NOTE: I’m not a financial or legal advisor. I just have a passion for software technologies and believe in Blockchain’s future. However, I definitely don’t recommend you putting all your life savings in Bitcoin or any other cryptocurrencies.
Bitcoins can be used as a form of currency. In fact, it is probably the best-known cryptocurrency today. Bitcoins enable cross-border payments with ease and low cost as it is not tied to any country or subject to regulation (yet).
Buy on an Exchange
Bitcoin exchanges allow anyone to buy or sell bitcoins using different fiat or cryptocurrencies. Coinbase is the leading exchange, and probably the easiest way to swipe your credit card online to get your first Bitcoin. If you are north of the border on the Canadian side you will not be able to sell on Coinbase (for now). I recommend Coinsquare. It is simple, and fairly a similar experience to Coinbase but you will find your friend Interac Online, and Interac e-transfer to fund your coinsquare account.
Other exchanges include Poloniex, Bittrex, Bitfinex. Not only you can buy Bitcoins on these exchanges but you can buy other less popular and upcoming coins. It will feel like you are trading penny stocks, so very risky (Yes, even riskier than Bitcoin). Worth mentioning that Bitfinex was hacked in 2016 and Tens of Millions (in $$) worth of coins were stolen.
Transfers
To send/receive bitcoins, you need two things: a bitcoin address and a private key. A bitcoin address is generated randomly, and is simply a sequence of letters and numbers. The private key is another sequence of letters and numbers, but unlike your bitcoin address, this is kept secret.
If you set yourself up with a Bitcoin Wallet. Like Blockchain.info, or a hardware wallet like Trezor. You can have someone transfer coins directly to your address.
Think of your bitcoin address as a safe deposit box with a glass front. Everyone knows what is in it, but only the private key can unlock it to take things out or put things in.
If you ever wondered why do you need to wait sometimes for your transaction to clear, it is because the miners need to approve the transactions. Wondering what are miners? Keep reading ;)
Mining
Miners compete to “mine” bitcoins using computers with a special software (and hardware) to solve complex math problems. This is how bitcoins are created. In return to their mining effort they are rewarded with Bitcoins. This provides a smart way to issue the currency and also creates an incentive for more people to mine.
Beyond the incentive piece, Bitcoin miners help keep the Bitcoin network secure by approving transactions. Mining is an important and integral part of Bitcoin that ensures fairness while keeping the Bitcoin network stable, safe and secure.
If you want to learn more about mining hardware and its specifications go to Bitmain
TL;DR
- Setup your Coinbase or Coinsquare if you are in Canada
- Buy your Bitcoins
- Optional: If you are concerned about security and don’t fully trust exchanges and their hosted wallets. Get a Trezor to use it as cold hardware storage.