Have you heard about Bitcoin from friends or seen headlines, but still aren‘t quite sure exactly what it is or how to get those coveted coins? As a long-time crypto enthusiast, let me walk you through everything you need to know in this all-encompassing beginner‘s guide!
I‘ll be sharing various methods for acquiring Bitcoin, but first let‘s quickly understand what Bitcoin actually is and why it‘s valuable.
What is Bitcoin Exactly?
Bitcoin is the original and most widely-used decentralized digital currency that enables direct payments between individuals without requiring a bank or middleman.
Here is a quick overview:
- Launched in 2009 following the 2008 financial crisis as an alternative financial system
- Built on open-source blockchain technology that records transactions on a distributed public ledger
- Supply capped at 21 million BTC that must be "mined" using computing power
- Funds held in digital wallets accessed via private keys instead of bank logins
Bitcoin serves as both a disruptive payment network as well as a speculative investment asset with significant price volatility.
Now that we know the basics, let‘s get into the good stuff…how exactly do you buy or earn Bitcoin?
Getting a Bitcoin Wallet
Before I can receive any Bitcoin, I need a secure place to store it called a Bitcoin wallet. This works kind of like my PayPal or Venmo account, but for holding crypto funds instead of regular cash.
Several good Bitcoin wallet options exist – some main choices include:
| Wallet | Description | Security | Ease of Use |
|---|---|---|---|
| Exodus | Software wallet for desktop & mobile | Medium-High | Very easy |
| Coinbase | Leading cryptocurrency exchange wallet | Medium | Easy sign-up |
| Ledger Nano S | "Cold storage" hardware wallet | Very High | Moderate setup |
Based on the above comparison, I‘ll go ahead and set up an Exodus software wallet to get started. This offers high ease of use while still maintaining good security practices.
I simply head to the Exodus website, download their app for my phone‘s operating system, and follow the setup guide:
- Install app
- Create new wallet
- Save unique seed phrase securely (functions as password)
- Done! My Exodus wallet is now ready to receive funds
Easy enough! Now it‘s time to actually get some Bitcoin headed my way…
Method #1: Purchasing on a Crypto Exchange
The most popular avenue for acquiring Bitcoin is buying it from an online cryptocurrency exchange. These exchanges allow you to deposit fiat money like USD, EUR, GBP etc and trade it for digital currencies like Bitcoin.
Based on research, I decide to sign up with Kraken to make my inaugural BTC purchase:
Kraken‘s straightforward signup page
The signup process is very similar to opening a stock trading account, requiring personal details and document uploads for ID verification.
Once my account is approved, I return to the Kraken dashboard and click "Funding" near the top left. This drops down a menu where I select "Deposit" and choose to fund my trading account via bank wire transfer.
After double-checking my details, I submit the wire transfer of $400 to add a nice roundnumber fiat balance to trade with.
Placing a market order to buy $400 worth of Bitcoin on Kraken
Once my USD bank deposit processes in 1-2 days, I see the balance reflected in My Kraken account. I head to the "XBT/USD" trading pair page and input how many dollars I want converted directly into Bitcoin, like ordering off an a la carte menu!
I place a market order to convert the $400 USD into Bitcoin, pay a couple bucks in fees, and voila – my exchange wallet is credited with $400 worth of BTC at the current market rate. Exhilarating!
Now my Bitcoin balance shows in my Kraken portfolio right alongside the cash balance. However, for optimal security I should really withdraw those coins off the exchange.
Using the "Withdraw" page, I simply input my Exodus wallet address and send my shiny new Bitcoin over there instead for safer storage.
And there you have it! I just officially purchased cryptocurrency for the very first time. Exchanges provide a simple gateway to turn fiat into "digital gold"!
Method #2: Earning Bitcoin via Mining
In addition to purchasing Bitcoin outright, it‘s also possible for enterprising folks like you and me to earn Bitcoin as a reward for supporting the network infrastructure. This process is called "mining".
It works like this:
- Thousands of unconfirmed Bitcoin transactions are continuously broadcast across its peer-to-peer network awaiting verification.
- "Miners" around the world compete to bundle these transactions together in "blocks" and perform the verification checks required to add those blocks to the immutable blockchain ledger.
- As a reward for successfully mining a block, miners currently earn 6.25 newly minted Bitcoin as well as any transaction fees attached.
So in essence, miners act as auditors – making sure no illegitimate transactions bounce through or duplicates slide in. It‘s the mathematical equivalent of catching counterfeit bills!
What‘s required from a technological standpoint to mine Bitcoin then?
Bitcoin Mining Equipment
In the early days of Bitcoin, mining could be done with regular home PCs. However the network‘s protocols make this increasingly harder over time. Now specialized computing equipment is a must.
Miners today use dedicated machines called ASICs (application-specific integrated circuits) that are specifically designed with customized chips to most efficiently process and verify Bitcoin transactions.
Popular ASIC models include:
- AntMiner S9 – $450
- MicroBT Whatsminer M30S – $1,400
- Bitmain AntMiner S19 Pro – $2,500
The AntMiner S9 unit above runs at 14 terahashes per second (TH/s). This number represents its processing speed and amount of cryptographic calculations it can perform per second in hopes of mining coins.
My laptop CPU by comparison clocks in at a mere 0.0000002 TH/s! So specialized hardware is definitely required to have a competitive edge.
Alright, let‘s give this Bitcoin mining thing a whirl…
Setting Up My Mining Operation
First, I‘ll secure the peripheral gear needed to house and run my ASIC machine:
- Dedicated mining PC case with built-in fans – $150
- Heavy duty power supply – $200
- Ethernet cables to connect gear – $10
- Mining software like CGMiner – Free!
That covers the physical hardware setup. However solo mining no longer yields consistent rewards, so I‘ll need to join a mining pool to team up with other miners and combine our computing power.
Popular mining pools include:
- F2Pool
- AntPool
- Slush Pool
- ViaBTC
These pools split rewards proportionally among participants based on the amount of hash contributions. I decide to rollout with F2Pool given their strong reputation.
After registering on the pool‘s site, I just need to input my wallet address from Exodus to receive payouts.
Lastly, time to startup my beloved mining rig! I configure my software to connect with F2Pool servers and set target temperature thresholds that trigger automatic shutdowns if exceeded.
With flick of a switch, my home transforms into a Bitcoin mint humming away in the corner!
Based on electricity costs in my area and mining difficulty estimates, I can expect to earn around 0.7 Bitcoin per year through my mining efforts. That works out to $15,000+ annually depending on market price!
Not too shabby for passive income generated by my new hardware employee I‘ve affectionately dubbed "Array the ASIC Miner". Hope you don‘t mind working overtime Array!
My ASIC mining rig happily churning out Bitcoin over time!
And believe it or not, determining where and how to setup a mining operation was the "easy" part! Optimization and maintenance requires ongoing care. But hey – no one said pioneering decentralized infrastructure was going to be a cakewalk!
Method #3: Using a Bitcoin ATM
Growing in popularity, Bitcoin ATMs provide convenient access to buy & sometimes sell BTC with cold hard cash rather than a bank account. These function similar to regular ATMs connected to the Bitcoin blockchain rather than legacy payment rails.
Over 6,000 Bitcoin ATMS now exist across 71 countries per the Coin ATM Radar directory.
I locate several Bitcoin ATMs positioned around major banks and retail establishments 30 minutes away. Let‘s give one a test run!
I drive over to the grocery store where I spot the distinguishable silhouette of cryptocurrency‘s emblem plus the oversized name "Bitcoin ATM":
Exterior of the supermarket with a CoinFlip Bitcoin ATM
After waiting in line behind a couple other patrons, I approach the machine and notice handy directions plastered across the front. Nice design thinking!
I take my smartphone out and open my Exodus Bitcoin wallet app, making sure to enable permissions for the ATM to access my camera.
Following the on-screen guidance, I select the "Buy Bitcoin" option and carefully scan a QR code shown – this allows the ATM to identify my wallet address on the blockchain.
After confirming the wallet, I slide my debit card into the designated slot and elect to purchase $100 worth of BTC. I accept the 10% transaction fee and insert my PIN when prompted.
Within seconds, I receive a confirmation that $90 in BTC (after fees) was successfully deposited to my Exodus address! The blockchain network processes quickly.
I add that experience to my crypto memoir with satisfaction. Although the convenience comes at a steep price via elevated fees, Bitcoin ATMs offer an intuitive way to enter the crypto economy.
Method #4: Crypto Lending
An emerging method to earn Bitcoin rather than having to buy it is via crypto lending platforms like BlockFi that pay interest for depositing your coins with them.
Think of it like a savings account or CD where banks might pay you 0.5% annually on cash deposits. Now imagine exponentially higher rates…
Here are rates BlockFi currently offers:
- Bitcoin (BTC) – 6%
- Ethereum (ETH) – 5%
- Stablecoins (USDT, USDC etc) – 8%
The basic premise is that these firms take custody of crypto customer deposits and lend funds out to institutional borrowers like hedge funds and investment banks charging higher rates. They pass a portion of the sizable margins on to retail depositors!
I already signed up for BlockFi when reading about them on Reddit. So I simply transfer $500 worth of my Bitcoin over to earn steady compound interest.
6% of $500 is $30 annually or $2.50 per month in this case. So I‘ll slowly accumulate more satoshis over time without having to trade or transact anything!
It may not seem like much but adds up, especially if I direct future crypto purchases into BlockFi rather than a standard wallet.
Let your money work for you!
Final Thoughts
Whew, quite a whirlwind tour getting hands-on with Bitcoin across exchanges, mining, ATMs and lending!
Hopefully this guide served as a helpful introduction to the multi-faceted world of acquiring cryptocurrencies.
In closing, here are some key takeaways as you venture down the rabbit hole:
- Exchanges offer the easiest entry point to instantly trade fiat for crypto
- Mining creates new Bitcoin but requires technical expertise
- ATMs provide anonymous but expensive access
- Lending platforms let your idle crypto work for you
- Try different options and see what resonates!
Embarking on your crypto journey often feels daunting initially but becomes second nature over time. Feel free to ping me if any questions bubble up!
