow their escrow system to be used for this as well. You'd basically meet someone at a Starbucks or McDonalds, and hand over cash once they provide you with the secret code.

This is a bit more complicated in that if you don't know what your doing and run into a bad seller being face to face they could offer to help you with your wallet or something like that and return the coins to them or screw you over. I think most people are good but don't do anything besides use the escrow system which is setup. I'd recommend having completed a few Bitcoin transactions sending and receiving before using this site.

I find this site to be somewhat overpriced. When Bitcoins were at $1,000 people were asking for upwards of $1200. You could do better on CoinBase.Com than those prices. That said you can find some good deals in person occasionally.

Craigslist
Yep, no special accounts, no codes, just regular sales like buying an X-Box or a couch on Craigslist. Look at your local Craigslist site, search for Bitcoins and you'll see a number of people selling them. You can work the transaction however you'd like but generally you'd meetup at a safe trusted place where you have access to internet. You'd give the person cash and they would transfer Bitcoins to your wallet at an agreed upon price or rate. Again, I'd recommend having a few transactions under your belt so you know what to expect before doing this.

Meetups
Bitcoin Meetups are kind of a cool concept. Just like people have meetups for people with pets or Bulldog owners or people who play chess or ride motorcycles. There are meetups for people into Bitcoins. It's basically a community, you can go network with people. Oftentimes there's a weekly or monthly meetup at a bar or coffee shop. You can buy from others and sell to others. I like this method as it's kind of a community with regulars. If someone rips you off they will probably see you or others in the group again making it less likely to happen. You can also ask advice and help from others.

BitInstant.Com
This is one of my favorites and a very easy way to buy Bitcoins. Unfortunately their site is currently down and it doesn't seem like a fix is comming anytime real soon. Basically how this site works, it finds a local store in your area which does Money Gram, basically a Walmart, 711, or CVS. You decide how many Bitcoins you want, they work out the conversion and then have you put in your zipcode where you can see stores in your area. You select one that you will go to, to pay, you then will print out a sheet of paper showing how many Bitcoins you get for the price and how much money you need to send via Money Gram. You bring that paper into the Walmart, 711, or CVS and pay the Money Gram bill. The coins are then sent to your wallet once you make payment. This is very easy and a good way for beginnners, fees aren't the best but it's not terrible and you get your coins in a timely fashion.

Wrapping Up

Well I hope  that gives you a better idea of what Bitcoins are as well as helping you to wrap your head around the concept. We explained Bitcoins and what they are, how to send them and receive them, and the best places to buy as well as how to do so.

This isn't the most complete guide around but I wanted to give you something which wasn't too long, which was concise and gave you all the essentials you need. If you have any questions please ask in the comments section below.