How to buy, use and store Bitcoin

/How to Buy, Use and Store Bitcoin
How to Buy, Use and Store Bitcoin 2017-09-21T05:19:38+00:00

bitcoin - localbitcoin - electrum

To make things easy to understand, Bitcoins can be labelled as a form of “Internet money” or “E-money”.

The goal of this tutorial is to give you the ability to buy, use and store Bitcoins, but if you want to understand more about the concept behind this ground breaking financial movement you can easily find more information about this technology by using a search engine or YouTube for example. Let’s start the explanation.

First we will build our first wallet with a desktop application that I recommend for its simplicity and security. Be advised that there is plenty of choice and you can find more information on this link for example : howtobuybitcoin


Electrum Wallet

Like all desktop software, you will need to start by downloading and installing the application;  you’ll  find it by following this link: https://electrum.org/#download. After installing the one that fits your needs, you will be prompted to create your first wallet. Here are the steps to follow :

new_wallet_01

After providing the name of your wallet, select the Standard wallet option.

new_wallet_02

The next step will be to choose the Create a new seed option. If you already made a wallet in the past and have a seed with you, you can select I already have a seed to restore your previous wallet.

new_wallet_03

As you can see, a seed is a simple list of 12 words. Those words are very important. You can lose your computer, it can burn or whatever; if you keep this seed safe, you will always be able to restore your wallet and get your money back.

The best way to keep your money safe is to write down these words on a piece of paper and put it in the safest place you know. Even consider making a copy and give it to people you trust.

new_wallet_04

To make sure that you stored your seed correctly, the next step is to re-write the seed in the following text area.

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If you re-write the seed without any mistakes, you will be able to go through to the next step.

Now you will be asked to enter a password. This password is used for two things :

  • To protect you against robbery of your funds
  • To encrypt your wallet in case your computer gets hacked or stolen

Make this password very strong.

new_wallet_08

After this final step, you will be able to see your fresh new wallet.

wallet_01

I will describe all the tabs later when I show you how to buy and withdraw bitcoins from the Localbitcoins.com website. Here’s just a little preview.

This is the send tab, where you will be able to spend your funds.

wallet_03

This is the address tab where you can find many public address that you can share with anybody that wants to give you some bitcoin.

wallet_02


LocalBitcoins

Localbitcoins.com is a website that allows people to buy and sell bitcoins in many different ways. Wire transfer, cash deposit, hand to hand cash and PayPal are just a few of them. From my experience, this board is the easiest way to buy bitcoins quickly and anonymously (Depending on the chosen payment type).

Let’s create an account and I’ll show you some of the features this website has to offer.

1 – Account creation.

First, go on the website and click on the Sign up free button on the top task-bar.

lbtc_01_signup

You will need to fill in a simple registration form :

lbtc_02_register

After providing a Username, Email, and Password your account will be ready to go. After this step you will need to follow a link inside an email (you’ll receive this after sending your details) in order to confirm your email address.

lbtc_03_confirmation_mail

2 – Buying bitcoins.

Now you are ready to buy your bitcoins. This all start with a good old click on the Buy button.

On the section Quick Buy, you can setup the Country where you would like to buy and if needed change the currency if you don’t want to buy with the local currency.

Inside this section you will also be able to select your preferred payment option.

After clicking on the Search button, you get a list of the current bitcoin offers by the other customers on this board.

On the show more link at the bottom right of this list you can get even more results.

Now we’ll look at what you see if you click on the normal Buy button to get your bitcoins. As you can see, you can access several pieces of information in regards to trading. The local price for 1 BTC, the user, some limits and so on. In the blue part you can set the amount of local currency you would like to buy, or directly set a BTC quantity to buy.

To make things a little bit easier for the customer and seller, they let the seller put some additional information next to this trade. Read these instructions carefully because they can be vital for achieving a decent trade.

It depends on the payment method you choose, but you will always need to pay the seller first under the 90 minutes allocated, then mark the payment as Paid, and then the seller will release the bitcoin. This means you need to be able to trust the seller. For this, Localbitcoins.com provide you with a function to check the reputation of the seller. When you click the username of a seller, you will gain access to a profile like this one :

With this information you can directly evaluate the trust rating of this seller and ask yourself if you are ready to deal with them. There is also a list of feedback provided by other users at the bottom of the page to bring even more confidence to the transaction.

After everything is in order, and you are ready to buy, you can Send a trade request and start to speak with the seller to close the deal.

Warning : Don’t be surprised, but the seller can put all sorts of limits or requirements in place depending on the payment methods they allow. I’ll now provide examples of two limitations you might encounter. I can’t list them all, but be warned that until you get a certain amount of trade/reputation, you will not have a fully open trade platform.

3 – Withdraw your bitcoin.

After all you have been through, here we are and you should now have some bitcoins in your account. If the answer is yes, we are going to withdraw them into our Electrum Wallet (as previously set up.) If you already have another wallet, this is almost the same procedure and you can follow the same step. So first, click on the balance (you’ll find this in the top right corner.)

On your balance dashboard you’ll find a Send bitcoins section.

On this form, you will be asked to provide a bitcoin address where you want to be paid and the amount in bitcoins to move. If you look closely, the task-bar balance and the balance inside the Send bitcoins section are not the same. This difference is due to the fee taken to move your bitcoins. It isn’t localbitcoin that keep this money, it is only used to pay for the transaction of moving the internet money into your own wallet. In the More options section,  you can select it to be free to use if you need to.

Do you remember the Addresses tab we looked into on the final step of the Electrum wallet section? This is where you will find an address to put in the  Receiving bitcoin address field on the picture above. So let see the wallet again – you can copy an address with a right click on one of them, followed by a click on Copy Address.

Now fill in the Send bitcoins form with this information :

Depending of the bitcoin transaction queue, you will get your funds credited to your Electrum wallet between an hour to a day. Finally, this is how your wallet will look when you receive your bitcoins from localbitcoins.com.

 


Electrum wallet : Spending your funds.

Now, the best part : Buying some products with your bitcoins of course!

On our website, we use an external bitcoin processor that generates this kind of box at the checkout.

There are two rules to follow carefully : In the Send EXACTLY section mention the precise figure you wish to send, and in the address field provide  your exact address. If you make a mistake on the amount, you will be able to contact support. Also if you make a typo on the address, it should not be possible to send your transaction. To send your bitcoin to this address, here is how it should look your wallet :

I put a 0.001 BTC fee (which is a very expensive one) to get my payment detected as quickly as possible. But you can set your fee to a cheaper amount. When you are ready to pay, click on the Send button and you will be prompted to put in the password that you set at the beginning of this tutorial.

And it’s done !
Now you have the power to run your own bank and use your bitcoins as you wish.