Bitcoin for Dummies 2024

Short guide; BTC Origin, Storing, Buying, Selling and Trading

In this short guide. We will go over all the basics you need to know.

Guide part 1. What is Bitcoin (BTC)

First lets separate two things;

1. BTC is the currency or asset that can be stored, spent or earned with a 21 million cap. This is the one that is worth x USD/YEN/GBP.
2. The Bitcoin Protocol is the system, that is a new technology created from Distributed Ledger Technology (DLT).
3. The BTC runs on top of the Bitcoin Protocol.

Let's use our smartphone as a reference to explain further;

Everything we do with our smartphone or Bitcoin runs on top of a system. Android or IOS equal the Bitcoin protocol. On top of these systems, we can use different apps and tools, such as online shopping, which need payment types and companies to process for each transaction. In Bitcoin, we use BTC for payment, rather than USD, YEN, GBP or other global currency. Visa or Mastercard are used to process most of our transactions facilitated by third parties that we trust with our money, while BTC is processed in the BTC Protocol network by computers called miners.

The difference with BTC is, that anywhere in the world, without needing approval from banks, governments or exchanging one currency to another, from say USD to YEN, we can easily process global payments quickly and for a lower cost.

Part 2. Storing BTC

Photo by WorldSpectrum

Before buying Bitcoin, you will need a place to store your cryptocurrency. Just like cash, we use the term, “wallet” to hold our money.

There are 2 main types;

Hot wallet’s

Cold Wallet’s

A hot wallet connects to the internet. It allows you access to trading, buying and selling easily, but because they are online, they can be hacked and targeted by malicious individuals. This does not mean they are unsafe, only that the chance of losing your funds, slightly increase due to hacking and other theft. Credit card fraud happens the same way, due to processing information online.

Cold wallets on the other hand can be thought of like a safe. This is a place where you can store your assets, safely and without worry of someone stealing them. It is the safest place to hold your cryptocurrencies. It does mean that you lose quick access to some services, but you can be assured your money is protected. You can read a review here on one of the most popular devices.

Most people use a combination of both. Cryptocurrency in hot wallets to use for services and payments, while storing other funds such as savings seperately.

Part 3. Buying Bitcoin. Selling Bitcoin. Trading.

There are multiple methods to do the above, with changing costs, pros and cons.

Bitcoin ATM

Like traditional ATM we use every day to withdraw cash, you can also buy cryptocurrency like BTC. You can use this site to see the closest ATM to you. Select how much you want, confirm the price and pay. A little like a vending machine. USD/GBP/YEN in, BTC out. Or vice versa.

Pros: Fast. Can skip giving personal Information like Id. Cons: 5–15% more expensive. Can be a scam.

Cryptocurrency Exchanges

Cryptocurrency exchanges offer an online way to buy Bitcoin. You can purchase based on competitive market prices. Depending on the exchange, you can use your credit card, debit card or pay-pal to process the payment. The exchange will create a hot wallet for you, and then you can remove the coins to a cold wallet of your choice if you want to further protect the assets.

Pros: Competitive market pricing. Can check Exchange reviews and communities for information on how good the platform is. Cons: More information required, including passport or ID to pass security. Waiting times for withdrawal. Funds are held by a third-party.

OTC (Over the counter)

An OTC marketplace is where people buying and selling cryptocurrency can meet and agree on transactions. The idea is to have no middle person, but a direct transaction with the other party. Person A has USD. Person B has BTC. They agree in a chat for price. They make the trade either in person or use OTC platforms as middlemen to facilitate the trade.

Pros: One to one trade. Easy process. Can trade large amounts of cash. Cons: Requires trust in the seller.

Get BTC for free

There are many promotions to get free cryptocurrency offered by different platforms. You can enter competitions, contests, giveaways and many other events offered online.

Pros: Free cryptocurrency Cons: You need to spend time and energy to win small amounts.

Get Paid in BTC

Do you like to blog, Freelance, create designs and offer services online? You can accept BTC for your work. All you need is a bitcoin wallet address and you can receive payment.

Did this guide help? Let me know in the comments below. Thanks for reading.

Interested in learning more about BTC?

Where Did the First Bitcoin Come From?