Mh?! Bitcoin? What’s that and how do i buy these?

What are bitcoins?

Not everyone yet knows, what bitcoins are. Here a short introduction in form of a video:

…to cut a long story short: It’s a digital currency.

Security and control

Bitcoin users are in full control of their transactions; it is impossible for merchants to force unwanted or unnoticed charges as can happen with other payment methods. Bitcoin payments can be made without personal information tied to the transaction. This offers strong protection against identity theft. Bitcoin users can also protect their money with backup and encryption.

Decentralized

The bitcoin network isn’t controlled by one central authority. Every machine that mines bitcoin and processes transactions makes up a part of the network, and the machines work together. That means that, in theory, one central authority can’t tinker with monetary policy and cause a meltdown – or simply decide to take people’s bitcoins away from them, as the Central European Bank decided to do in Cyprus in early 2013. And if some part of the network goes offline for some reason, the money keeps on flowing.

It’s anonymous

Well, kind of. Users can hold multiple bitcoin addresses, and they aren’t linked to names, addresses, or other personally identifying information.

Choose your own fees (even no fees!)

There is no fee to receive bitcoins, and many wallets let you control how large a fee to pay when spending. Higher fees can encourage faster confirmation of your transactions. Fees are unrelated to the amount transferred, so it’s possible to send 100,000 bitcoins for the same fee it costs to send 1 bitcoin. Additionally, merchant processors exist to assist merchants in processing transactions, converting bitcoins to fiat currency and depositing funds directly into merchants’ bank accounts daily. As these services are based on Bitcoin, they can be offered for much lower fees than with PayPal or credit card networks.

Payment freedom

It is possible to send and receive bitcoins anywhere in the world at any time. No bank holidays. No borders. No bureaucracy. Bitcoin allows its users to be in full control of their money.

How does one acquire bitcoins?

While it may be possible to find individuals who wish to sell bitcoins in exchange for a credit card or PayPal payment, most exchanges do not allow funding via these payment methods. This is due to cases where someone buys bitcoins with PayPal, and then reverses their half of the transaction. This is commonly referred to as a chargeback.

Bitcoin exchanges like BitStamp/MtGox

I think, the easiest way to exchange a larger amount of money is through a Bitcoin exchange like BitStamp. Everything is done online and you can buy or sell Bitcoins instantly. I opened an account and had to go through a verification process. I had to send my driving license (had a photo on it too) and my credit card bill. They verified me in 48 hours and I was ready to do my first transaction!

First i need to get money from my swiss bank account to Bitstamp’s account. In Europe we’ve got a thing called SEPA credit transfer. Within few days and a small fee, my money was transfered to their account. Now I finally could buy Bitcoins with the current exchange rate and set up a buy order.

You can check the current exchange rates yourself on Bitcoinity or Bitcoinwisdom.

bitcoin chart

Exchange with someone near you through LocalBitcoins

LocalBitcoins is a platform, where you can find people selling and buying bitcoins. You can search for them, even set a filter for country oder city. It’s almost the same as Ebay. After an exchange, you give and receive a rating. The more/higher ratings you have, the better reputation you’ll have on LocalBitcoins.
So if you you meet in person, how do you exchange real money and bitcoins? You have to have a Bitcoin wallet. Normally it’s just a long unique identifier, but you also can generate a QR-Code from it. The other person has to scan you QR-Code and send the bitcoins you want. In exchange you’ll give him cash.
My wallet is called 12KKAsznrn6P17SqWeuErM5FVYptpS7y5z. My QR-Code looks like this:

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