Buying bitcoins (BTC) is very simple, but do you really know what you are buying? and what to do with the purchased BTC? In this practical guide we have compiled all the information you need to know before buying your first bitcoins (and what to do next).
Bitcoin was created by Satoshi Nakamoto (person or group; identity still unknown) and launched in January 2009. This cryptocurrency is not governed or directed by anyone. Although Satoshi was the creator, currently its operation and maintenance is handled by the entire user community. This is because it works through a distributed network and its code is open and free.
The solution proposed by its creator, or the reason for Bitcoin to exist, was to get a payment method, not centralized, in which users could send and receive money without a third party interceding and avoiding double spending. This, in short. Although Bitcoin goes far beyond these concepts. That is why we recommend you read Satoshi Nakamoto’s Bitcoin white paper, where he presents the why and for what Bitcoin is created.
1: Educate yourself about Bitcoin
Know what you buy. This is the first step you must take. The first thing is to understand that Bitcoin is not just a cryptocurrency that is always on the rise, as happened in 2017 and recently in 2020. Bitcoin is a technology that requires a minimum of knowledge to be used.
Do not worry; You don’t need to be a cryptocurrency guru before buying your first BTCs. With knowing the basics (what is Bitcoin, where to store it, how to send and receive, and above all, how to keep your bitcoins safe), you will be ready to use it. This last concept is vital that you handle it very well; remember that there is no custodian to handle your cryptocurrencies, like a bank, being you the only one who controls your money. It is the era of being your own bank.
Cryptopedia of CriptoNoticias. Source: Criptonoticias.com
Due to all this that we pointed out to you, the question will surely arise where can I learn about Bitcoin? Well, we have a solution for you; within CriptoNoticias you will have the Criptopedia, a virtual encyclopedia where you will find all the concepts about the world of cryptocurrencies.
Along with this tool, you also have the Tutorials and Guides section where you can find articles that teach you step by step how to use the different platforms of the Bitcoin world. You also have our YouTube channel with video tutorials.
Articles of interest:
2: Bitcoin is not just trading
Trading consists of buying and selling assets, in this case bitcoins, with the aim of generating profits by speculating on their price. This concept is usually closely linked to Bitcoin, to the point of being confused that Bitcoin only exists for trading, Which is not true.
First of all, let’s remember that Bitcoin is a cryptocurrency that is used as digital money without intermediaries and, in turn, an asset that can be exchanged. When you trade bitcoin, are you really doing an asset swap, taking advantage of the price differential, but it is not the only use that this Bitcoin has.
In this aspect of trading and Bitcoin, you usually find a lot of “gurus” or “experts” in cryptocurrencies, who offer you promises to become a millionaire with Bitcoin. Thing that must be taken with great care, since Bitcoin is not a technology to become a millionaire.
For its part, regarding exchangeable assets for trading, Bitcoin has a very high volatility compared to other traditional assets like currencies or raw materials. This concept of volatility refers to the probability that an asset possesses to increase or decrease its price precipitously.
Regarding what is Bitcoin in addition to trading, remember that we are talking about digital money, that is, it can be used as a payment method either between friends or payments to businesses. For the latter, there are web portals such as Coinmap.org that allow you to locate nearby locations that accept cryptocurrencies, as well as bitcoinwide.com or BTCPay Server Directory that provide you with a catalog of websites that accept crypto assets.
However, if your interest in Bitcoin is oriented to trading, within CriptoNoticias you can find tutorials that will help you learn how to use different platforms or exchanges.
3: Choose a portfolio
Cryptocurrency wallets or purses It is the place where you will store your bitcoins. You are in charge of managing two fundamental parts of the use of Bitcoin: the public addresses and the private keys.
To explain how it works in a simple way, a wallet generates public addresses that are the ones that allow you to receive bitcoins, and secures the private keys, which are used to sign outgoing transactions or bitcoins shipments.
Portfolios are typically divided into four groups, ordered from highest to lowest with respect to the security they offer:
Cold wallets: They offer the greatest security, they are those that are not stored on devices connected to the internet, such as paper wallets or Ledger and Trezor devices.Applications or software: They are those that you install on your mobile device or computer, and encrypt and save the private keys within your computer.Online wallets: They are wallets that are used from a web page, being mandatory the use of the internet to know the status of your cryptocurrencies. They usually handle the private keys to the cryptocurrencies you store.Exchange houses: platforms dedicated to the exchange either from cryptocurrency to fiat money or from cryptocurrency to cryptocurrency. There are 2 types of exchange houses, centralized and decentralized. The first of this handles and stores your private keys, while the second does not.
Paper wallet generated by WalletGenerator. Caption: WalletGenerator.
Knowing which portfolio to choose is an important step, so don’t take it lightly. For them, you have this guide that shows you how you can choose a cryptocurrency or Bitcoin wallet.
4: Are you really buying Bitcoin?
Bitcoin, as we have been mentioning throughout the article, is both a cryptocurrency and a distributed network, whose source code is open. This means that anyone can copy the code and create their own cryptocurrency. As a result of this possibility, an alternate world to Bitcoin has been born: the world of altcoins, independent cryptocurrencies with their own blockchain.
In this order of ideas, within the altcoins there are some that use the name of Bitcoin, being a fork of it, but without being Bitcoin, among which you can find: Bitcoin Cash, Bitcoin Satoshi Vision, Bitcoin Gold, among others, which their creators claim are the true Bitcoin, but are not at all. These cryptocurrencies cannot be sent to native Bitcoin wallets, since they have both their own blockchain and their wallets. So, not all that glitters is Bitcoin.
CoinMarketCap home page. Source: CoinMarketCap.
Of the rest of altcoins, there is an immense catalog of more than 8,000 cryptocurrencies registered in CoinMarketCap. Many of these claim to provide benefits that Bitcoin does not offer, but falls short in practice. Of course, within the altcoins there are useful cryptocurrencies, such as Ethereum, that integrates easy-to-program smart contracts thanks to its own programming language: Solidity.
5: Commissions and waiting times with Bitcoin
For each transaction to be confirmed, there is a group of miners (learn more about what a cryptocurrency miner is here) who is in charge of verifying and recording the transaction that is being carried out within the Bitcoin blockchain.
Each transaction you make is confirmed on the network through a data block (hence its name of blockchain or blokchain). Each block occupies a finite number of transactions. Now, When you decide to submit, you have to pay a mining commission. The miners to create the next block, which occurs every 10 min approximately, will take the transactions that pay the best commission.
The mining commission can be set by you, although there are wallets that do not allow it. So, it is advisable to choose a wallet that allows you to configure how much is the exact commission that you are willing to pay.
Due to all this, on the amount of transactions per block, network congestion can occur. Where many users want to transfer their funds, but the capacity of each block does not allow it. This makes more users willing to pay higher commissions, so that their transaction is confirmed in the next block, thus increasing commissions and waiting times.
It should be clarified that if you pay a very low commission it does not mean that your transaction will not be confirmed, but that the waiting time will be much longer, while the blocks with higher commissions are mined. Similarly, there is the Replace by Fee technology that allows you to unlock transactions that have not yet been confirmed.
Main cover Mempool.space. Source: Mempool.space.
To know the network commissions and how much is the minimum possible to pay for a transaction to be confirmed in the next block, there are portals such as Mempool.Space. On this website you can see graphically the blocks that are about to be “mined” and the approximate amount of commission for each one. This allows you to reduce waiting times, paying a fair commission.
With regard to waiting times, as we already mentioned, it is at least 10 min. However, it may happen that this time is even reduced to less than 1 minute, but this in particular cases. Likewise, within the scope of Bitcoin, there is the so-called micro payments network or Lightning network, this network allows payments with Bitcoin outside the blockchain instantly with very low commissions. Learn more about the Lightning network here.
6: Where to buy Bitcoin in your country.
First of all, it must be clarified that Bitcoin is a cryptocurrency that knows no borders, anyone with an internet connection could access this cryptoactive. However, due to national regulations, its use may be prohibited in some countries. So, your task will be to find out if you can use Bitcoin in your country without any problem.
Within CriptoNoticias, we have a compilation of articles that allow you to know the different options to buy and sell bitcoin in your country, among which are: