What to know when buying and selling bitcoins

Holiday Gift Guide. Bitcoin serves as a new kind of currency for the digital era. Exchanges connect you directly to the bitcoin marketplace, where you can exchange traditional currencies for bitcoin.

Where can I buy bitcoin?

Before you jump into this overview of how to buy and sell bitcoin, check out our first article in this series, Bitcoin, explained. Mining bitcoin isn’t the only way to get your hands on the stuff, you know. In fact, mining bitcoin is a complete pain in the what to know when buying and selling bitcoins. At a minimum, you need specialized software, a sophisticated hardware rig to run it and a considerable amount of electricity to power the whole thing. Really, the simplest way to amass bitcoin is to just buy it. Of course, that’s something of a process in and of. Before you’re ready to ride the bitcoin rollercoaster, you’ll need to establish an account with one of the major exchanges like Coinbase or CEXconnect a bank account or credit card and transfer money .

What is happening?

Be aware though, that if you decide to sell at the same time as everyone else, you can run into a few problems. They act as a middle-man for the famously decentralized cryptocurrency by selling your Bitcoin for you. That can take a few days to process. Signing up to Coinbase Pro at the same time is also recommendable, though not strictly necessary, to give you greater control over your sale. Once your account is created, link your bank account to it so that when you have made your trade you can get your cash out with as little hassle as possible. From there the trade will take place without any further input from you.

Step 2: Transfer your Bitcoin to your exchange wallet

Bankrate diligently follows the ups and downs and developments of virtual currencies. Earlier this year, I bought some bitcoin so I could see for myself firsthand how it worked and track its movements. That fluctuation makes it difficult to use bitcoin as a currency.

That also makes it a discomforting investment choice. The Financial Industry Regulatory Authority has released an investor alert to that effect.

Bitcoin is not anonymous. But at the same time, it can provide more privacy than paying with a credit card or other electronic payment. Like cash, you can transfer bitcoins from one person to another, or to a company, without attaching your name or other personal information to it. It creates a measure of pseudonymity.

Unlike cash, the bitcoin public ledger keeps a record of all transactions. If someone knows your bitcoin address, and you only use that address to make transactions, anyone can see your transaction history. Buying bitcoin also has varying degrees of anonymity. It was very close to a cash transaction. At the other end of the spectrum, I handed over my Facebook account, credit card information, phone number and email address to Tinkercoin to buy bitcoins through that company.

Bitcoin is not the shady underworld that some have reputed it to be. But, there are opportunities for scams and illicit transactions. The U. My limited experience with bitcoin was anything but shady. Instead, I encountered a number of people and businesses who wanted to help me learn about and transact in bitcoins.

Some illicit bitcoin sites do exist, such as online illegal drug and weapons markets that are the descendants of Silk Road, and Assassination Market, which uses bitcoin to crowdfund bounties for the murder of public officials.

But there are many other sites and businesses that want to prove what to know when buying and selling bitcoins is legitimate and viable. Still, there are no guarantees when transferring bitcoins or working with bitcoin companies. For instance, when I sent bitcoin to a company to buy pizza, I had no way to ensure that my bitcoin would be used to buy my pizza. My pizza did arrive as promised. Unlike credit card transactions, where you can dispute a purchase, bitcoin transactions are not reversible, so there what to know when buying and selling bitcoins little recourse if someone improperly takes your bitcoins.

Similarly, if you store your bitcoins with a company and that company goes under see: Mt. Goxyou could similarly be out of luck. Buying the things you need with bitcoins is not easy.

A growing number of companies are now accepting bitcoins, but the network of businesses doing so is still small. Here, local vendors that accept bitcoins are fairly limited but do include a florist, car dealership, screen repair company and computer repair firm.

Most have had none or only a few bitcoin sales. There are people who have successfully lived on bitcoins, including Forbes senior editor Kashmir Hill and a newlywed couple from Utah who have done a documentary of their bitcoin journey. Bitcoin enthusiasts want you to also love bitcoins. As bitcoins become more mainstream, bitcoin companies will begin to act more like mainstream financial institutions. One of the benefits of bitcoins is that they are able to circumvent traditional systems and third-party intermediaries like banks.

But, companies like Coinbase are acting very much like the banks of the bitcoin world. She says bitcoin users and companies are eager to show they are legitimate, so they act more like traditional financial institutions, working carefully to avoid breaking any laws or regulations. Hill cited a recent example of a marijuana shop in Seattle that began accepting bitcoins through Coinbase.

We will see more innovations and news coming from the bitcoin community. Even in the short time that I was doing this story, politicians began accepting campaign donations in bitcoin. Bitcoin ATMs have begun to slowly spread across the U. Related Links: 9 financial planning rules for women How to find k investment advice 5 financial terms not to take for granted.

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Holiday Gift Guide. Coinbase offers konw secure «multisig vault» to host user keys. While exchanges offer wallet capabilities to users, it is not their primary business. But the transaction can take significantly longer. CNNMoney Sponsors. However, sites like LocalBitcoin or Paxful have far more numerous options, including Moneygram, gift cards, cash in the mail, and even cash in person. Are you trading Bitcoin? On some level, I figured one fear might cancel out the. Once you give it the thumbs up, the buyer pays you, and you then send them the cryptocurrency in return. Bitcoin Exchanges. Related Articles. And when the value of your bitcoin doubles in a week, as it did for me, it’s easy to think you’re a genius.