How to use Bitcoin
There are many ways to use Bitcoin, but all methods basically follow the same procedure. There are three steps to follow when using bitcoin: earn bitcoins, manage your wallet, and pay bitcoins for goods and services. So let’s take a closer look at each step below.
A. Acquiring Bitcoin
In addition to bitcoin mining (discussed in section 2), you can get bitcoins simply by buying them. Purchases can be made through online exchanges or over-the-counter (OTC) transactions.
Over-the-counter trading refers to a transaction with another individual, usually a broker who manages negotiations. This method is mainly preferred by those who want to purchase large amounts of Bitcoin. The reason is that exchanges don’t have the liquidity to enable such huge trades (for example, buying millions of thousands of dollars worth of bitcoins).
Over-the-counter trading refers to a transaction with another individual, usually a broker who manages negotiations. This method is mainly preferred by those who want to purchase large amounts of Bitcoin. The reason is that exchanges don’t have the liquidity to enable such huge trades (for example, buying millions of thousands of dollars worth of bitcoins).
For ordinary Bitcoin users, Bitcoin exchanges such as Coinbase, Coinmama, and itBit are the safest and easiest way to get Bitcoin. To avoid foreign exchange fees, it is best to buy bitcoins on an exchange located in your country, which is usually connected to a local bank.
Using the exchange is very simple. If you go to the exchange’s website and complete the membership registration process, you can purchase Bitcoin right away.
An important note is that most exchanges require personal information such as name, email, and phone number. In addition, if you purchase Bitcoin through a credit card or bank transfer, such personal information is of course recorded.
If you decide to use an exchange, traders can lose anonymity in the process of buying and selling Bitcoin .
B. Manage your wallet
In the Bitcoin network, owning Bitcoin simply means owning the address and private key. As we have already shared above, private keys allow only certain individuals to encrypt digital signatures.
Without your private key, you cannot access your bitcoins, and there is no way to prove that you own these bitcoins. That’s why you should keep this private key in the most secure place possible.
When a Bitcoin address is issued, a private key is given to the user. This key is 256-bit long data, also displayed in alphanumeric format. For example, people sometimes use it in hexadecimal form, meaning a number between 0 and 9 or 64 characters between A and F. The most common method is to use the Wallet Import Format (WIF), which is 51 alphanumeric characters, always starting with a 5.
An example of a WIF private key is shown below.
5KJvsngHeMpm884wtkJNzQGaCErckhHJBGFsvd3VyK5qMZXj3hS
Losing your private key is like losing Bitcoin. If you lose your private key, you cannot find your bitcoins. Also, if someone else has my private key, that person can withdraw all of my bitcoins.
So, how can I protect my private key and bitcoin?
One way is to store your bitcoins offline. Storing your bitcoins and private key on a USB is a more secure way to prevent attackers and hackers from stealing your information. However, if you lose this USB and someone picks it up, you’re out of luck.
Another way is to store your bitcoins on third-party providers or clients that offer bitcoin wallets . A Bitcoin wallet is software that stores addresses and keys for all individual Bitcoin transactions.
However, as the number of attacks targeting crypto exchanges increases, the act of storing private keys in a Bitcoin wallet is no longer considered secure. The most recommended way is to store the key offline.
C. Trade with Bitcoin
Trading with Bitcoin is very simple. If you have a specific person you want to send money to, all you need is their bitcoin address , and you write this address into your bitcoin client. If the person you’re sending money to uses the same client as you, email may be all you need to send money. This is because the email is linked to the recipient’s account.
Online businesses that support Bitcoin as a payment method usually have a button that, when clicked, takes the user to their wallet. And the user proceeds with the payment from his or her wallet. For wallets installed on mobile devices, a QR code is usually provided to help users scan with their phone.
