Getting Started with Bitcoin: How to Buy, Sell and Store BTC
Diving into the world of Bitcoin can feel like venturing into uncharted territory. Unfamiliar terms, complex security measures, and volatile markets might make you hesitate. However, with the right knowledge and a step-by-step approach, getting started with Bitcoin can be an empowering and rewarding experience.
This guide is here to break down the process into manageable steps, showing you how to securely buy, sell, store, and even spend your first BTC as a beginner. So, take a deep breath and read on.
How to buy and sell BTC
There are two main ways to acquire (and cash out of) Bitcoin:
- Cryptocurrency exchanges: Online platforms such as CoinW act as middlemen, allowing you to buy Bitcoin with fiat currency (like USD or SGD) or other cryptocurrencies. To use an exchange, you’ll need to create an account and verify your identity. Once verified, you can link your bank account or debit card to buy Bitcoin.
- Peer-to-peer marketplaces: These platforms connect buyers and sellers directly, enabling you to purchase Bitcoin with cash or other payment methods. Popular options include LocalBitcoins and Paxful. Be cautious when using peer-to-peer marketplaces, however, as there’s a higher risk of fraud. Always check the seller’s reputation before making a transaction.
How to store your BTC
There are two main ways investors store BTC–through custodial and non-custodial options. The key difference boils down to who controls the private keys to your BTC.
- Custodial storage: In this scenario, a third-party service, like a cryptocurrency exchange, holds your private keys for you. It’s similar to keeping your money in a bank. This offers convenience and often comes with user-friendly interfaces and recovery options if you lose your login credentials. However, you relinquish control over your BTC to the custodian.
- Non-custodial storage: Here, you take full responsibility for your private keys. These keys are like passwords that grant access to your BTC. Non-custodial wallets come in various forms, from software wallets on your phone to hardware wallets that resemble USB drives. With non-custodial storage, you have complete control over your BTC,but it also means you’re solely responsible for safeguarding your private keys and ensuring they aren’t lost or stolen.
If you go for the non-custodial option, you will then choose between two main types of Bitcoin wallets:
- Software wallets: These are digital wallets you install on your computer or phone. They’re convenient but can be vulnerable to hacking if your device is compromised. Popular Bitcoin-only software wallets include the Blockstream Green Wallet and Blue Wallet.
- Hardware wallets: These are physical devices resembling USB drives that store your Bitcoin offline. They offer the highest level of security but come at a cost. Ledger and Trezor are well-regarded hardware wallet brands, as is Jade Wallet (also from Blockstream).
How to keep your BTC safe
When you create a Bitcoin wallet, you’ll be given 12 random words called a seed phrase. This seed phrase acts as a master key to recover your Bitcoin if you lose your device. Never share your seed phrase with anyone, never keep it in digital form (this includes taking a picture of it) and keep it in a safe place.
For each Bitcoin wallet you create, you will also be given a public key and a private key.
- The public key is like your bank account number — it’s used to receive Bitcoin. This is the key you give to others to send BTC to you.
- The private key is like your ATM pin — it’s used to spend your Bitcoin. Keep your private key secure, as anyone with it can steal your Bitcoin. Hardware wallets store your private keys securely offline.
How to spend and receive BTC
At the risk of repetition, here’s a step-by-step guide to receiving and spending your BTC.
Receiving BTC:
- Get a Bitcoin wallet: This is like your digital bank account for BTC. There are many wallet options available, choose one with a good reputation and user interface that suits you. Ask around your local BTC community (be very cautious of asking random strangers online, they might send you a phishing wallet and you will never see your BTC again if you send it there).
- Copy your wallet address: Think of this as your account number. It’s a string of letters and numbers that you can share with people to send you BTC. Your wallet app will usually let you copy it or display a QR code for easy scanning.
- Share your address: Give your wallet address to anyone who wants to send you BTC. They can enter it manually or scan your QR code.
Spending BTC:
- Pay at stores (online or physical): A growing number of stores accept BTC directly. Look for a crypto payment option at checkout. They might provide a QR code or address to scan/enter to pay.
- Use a crypto debit card: Some services offer cards that let you spend your BTC like cash at any store.
- Send from your wallet: This is for sending BTC to friends, family, or crypto exchanges. Open your wallet app, select “send” and enter the recipient’s wallet address and amount (before confirming the transaction, do take note of the fees. When fees are high, it may be less costly to send it via Lightning. Many wallets have this option.)
- Double-check the address before sending BTC, as transactions are irreversible.
It’s a good idea to start with a small amount of BTC to get comfortable with the process before making larger transactions.
In conclusion
Congratulations, you’ve taken your first step to participate in a decentralized financial system. This will be far from the only guide you should read about getting started with BTC, though, there are various resources out there to help you sharpen your knowledge even further. Again, be cautious of interacting with strangers online, and if something seems off, it probably is.
