I decided to put together a sort of quick reference guide or datasheet to share with friends and family who ask about Bitcoin. I'm pretty sure nobody on here needs this as if you're already on a blockchain based social media site and using Steem I imagine your pretty adept at this stuff but figured I'd post it anyhow.
Basically just wanted to make a guide so I can tell people where to buy Bitcoin as well as a few options to store it so I'm not having to go through this whole spiel everytime my dads buddies or my girlfriends cousins ask about it.
If I mis-spoke or said anything incorrectly feel free to correct me so I can edit my guide.
Beginner Friendly Guide to Buying and Holding Bitcoin & Cryptocurrencies
There seems to be a lot of new interest in here and online in general about Bitcoin and Cryptocurrencies so I thought I would make a brief guide on how a beginner can safely and easily buy Bitcoin as well as "alt coins" or other Cryptocurrencies.
I'm going to assume you know the very basic idea of what Bitcoin is so I won't go too in depth, but Bitcoin is a digital currency based on cryptography. There can only ever be 21 million Bitcoins so no inflation. It's decentralized meaning no central bank, or government or central authority is in charge of it. Unless the internet goes down it can never go down as it's run on nodes all over the world. It's nearly impossible for it to be tricked or hacked since it's based upon proof of work. And no, it's not backed by a central bank or government, but that's actually a good thing as you can't print fake money out of thin air, the value is in the utility and it's become pretty clear people believe in it which gives it it's value as well.
Blockchain technology is essentially what Bitcoin, Ethereum, Litecoin and pretty much all cryptocurrencies or digital currencies are based upon and it's being adopted by banks, Wallstreet, etc. For anyone who still doubts it guys like Bill Gates, Richard Branson, and others have talked about how bullish they are about Bitcoin and blockchain technology in general and recently John Mcafee of Mcafee anti-virus said he would eat his own penis live on tv if Bitcoin is not at $500,000 in 3 years. Basically people smarter than you and I are big believers.
A Couple Points Before We Get Into It
Don't invest more than you're willing to lose. Crypocurrencies are still in their infancy and there is a lot of volatility. Personally I have 30% to 40% of my investments in cryptos but in general you probably don't want more than 10% max, probably. Hopefully going in with this mentality will keep you from selling on a dip, and there will be dips but it always rises back up.
Decide why your buying in. Do you believe Bitcoin will be worth tens or even hundreds of thousands per coin? If so your a long term holder. Or are you just trying to swing trade and make a few hundred here and there on dips and spikes?
Don't sell on dips. Many new Bitcoin holders bought in at $3,000 and then understandably freaked out and sold when it dipped to $1900, they sold and lost a boatload of money. Less than a week later Bitcoin was back up over $2900, happened in less than 48 hours.
Learn how to safely store your Bitcoins. Ideally you want to control your private keys yourself and not keep them on an exchange. We'll discuss this in this guide.
Buying Bitcoins
You want to buy your Bitcoins on Coinbase .
Coinbase is going to be the safest and easiest to use, especially for a beginner. With Coinbase you can purchase with an ACH transfer from your bank or by using a credit card for an additional 1%. For larger purchases you can also send a bankwire.
Coinbase is regulated, they are insured, and they are one of the few exchanges, if not the only exchange, which to date has not been hacked. They also offer two factor authentication via either text message or Google authenticator use it. Basically if someone gets your password they can't get into your account without also having your phone.
Coinbase sells Bitcoin, Ethereum, and Litecoin, the three major cryptocurrencies. For other alt currencies you can buy on Bittrex.
They make the process of buying Bitcoins and other cryptos as well as holding them or storing them safely very user friendly and easy.
Coinbase also offers a cold storage as well as a cold storage where you hold your own keys. We'll get into that later.
Overall, Coinbase really makes the entire process simple. They have a user friendly interface and it's really no different than doing something with your online banking or Scottrade or Schwab account. They also offer things like recurring buys for those of you who want to get into Dollar Cost Averaging.
Storing Your Bitcoins Safely
Most of the smartest people in the room will tell you it's stupid to store your Bitcoins on an exchange, and it's a valid point. Ideally you want to control your own Bitcoins and control your own private keys. That said it can be a bit overwhelming when you first get started, and I'm going to go against conventional widsom and say storing your Bitcoins on Coinbase isn't the worst thing in the world.
While it's true many exchanges have been hacked, one of the biggest most memorable stories being MtGox, Bitcoin exchanges have come a long way since then. MtGox was initally setup to trade magic cards, not Bitcoin or financial instraments so when people say don't keep your coins on an exchange I think they are more so referring to unprofessional exchanges like MtGox as opposed to a company like Coinbase who's regulated, insured, and has a high level of security.
Exchanges
Coinbase is probably the only exchange I would recommend storing money on. I still would say it's ideal to hold your coins on a light software wallet like Electrum or a hardware wallet like Bitcoin or Trezor, however I would still sleep safe at night having my coins on Coinbase.
To help secure your coins I'd recommend using Coinbase's 2 factor authentication. This can be done using either text message or Google Authenticator. This basically means even if someone had your Coinbase login they couldn't access your account without also having your phone to receive the second part of the authentication.
Coinbase also offers a vault feature. You can transfer Bitcoin from your regular wallet to the vault. The vault is protected with an additional password and when you want to pull money out of the vault there's a 2 day waiting period, during which, Coinbase will bombard you with e-mails and texts asking you if you did the withdrawl.
Having two part authentication and using the vault would make it literally impossible for someone to steal your Bitcoin.
If your someone who wants to hold or store your own private keys Coinbase also offers a multisignature vault where you control 2 out of 3 of your private keys and Coinbase holds the other so they can sign off on your transactions. Coinbase however even if they wanted to could not do anything without your two keys which you hold.
I would say your first couple weeks on Coinbase keep your coins there while you slowly get comfortable with holding and using Bitcoins. Make a small purchase, make a small transaction or send, just try to slowly get a lay of the land and learn while using small amounts.
If you want to store them on Coinbase forever I honestly don't have any big objections to that but I would suggest learning how to use a software wallet or a hardware wallet.
Software Wallets
There are essentially two types of software wallets. Something like Multibit which downloads every Bitcoin transaction on the blockchain and really bogs down your machine, or a "lite" or "light" wallet like Electrum.
Electrum is probably the most popular, more secure, and safest software wallet to use. It's free to download, it's very userfriendly, and in the case of a coin split or fork they have said they will support both coins.
There are other hardware wallets but I really like Electrum as it's easy to use, it doesn't bog down your computer, they will support offshoots of Bitcoin, and it's compatible with hardware wallets like the Trezor and Ledger.
Sending Bitcoins from an exchange to your software wallet is literally as easy as sending an e-mail. Put in the address of your Electrum wallet and hit send.
Hardware Wallets
Hardware wallets are by most considered to be one of the safest ways to store Bitcoin. While there's a couple different types the two big names are the Trezor and the Ledger . The Ledger is currently backordered until September 1 and costs 58 Euros. The Trezor you can get immediatley and costs 89 Euros.
Both these wallets are excellent and you can't go wrong with either. That said I think the Trezor is a bit more secure and a bit more user friendly, however the Ledger can store more alt coins if you wind up getting into those.
These devices are basically like fancy USB sticks. What they do is store your coins offline so you can do Bitcoin transactions on a computer or phone which is infected with malware or viruses and there is no security risk as the private keys are actually on your device which require an encoded pin to use. Even a keylogger will not be able to steal your Bitcoins.
Sending Bitcoins to your hardware wallet is as easy as sending an e-mail. Just put in the address, put the amount, and hit send.
Investing In Alt Coins
While Bitcoin is kind of the first and main cryptocurrency, there are many others which people often refer to as alt coins or alternative coins. The main ones aside from Bitcoin are Ethereum and Litecoin. Ethereum was up over 5000% from the new year up until the recent dip. The other main altcoin is Litecoin. Coinbase supports Bitcoin, Litecoin and Ethereum.
There are other alt coins, some are great and have seen returns of thousands of percentage points in the past few months, others are more like penny stocks and pump and dump schemes and will go to zero.
I would suggest mainly sticking with Bitcoin, Litecoin and Ethereum for your first few weeks until you get the hang of things. If you want to start dealing with alt coins later down the road you'll do so on Bittrex. Bittrex is the largest marketplace and has the most amount of altcoins. It's fairly easy to use and pretty secure. There are other exchanges like Gemini and Poloniex, however I recommend Bittrex.
You typically cannot buy alt coins with Dollars, you need to first buy Bitcoins on Coinbase and then transfer Bitcoins to your Bittrex account where you can trade Bitcoin for other alt coins.
Where this gets kind of confusing is while some hardware wallets store multiple coins and some software wallets store multiple coins, not every wallet stores every coin so if you start getting a large holding you may need dozens of different wallets to hold all your coins. I don't have huge holdings in alt coins so against a lot of peoples suggestion I typically keep them on Bittrex and have not had any issues.
If you're wondering about some alt coins to look into here are some of mine I really like and hold... Ripple, Monero, New Economy Movement (NEM/XEM), Lisk, ARK, Steem, Dash, Golem, Siacoin, Bitshares, Ethereum Classic, Antshares, VertCoin, Maid, Waves, Burst, Komodo and Ardor.
One last thing I want to mention about alcoins. Origionally most coins were meant to be currencies. As of recently however a new thing is ICO's or initial coin offerings which are sort of like an IPO for a stock. Some will take off, others will flop and go to zero. Conventional wisdom is stay away from them for the first few weeks/months. The reason I bring this up is these are not really cryptocurrencies in the sense they are meant to be a store of value or a way to transfer money.
To get around accredited investor rules where only people with a net worth of over 1 Million can invest, by calling it a coin tech startups are able to get around these rules and sell their coins to investors, as long as the coin has some "utility".
Some of these coins may actually have a bright future, however I do feel the need to specify not all of them are meant to be transfers of value. If the company fails the coin fails.
Wrapping Up
That pretty much sums up the basics to buying Bitcoin and storing it safely. I didn't wanna go in to too much depth as this is a beginner guide and this should be enough to get you started. If you have questions or want anything clarified drop a comment and I'm happy to answer.