Bitcoin

bitcoin logoHere is my experience with Bitcoin and some resources.

Bitcoin is an innovative payment network and a new kind of money.

Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part.

– bitcoin.org

Bitcoin

I set up a Bitcoin wallet.  Then I bought some bitcoin which was deposited to my wallet.  Now I’m ready to buy and sell with bitcoin.

The details.  Actually I set up two wallets.  The first is with an online exchange (coinbase.com) which I linked to my checking account.  I transferred an amount of money from my checking account to the wallet.  As a second test, I transferred money from a credit card to the wallet.  This wallet is accessible from the website and a smartphone app.

My second wallet I set up on my computer with wallet software from electrum.org.  I used a Bitcoin ATM to transfer US dollars (paper bills) to my Electrum wallet.  This wallet is only accessible on my computer but I made a printout of my QR code so I could deposit money at the Bitcoin ATM.

Electrum wallet for Bitcoin.
Electrum wallet for Bitcoin.

The details of the fees and wait times for transferring money into a wallet are laid out in tables at the end of this post.

Bitcoin transactions are done with the wallet software and the receiving address.  The receiving address is a long alphanumeric string of 34-36 characters which can be typed in but is more easily scanned in via QR code, copy and pasted or read from a file.

bitcoin_electrum_send
Electrum wallet send bitcoin.
Electrum wallet receive bitcoin.
Electrum wallet receive bitcoin.

For mobile transactions, the smartphone rocks, displaying the QR code on the screen and reading the QR code by camera.

Now my definition of Bitcoin –

Bitcoin is numbers in a public ledger that represent people’s holdings in bitcoin.  Bitcoin is just encrypted numbers.  People keep a copy of their Bitcoin numbers in a wallet, ready for transactions.  A Bitcoin wallet can be an app, computer program, website or paper.  The Internet is required to glue it all together.  The Bitcoin public ledger is distributed, maintained, encrypted and secure.  Bitcoin has value as long as people value bitcoin.

Pros

  • Cool
  • Private
  • Not controlled by governments, banks, anyone
  • Lower fees than credit cards for merchants
  • The underlying technology is fascinating – cryptography, block chains, Internet
  • International
  • Transactions are “instant” (seconds or minutes for extra confirmation)

Cons

  • Requires technology and understanding how to use it
  • Bitcoins can be lost or stolen by errors, loss, failure, hackers
  • Lost bitcoins are forever lost
  • Bitcoin transactions cannot be reversed (like a credit card transaction can be reversed)
  • Confusion about legality and taxation
  • May be illegal in some locations
  • Limited acceptance by merchants
  • Converting cash to Bitcoin and back can be inconvenient and fee based
  • The Bitcoin system could fail – crashing down in value or completely or become illegal

Backup your wallet and use a good password.  Choose a reputable exchange for wallet storage and currency exchange.

The Bitcoin reputation has been tarnished by being associated with purchasing illegal items, money laundering and the Dark Web.  On the good side, major merchants accept bitcoin – Microsoft, Dell, Virgin Atlantic, Sacramento Kings examples – as well as charities, mom and pop businesses, people and politicians(!) (see Wikipedia entry for Bitcoin).

The history of Bitcoin is a hoot. It was invented by a person named “Satoshi Nakamoto” in 2008 who disappeared from the scene without anyone knowing his real identity or fate.  I hope this genius is fat and happy living off his Bitcoin millions somewhere.

I have enjoyed my dive into Bitcoin.  Will I use it?  Only time will tell.

Check it out.  Get a wallet, some bitcoin and enjoy.

Resources

Documentation

Web site:  bitcoin.org

Web site:  wikipedia.org Bitcoin

Book:  Bitcoin for the Befuddled (2015)

Book:  Bitcoin for Dummies – 1st edition (2016)

Video documentary: The Rise and Rise of Bitcoin (2014)

Video documentary: Bitcoin: the End of Money as We Know It (2015)

Wallets

electrum.org

coinbase.com

Bitcoin Exchange

coinbase.com

Internet resources

Locate Bitcoin ATMs:  coinatmradar.com

Blockchain information:  blockchain.info

 

My research to buy bitcoin

buy bitcoin from method of purchase % fee wait time notes
coinbase.com credit card 4 instant
coinbase.com checking account 1.5 with $0.15 minimum 5 business days ACH
Bitcoin ATM – coinucopia.io cash 3 instant
person to person cash exchange for bitcoin 0 to 15 or fixed price markup (example 7%) instant parties negotiate exchange rate
person to person sell item(s) for bitcoin instant

My research to sell bitcoin

sell bitcoin to deposit cash to % fee wait time notes
coinbase.com checking account 1.5 with $0.15 minimum 2 business days
coinbase.com USD wallet 1.5 instant
person to person buy item(s) for bitcoin instant
person to person cash exchange for bitcoin 0 to 15 or fixed price markup (example 7%) instant parties negotiate exchange rate
Bitcoin ATM some Bitcoin ATMs will convert bitcoin to cash for fee

Leave a Reply

Your email address will not be published. Required fields are marked *