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Security

How To Buy Bitcoin

November 30, 2016 — by Daniel Smith48

First, what is Bitcoin and where did it come from?

Bitcoin (BTC) is a cryptocurrency payment system based off of the blockchain, a core component of the digital currency. The blockchain was introduced by a pseudonymous creator, Satoshi Nakamoto, in 2008 and open sourced for the currency in 2009. The blockchain serves as a public ledger that records all Bitcoin transactions. One of Bitcoin’s main features is the fact that the system is a decentralized peer-to-peer payment network with no central authority, which means that it provides a certain level of anonymity with no central point of failure, though most services and business that use Bitcoin are centralized in one way or another. While there are numerous legitimate uses for Bitcoin like investing, paying friends or shopping, a number of criminals have adopted the currency for selling services and deploying ransom campaigns due to its level of anonymity.

The Bitcoin “Bank Account”

Before you can purchase Bitcoin, you will need somewhere to store it. An online Bitcoin wallet and exchange is accessible via the web from a browser or a cellphone. Some exchanges like Coinbase even offer an application for both Android and iPhone that makes buying and selling Bitcoin and in-store purchases very simple. Paper wallets are a form of cold storage with the address and private keys printed on them from offline computers. By printing the paper wallets offline, the exposure for your wallet being compromised is greatly reduced. There are even hardware wallets specifically designed to securely hold your Bitcoin. Once you have a wallet, you will then be able to buy and deposit your Bitcoin along with sending and receiving it.

bitcoin

How to Purchase Bitcoin

Users wishing to invest, purchase or shop using the digital currency only have to take a few basic steps before being able to use Bitcoin. You can either purchase it online at a number of digital exchanges or locally at a Bitcoin ATM. Another way to accumulate it is to accept it for goods and services.

There are a number of online exchanges you can use to purchase Bitcoin. Exchanges like Kraken, BitStamp, and OkCon all offer services where you can buy it online. Coinbase is one of my favorite online exchanges and one I use personally. Their app is very user friendly and convenient to use.

[You might also like: Threat Alert – Bitcoin Exchanges and Websites Experiencing DDoS Attacks]

On Coinbase you can convert your local currency into and out of Bitcoin and ethereum, another cryptocurrency, by linking your wallet to your bank account. You can also use debit and credit cards to purchase BTC on Coinbase. Coinbase allows users the ability to buy and sell items with their app at local vendors as well. To send money you can simply enter the recipients’ BTC address, but if you are purchasing from a local vendor you can use the app to scan the merchant’s Bitcoin address displayed in the form of a QR code. Coinbase also provides a great interface for watching the digital market so you can buy low and sell high, as the value of Bitcoin does rise and fall like the normal stock market.

coinbase

You can also purchase Bitcoin at a Bitcoin ATM if there is one nearby. Here in Brooklyn we have several of them that allow you the ability to purchase and sell Bitcoin at a physical location. Most of the ATMs around here are made by three different companies, BitCOIN, CoinBTM, and CoinSource. My local deli has a two-way Genesis ATM. Limits are varied based on verification status but the machines limit, according to the manufacturer, lets you buy $9,000 USD and sell $2,980 USD a day. Buyer fees range between 7 and 15 percent while selling fees are 3.5% across the board.

bitcoin-atm

Where can I use Bitcoin?

So who uses Bitcoin and where can you use it? A lot of merchants have adopted or used Bitcoin in one way or another over the last few years. Many Ecommerce stores have already embraced Bitcoin technology. You can purchase items on websites like Overstock, Newegg Tiger Direct, and Expedia with Bitcoin. Now, there are also physical stores that accept it. Here in New York City, there is a wide variety of bars, coffee shops and other independent stores that accept Bitcoin.

Perhaps most notably, Darknet marketplaces like AlphaBay and Hansa, along with the DDoS-for-Hire industry, have adopted BTC as their currency of choice. Even ransomware authors are choosing to accept payments via Bitcoin. Criminals will use a number of methods to anonymously purchase and store ill-gotten BTC through the use of services such as tumblers. Tumblers are online services used to launder Bitcoin in an attempt to mask the coin’s origin or to prevent it from being identified while purchasing illegal goods online.

As the currency continues to mature, users will see even more legitimate uses and big name stores accepting Bitcoin. As it grows, more investors will fund projects that result in more secure and enhanced infrastructure. Bitcoin is the first mainstream digital currency, so there will be more growing pains, especially when it comes down to government control and taxes, but at the same time there are many benefits and security features behind accepting the digital currency. One that stands out to me is the fact that criminals cannot steal your payment information from the merchant like they can with credit cards.

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Daniel Smith

Daniel Smith is an information security researcher for Radware’s Emergency Response Team. He focuses on security research and risk analysis for network and application based vulnerabilities. Daniel’s research focuses in on Denial-of-Service attacks and includes analysis of malware and botnets. As a white-hat hacker, his expertise in tools and techniques helps Radware develop signatures and mitigation attacks proactively for its customers.

48 comments

  • Daddy big bucks

    December 14, 2016 at 2:35 pm

    Bitcoin is a waste of money, unless you need to hide illegal activity. The waste comes in the fees that are charged to buy and sell. The buy low sell high is a poor investment as the value does not change enough to make it a sound investment.

    Reply

    • David Vice

      March 14, 2017 at 1:16 pm

      The investment is not looked upon as financial. It is about independence. This is a system composed for people with above average IQ that feel they do not need a central authority to own and administer their wealth.

      Reply

      • Shamus

        March 29, 2017 at 5:01 pm

        Spot on, its a libertarian movement, anti-corruption tool to the likes of WS, FedRsrv and banks, etc. – Old school investors of the 1903 mentality, have narrow vision and do not realize yet that scammers and hackers are the biggest threat to everyone today. Blockchain…

        Reply

      • Shamus

        March 29, 2017 at 5:02 pm

        Very true, but oldtimers want to control for thier benefit and on occassion help others too…

        Reply

    • Steve

      March 29, 2017 at 4:35 pm

      Try using bitcoin during a power outage

      Reply

      • Shamus

        March 29, 2017 at 5:03 pm

        or a debit card, bank account, gold reserves –

        Reply

      • Billy

        May 4, 2017 at 8:48 pm

        That’s hilarious!!!

        Reply

      • Sam Berouty

        May 7, 2017 at 7:33 pm

        If there’s an EMP event, adios digital currency

        Reply

    • D Dizzle

      May 4, 2017 at 5:48 pm

      That’s interesting. I just made a 50% return on Bitcoin and a 150% return on Ether in the last month and only had to pay a 1.49% fee.

      Reply

    • Pom

      March 19, 2018 at 5:18 pm

      Yay’ I’ve said this from the beginning. Drug dealers from the get go can use this for so many ways. The man invents money?

      Reply

  • zinger59

    December 16, 2016 at 3:24 pm

    I don’t trust what I don’t understand. There are smarter people out there who will always find a way to steal your money. Mt. Gox for example.

    Reply

  • Revd Ian P.Hamilton

    January 31, 2017 at 5:49 pm

    Bit-Coin is a currency used by criminals trying to hide the proceeds of crime, and to avoid tax payment by unscrupulous business when they want to leach off any society.

    Reply

    • David Vice

      March 14, 2017 at 1:18 pm

      Thank you for being a champion of our most honest Tax system. My hero.

      Reply

  • Harry

    February 11, 2017 at 6:48 am

    As BTC is a digital currency and origin of payment info is very secure, it is a safe gateway for hackers and criminals. Until government take a peek in to it and decorates with tax, it is pain less.

    Reply

  • bitcoin storage

    February 19, 2017 at 2:51 am

    Definitely great post about how to buy bitcoin, bitcoin is also like any other currency it’s just that it’s virtual unlike banks, bitcoin is decentralized currency. About investments bitcoin may be ideal but if you want to create more money you may consider diversifying your account to other investment it’s like creating more cheese station from one point to another because someone is moving the cheese from one point to another.

    Reply

  • Realdamnreal

    March 16, 2017 at 1:34 pm

    Great explanation. However, DaddyBigBucks hit the nail on the head. The 3% here and 7% there is too expensive to pay for a system that is not centrally administered. Why do I care- I have nothing to hide? In addition, I want there to be someone whom I can chew when mistakes plague my accounts.. No thanks, I am good.

    Reply

  • bill

    March 17, 2017 at 12:51 pm

    might be a “great explanation” for computer geeks but notsogood for a technology novice. WTF is cryptocurrency?

    Reply

  • bill

    March 17, 2017 at 12:57 pm

    sounds like same funny money garbage that governments issue backed up by NOTHING only worse to the power of 10 losing your assets in the probabilities of quantum space

    Reply

  • Virginia Vierra

    March 22, 2017 at 2:44 pm

    As a CPA i am skeptical of the security of investing in bitcoins. The US dollar is backed by gold. What is the bitcoin backed by? The fact that you could buy low and sell high means your “asset” or “money” could lose value while sitting in your bank account. This sounds more like a stock or bond investment except thise are backed by actual companies. With all the computer hacking going on i picture a hacker giving himself millions of bitcoins thus devaluing, if not making them totally worthless.

    Reply

    • Kevin Longfellow

      March 23, 2017 at 12:43 pm

      Unfortunately the dollar is no longer backed by gold like it should be and was in the good old days. Now the dollar is backed by trust in the U.S. government, I don’t know about you but I definitely don’t trust the government. I’d rather have Bitcoins for the time being. Hopefully America will get it’s act together but as I originally stated, the 1$ is no longer backed by gold bullion like it’s suppose to be.

      Reply

    • Robert Fager

      March 24, 2017 at 2:15 pm

      US Currency hasn’t been back by gold since the Nixon Administration!

      Reply

    • SotoMan

      March 27, 2017 at 4:53 pm

      Wow, a CPA that does not know we have been off the gold standard since the early 70s thanks to Nixon.

      Reply

    • Michael Wigger

      March 27, 2017 at 5:55 pm

      U.S. has not been backed by gold since The gold standard ended on August 15, 1971. Where did you get you CPA Cracker Jacks University?

      Reply

    • Shamus

      March 29, 2017 at 5:07 pm

      Really? US monopoly money is backed by real gold – hmmm, fools gold maybe…

      Reply

      • RonaldB

        March 31, 2017 at 6:37 pm

        Unless the amount of gold you have is increasing, which is unlikely today, currency backed by gold is a recipe for deflation, which is at least as bad, probably worse, than inflation. In an expanding economy, the currency needs a way to expand. This is impossible when the paper currency is backed by gold.

        This goes against the dogma of the free-marketers, but accepted dogma is not necessarily the path to truth.

        Reply

        • Tom

          April 11, 2017 at 12:53 pm

          So then how is this different than bitcoin which is built on the concept of finite supply?

          Reply

    • Rollo

      May 7, 2017 at 10:08 pm

      Our dollar is NOT backed by gold. That is why we are in trouble. Big time

      Reply

    • Kevin

      May 11, 2017 at 8:04 pm

      Ooops! The U.S. dollar is not backed by Gold , and in fact it is not backed d by anything except the “good faith of the government”. We have not been on the Gold standard since Nixon.

      Reply

    • Jim conner

      May 21, 2017 at 7:23 pm

      1971 dollar not back in gold!!

      Reply

    • Dan

      May 24, 2017 at 3:41 pm

      So you think our USD is still backed by Gold? Don’t you know why they killed our president John F. Kennedy? Do some research.

      Reply

    • Slammo H Fandango

      May 28, 2017 at 1:17 pm

      “…backed by gold”…

      Ha! US dollars are backed by debt and nothing other than faith that those in debt will return what they’ve already borrowed. The US government has borrowed 20 Trillion dollars it can not possibly pay back, which explains why it takes over 5 times as many dollars to feed ourselves as we’re needed in the 70s. US Federal Reserve Dollars are a yuuge scam. Most of the dollars in circulation aren’t even worth the paper their not even printed on.

      Reply

    • Libertarcurmidgeon

      May 29, 2017 at 4:24 pm

      What? Before or after August 15 1971!?!?

      Does Nixon and Bretton Woods ring a bell?

      Reply

    • willis Genoa

      June 6, 2017 at 3:32 pm

      The dollar has not been backed by gold since 1970/71 and gold was valued at $35 an oz. Today it takes $1250 to buy that same oz of gold. Where is the security of the dollar to allow that dollar to depreciate so much in buying power to buy that same oz of gold?

      Reply

    • Greg

      June 19, 2017 at 11:22 pm

      Our currency has not been backed by Gold since Nixon. The reason is because at the time based on the price of gold versus our national debt at the time – the Federal Reserve demanded collateral against the national debt . So most of the reserves at Fort Knox were moved to the Federal Reserve Bank of New York. This move from Gold was the initial cause of the stagflation of the 1970s culminating in the Carter administration. Which then caused the dollar to be based off what then became the Petro-dollar as a result of the promises made by former Sec. of State Henry Kissinger to the OPEC countries if everyone had to buy their oil in US dollars. There is a lot more to this so do your research.

      Reply

    • Pacific

      June 22, 2017 at 3:21 pm

      “The US dollar is backed by gold.”
      Really? Are you really an accountant? Or a dinosaur?
      The dollar hasn’t been back by gold for almost half a century.

      Reply

    • Wally

      June 25, 2017 at 1:57 pm

      Not backed by gold, backed by debt

      Reply

  • bitcoinesBat

    March 24, 2017 at 7:58 pm

    You must not know so if it’s an good wager just at the time of knowing my return. Owners have which can know what much financial risk I received with each of our bet living in order to positively know assuming I was considered adequately treated for the chance. I can certainly have option $12,000 in which to win $5,000 on some coin move. That’s a awful bet, yet unfortunately you you shouldn’t know the idea if each of I convey to you has been that My partner and i won $5K. Thanks towards all unquestionably the import. Yeah, I have in effect a wonderful of don’t buy about bitcoins that’s how I’m expecting help. Kudos again

    Reply

    • Sam Berouty

      May 7, 2017 at 7:40 pm

      Scratching my head on your syntax bitcoinesBat

      Reply

  • bitcoinesBat

    March 24, 2017 at 8:11 pm

    You shouldn’t know in the instance it’s an good decision just through the process of knowing private return. People have to help you know so how much issues I made with which the bet inside order that can know if perhaps I already been adequately settled for associated with. I might have option $12,000 that can win $5,000 on virtually any coin sell. That’s a very bad bet, even though you you shouldn’t know this tool if all of I teach you is usually that I simply won $5K. Thanks to gain all unquestionably the import. Yeah, I have now a fantastic deal of mistrust about bitcoins that’s exactly why I’m requesting help. : ) again

    Reply

  • bitcoinesBat

    March 24, 2017 at 8:11 pm

    man, wish that I offered bought several hundred and few , 000, 000 dollars of bitcoins as some year previous. seems too late then. Although, had I gone with Mt. Gox I could possibly have already been screwed coming from my moola. Maybe just as competently.. Hope I won’t be supposing a year or two or far more down the queue that I still requires gotten into Bitcoins now

    Reply

  • Shamus

    March 29, 2017 at 5:14 pm

    All the anti-crypto-bitcoin haters must love that ALL of us are now impacted by some type of blockchain (a.k.a. – crypto-currency of some sort or dl)

    No escape from crypto – its in your life regardless of your stance – if your aware of it or not, like it or not – its in your life’s data.

    Reply

  • THAX MAN

    March 29, 2017 at 5:54 pm

    To “bitcoinesBat”…WHAT ??

    Reply

  • Tom

    April 11, 2017 at 12:51 pm

    while I understand the premise of bitcoin and the concept of having a finite number, what keeps new crypto currencies from constantly being created and competing with Btc? It would have the same affect of expanding the currency pool and deflating currency.

    Reply

  • Sakasi Nakatomo

    December 16, 2017 at 7:12 pm

    Hey Daniel,

    Thank you for your great insight on the bitcoin.
    No more debates are required, it’s over. Because we’re going to the moon anyway.

    Reply

  • johnhoomles226

    July 14, 2018 at 4:42 am

    cryptoexmart looks like the best place to sell or buy bitcoins. I checked their service and I was pretty impressed

    Reply

  • johnhoomles226

    July 14, 2018 at 11:48 pm

    Paxful is good except for the loads of scamers and thieves on their platform. I lost $10,000 on paxful. Well, I found a better website, CryptoExMart.com where I sold bitcoins and I received money in less than $21,000

    Reply

  • Robert Bint

    January 24, 2019 at 11:56 am

    Thanks for sharing useful information. i appreciate your content. I love your blog. Keep sharing!

    Reply

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