How to Use Bitcoin: 14 Steps (with Pictures)

2024 Author: Samantha Chapman | [email protected]. Last modified: 2023-12-17 09:13

Bitcoin is the first digital currency created for the average man. Bitcoin is a global decentralized market which, bypassing banks and payment processes, only requires an internet connection. Although it is still in the experimental stage, it is expanding and is considered by many to be the future. To get started and learn more about Bitcoin, as an individual or as a company, start reading from the first step.

Steps

Method 1 of 2: Using Bitcoin as a Private

Step 1. Install the official Bitcoin client

To start using Bitcoin, whether you want to set it up via phone or online, you will need to download the client and visit the main Bitcoin page to create the account on your computer. The client is available for Mac, Windows, and Linux, and can be downloaded by visiting here.

Step 2. Create your portfolio

As with real-world money, you will need somewhere to keep it. Wallets are essentially programs that track and manage digital currency through your account. There are many possible options, depending on how you intend to use Bitcoin.

• Wallet software does not use third parties after download. These wallets run on your computer, where you will need to start a blockchain locally to keep your transactions anonymous. This is the original wallet Bitcoin was conceived with. The wallet software includes:

  • BitcoinQT
  • Armory
  • Multibit

• Web wallets' are always available online making them the most convenient and user-friendly. All you have to do is create an account and log in. They are, however, potentially less secure than wallets you install on hardware, but are also compatible with most phones and mobile devices. Web wallets include:

  • Blockchain
  • Coinbase
  • Coinjar
  • Coinpunk

  

  Step 3. Get Bitcoins

  Now that you've got everything set up, how can you get Bitcoin to spend? There are several options available to you. Even though the system is sometimes unpredictable and still in an experimental stage, Bitcoins seem to be gaining in value, making them a unique opportunity.

  • To buy Bitcoin, it is useful to visit a database of Bitcoin markets, like this one. You will simply have to complete a transaction in many markets where you will convert your currency into Bitcoin. You can also convert coins to Bitcoin with a similar process.

    

  • Bitcoin Mining: You can download and install a program like CGMiner which, theoretically, can make you profit without requiring a lot of work. While it could once have been done from a normal home computer, today it is no longer a viable option. You would spend more money leaving your computer on than you would with this method.

    

  • Exchange Bitcoins: look for other people who want to trade Bitcoins. You can find them on trading sites. Plus, if you're selling items or services, consider accepting Bitcoin as a payment.

    

  

  Step 4. Secure your wallet

  Now that you have some Bitcoins you need to make sure they are protected. Unfortunately older Bitcoin customers have not encrypted the wallet.dat file, which means that theoretically anyone can steal your Bitcoins from you. The good news is that you can protect your wallet to make sure this doesn't happen.

  • If you want you can use a program to encrypt files. Click on the menu item "Settings"> "Encrypt the wallet".
  • It's a good idea to keep two wallets, one account for day-to-day use and transitions and a separate one for keeping your money offline where you can keep most of your Bitcoins.

  

  Step 5. Find a seller who accepts Bitcoin

  How to use Bitcoins? The simple answer is that you can use them like you use regular currency with a debit or credit card, the trick is to find vendors who accept this currency. You might want to visit a database of local Bitcoin-accepting sellers to find out where you could spend it or what you could use it for. Click here for a directory with local results.

  

  Step 6. Buy on the Bitcoin store

  The Bitcoin store is a constantly updated marketplace that sells technological and electronic items such as laptops, desktop computers, and other home accessories at Bitcoin exchange prices. To have transactions with a correct exchange rate per minute you can use the Bitcoin store.

  

  Step 7. Convert your Bitcoins into a gift card

  An easy way to find places that accept Bitcoin is to use your Bitcoins to buy a gift card to use online with a seller and make purchases easier. Many large companies like Amazon or Sears have gift cards that can be purchased through Gyft, an online store that accepts Bitcoin transitions.

  

  Step 8. Convert Bitcoin to Gold or Silver

  A very popular method of using Bitcoins is to convert them into a more stable and customary asset such as gold or silver. Since the Bitcoin market is subject to fluctuations, this is a very popular option. At the beginning of 2014, a Bitcoin was worth around $ 462.50 USD, making it a decent investment.

  Method 2 of 2: Using Bitcoin as a Seller

  

  Step 1. Learn how Bitcoins are accepted

  Follow the basic steps to create and set up a secure wallet for your transactions, as you would for a normal individual account, then explore the payment options to make sure your store is Bitcoin-friendly. There are several Bitcoin services created to facilitate transactions and to make using Bitcoins easier and safer for sellers. Some of these services have a cost, others are free.

  • Blockchain is free and not too complex, and does not require an account or installation.
  • Coinbox is the Bitcoin equivalent of Square, a mobile app that is used by many small sellers to transact credit cards quickly and at affordable prices.
  • BitPagos is an international service for dealing with Bitcoin and credit cards.

  

  Step 2. Find out about Bitcoin rates and follow them

  Very often your Bitcoins will be automatically translated into your current currency, but in some cases an additional step may be required which will lengthen the transaction. You will need to be able to quickly translate the price from Bitcoin to your currency and vice versa within your store. Since Bitcoin's value fluctuations are unpredictable, and since a payment can take up to 10 minutes, in-person transactions could be deceptive.

  

  Step 3. Advertise that your store accepts Bitcoin

  Since people want to trade Bitcoins, it can be a good idea to let them know that you accept them as a form of payment. Enter this information on all your advertisements and subscribe to online databases through which your customers who use Bitcoin may find you.

  

  Step 4. Be cautious

  Bitcoin is an innovative, exciting and full of possibilities, but it is also experimental and volatile. It is important that you know that Bitcoin payments are irreversible, and that if you get scammed it will be impossible for you to get your money back. Try to run the security protocols for every Bitcoin transaction, especially on how your customer decides to pay you:

  • How are the funds converted? how are they received?
  • How is the exchange rate calculated?
  • How long does it take for a payment to be approved?
  • What are the risks?
  • Are there any taxes or paid services?

  

  Step 5. Confirm payments

  Transactions with Bitcoin, even instant ones, are delayed by a few seconds and can take up to 10 minutes to complete. During this time it would be easy for a salesperson to give their customer the go-ahead even though the transition could still be undone. Bitcoin itself recommends that sellers complete at least 6 different confirmations for large transitions, to reduce the chance of being scammed.

  

  Step 6. Develop a tax strategy with Bitcoin

  While Bitcoin is not recognized as an official currency, many countries still require you to pay taxes on anything of value, including Bitcoins. Unfortunately, the IRS recently ruled that you can also be held accountable for the profits made from Bitcoin transactions.

  Advice

  • Bitcoin transactions are increasing day by day and, as of April 2011, around 30,000 US dollars were traded daily.
  • This is a peer-to-peer currency. It is an open source project.