Dare to Dabble in Bitcoin - Choose Your Adventure
Jul 13, 2018 By Katherine Flores
It's simple to start. There are two paths for Bitcoin dabblers. You can buy into the exchange or just start mining.
The bitcoin protocol stipulates that 21 million bitcoins will exist at some point. That's the limit. What "miners" do is shine a light on them, a few at a time. It's a discovery process much like gold mining - thus the terminology. Miners get to make these golden discoveries as reward for blocks of validated transactions they create and include in the blockchain.
Bitcoin mining works a lot like a puzzle/reward system and the earlier you get in, the bigger the reward.
Here's the puzzle part: there's a lot of guesswork. In fact, bitcoin mining is essentially a complex math calculation set to solve a puzzle. Specifically, miners search for a number within the range of zero to about 4,300,000,000. That's how they discover the bitcoin - they guess it's number, which lies somewhere within that range. Easy peasy, no prob. Right?
The victorious miner gets new bitcoin as reward for their correct guess. Currently it's about 12.5 coins (worth about $200,000). Sounds pretty Gucci when you hear the payoff part. But clearly mining isn’t for everybody given the time, energy, and math required.
Miners with faster processors and access to large amounts of electricity have a definite advantage. That's because they can perform more guessing calculations and thus have greater luck. So keep your resources in mind when you consider mining.
Thus, mining takes a substantial amount of time, computer energy, and math acumen. Luckily there's another way.
Purchasing bitcoin outright actually is easy peasy. In fact, you can pay in a variety of ways and use an exchange or direct from another person in a marketplace. Here are the simple steps to buy bitcoin.
1) Choose your wallet. Just like standard money, bitcoin needs storage. You can create a wallet online as part of the exchange platform or with an independent provider. Or you pick from a desktop, mobile, or even an offline hardware device wallet.
Finally, for those with tech trust issues, there's an old school paper wallet. Basically, that's just the bitcoin address and private key numbers printed up or written down for cold storage.
2) Open an exchange account. There are hundreds of cryptocurrency exchanges where you can buy and sell bitcoin. We recommend you do some research to find a reputable exchange that suits your particular cryptocurrency needs.
Be prepared. You'll likely need a photo of your official ID and maybe a proof of address. Most also charge a fee.
Once you've made payment the exchange will deposit the bitcoin into an automatically generated wallet on the exchange. But then we recommend transferring those funds into your off-exchange wallet.
3) Got cash? Alternatively, people now purchase bitcoin with cash using local platforms that work like an ATM machine and bitcoin dispensary in one. You slide in the bills and receive the bitcoin back. There are also places like this but instead you deposit the cash and then get the bitcoin a few hours later. If that sounds a lot like a bank… that's because it is. It's a bitcoin bank, baby.