Why would I want to send or receive Bitcoin?
There are many similarities between Bitcoin and stocks, but there are also a lot of differences that must be discussed. When purchasing stocks with a brokerage firm, you are holding a percentage of ownership to a company. Similarly, a bitcoin user has the ability to purchase a percentage of Bitcoin’s monetary network. However, Bitcoin is not a company and is more akin to an internet protocol. Additionally, portions of a whole bitcoin may be purchased. It is also becoming more common for stock brokerage firms to allow their customers to buy portions of shares.
Once purchased, stock shares are held by the brokerage firms. There are only two main uses for stocks, but only one of them is ever used. The first use case is selling the share back to the broker in exchange for fiat. The second use case is the option to vote for corporate policies. This use case is becoming less and less available for most new companies because founders are retaining all voting rights in order to have more control over the company.
In contrast, a Bitcoin user has the option to leave their funds on an exchange or send it to a wallet (on their phone, computer, or on a hardware wallet device) they control. When one stores their own bitcoin on a wallet that they have the private keys to, they decide when and where they wish to use their bitcoin. As long as the user has access to their private keys (think of it like a password to a bank account), their funds can never be confiscated, sold, sent, or used for other purposes without the person's consent. This is not achievable with shares held by a brokerage on behalf of their customers.
How do I buy Bitcoin?
Similar to purchasing stocks through a brokerage account, a user must sign up with a Bitcoin exchange and provide some personal information to prove their identity. Once approved, users are able to send funds from their bank accounts to their Bitcoin exchange account. The processing time for settled funds depends on the method of the transaction and the exchange’s policies. However, in general, a user’s account may be credited and the funds will be settled within five to seven business days.
Check with your available exchanges for funding methods like:
- Wire Transfer
- Debit or Credit card
How do I receive Bitcoin?
In order to store our bitcoin securely off of an exchange, you must setup a Bitcoin wallet. With this wallet, you will be able to send and receive bitcoin without the intervention or need for a third party.
You will first need to use a wallet that will generate a public and private address. A public address is a sequence of randomly generated numbers and letters that may be shared publicly in order for funds to be received. A private address or key is like the password used to withdraw funds from the wallet. This password must never be shared or stored on a device connected to the internet.
Please do not use the above example as a way to store your bitcoin. You must generate your own public and private keys.
There are a number of wallets for you to choose from, and it will take a certain amount of research to find out which wallet suits your needs the best. For our purposes, we will use BlueWallet to demonstrate the process of generating a public address to receive bitcoin.
After downloading the BlueWallet app onto your phone, you may select the “Add a Wallet'' option.
You will then be prompted to write down the 12-24 word seed phrase. A seed phrase is a more readable version of a private key. In the event that you lose your device that has your Bitcoin wallet on it, you may use the 12-24 word seed phrase to recover your funds on another device with the app. The seed phrase must never be stored electronically on a device connected to the internet.
Once the seed phrase is copied down on a non-digital material, BlueWallet will allow you to select the “Receive” button, and will generate a public address to send funds to.
How do I withdraw Bitcoin from an exchange?
Once you are able to acquire some bitcoin from an exchange available in your area, you will then be given the option to send funds to a wallet. The user interface and naming of features may appear differently for each exchange, but the mechanism for sending funds is similar on all exchanges. For the purposes of this demonstration, we will use the Coinbase interface on the desktop.
First, select the transfer or withdraw option in your exchange.
You will then be prompted to input a public Bitcoin address. In our case, this is the public address that we generated in our BlueWallet. You may think of the public address as a bank account number that is used to identify where funds should be sent to.
Once the amount of Bitcoin is selected, you may confirm the transaction in your exchange account.
How do I send Bitcoin from my wallet?
With funds now in your wallet, you have the option to send them to whoever you want, whenever you want. In order to do so, copy the public address you wish to send your funds to. In your BlueWallet (these steps will generally be the same in other wallets as well), select the send option.
Once prompted, paste the address you copied into the address field. Be sure to also select the appropriate amount of satoshis you would like to spend on this transaction. Satoshis are portions of a whole bitcoin. The higher the amount of satoshis you pay for the transaction to be executed, the faster it will process on the network and vice versa.
Confirm the transaction within your BlueWallet (or other wallet) and then check to see that the transaction was verified at least 6 times on the network. Confirmation times may vary depending on network activity, but will generally execute within 40 to 60 minutes.