How To Buy Your First Bitcoin Using Bank?

Bitcoin is a revolution that happened after a long time in the ‘exchanging’ field and you certainly don’t want to be not part of it. The last time we saw something like this was when the paper money was introduced instead of the barter system. As it’s only been 8 years since the first bitcoin is mined, not many know how bitcoins works and how to get a few BTCs. We will try to break it down for the newbies who would be eager to know how to purchase their first bitcoin online.

Obviously, the best way for anyone to buy bitcoins is by making use of their bank account. For online money makers like us, bitcoins are the real future and can save some money which PayPal/Payza take as fees. Fees for sending bitcoins is minimal as the fees can be as low as 7 cents even for sending $500 worth of BTC.

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What’s Bitcoin?

Bitcoin is a digital currency which has no central authorities or owners to control its prices/flow. All physical currencies like dollars, euros are regulated and even manipulated by the governments. Haven’t you heard about China’s devaluation of their own currency, Yuan? You won’t see such drastic news in bitcoins as it’s decentralized.

Bitcoin protocol was formed in 2009 by Satoshi Nakamoto and cryptocurrency fans were sending thousands of BTC for no value or less value back in 2010. Exchangers started to appear by 2011 and the price rose from $0.008 to $1 within 6 months. Spectacular, isn’t it?

Methods To Get Your First Bitcoin

One can acquire bitcoins by 3 methods, mainly.Bitcoin

  • Through Mining. This is done by sophisticated mining machines. (Note – Not much profitable these days unless you get cheap electricity and good GPU at best price). Forget about it if you are complete newbie to bitcoins!
  • From your friends who hold bitcoins already. Localbitcoins is such a marketplace where you can find many sellers from your country who currently hold bitcoins.
  • Through bitcoin exchangers or bitcoin wallet websites (Coinbase, Xapo, Unocoin e.t.c). The payment methods are usually bank transfer, bank wire and credit/debit cards.

Let’s concentrate on the third method which is comparatively easy considering the fact that mining is hardly profitable and finding friends with bitcoins can be little hard if you are a newbie to make money online industry. Even though the US has the highest population of bitcoin users, majority of US citizens are still yet to have their first BTC. For example, let’s look to the other side of the world, India. India has 500 million regular internet users has only 40000 bitcoin users, according to the latest TOI media report. That’s just 0.008% of the active internet users!

Does Bitcoin Have an Official Website?

No, bitcoins are completely decentralized and don’t even have a website like other payment processors like PayPal or Payoneer. Still, in order to keep your BTC, you need a wallet and it’s usually called as BTC wallet. There are thousands of BTC wallet providers available and none of those is an ‘official’ bitcoin wallet provider. If you don’t choose your BTC wallet provider carefully, you would most probably face a day when you realize that you have been scammed by your BTC wallet provider. That’s why you need to read this article forward. We have some good recommendations for you!

Trusted BitCoin Wallets

You can send or receive bitcoins only if you have a bitcoin address to/from which transactions can be made. Each bitcoin wallet comes with an address which starts with either 1 or 3 and looks somewhat like this ‘1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2

CoinBase(US and Europe) and Unocoin (India) are the wallets that I use personally even though I use Coinbase only for the purpose of storing bitcoins, not for selling or buying. There are hundreds of them out there. But you should choose your wallet provider carefully as the security of the wallet is a matter of consideration. A crap wallet will make you lose all your money by a single hack attempt. We will discuss the security measures later in this article.

  • CoinBase

CoinBase is the most popular bitcoin wallet and has nearly 3 million members. Started on June 12, 2012, in California USA, it has grown to about 32 countries including US, Canada, Australia, Singapore and majority of European countries. It still hasn’t opened fully to countries like China and India. That being said, citizens of any country in the world can register in Coinbase and make use of their ‘send/receive bitcoins’ services, you can’t directly buy and sell bitcoins in exchange to your national currency. Only members from the coinbase approved countries can load bitcoins from banks or withdraw bitcoins to banks. If you are from any Europe or any of the above said country, join CoinBase to get your bitcoin address instantly. Not just that, if you buy $100 worth of BTC by either bank transfer, credit card or bank wire, you will get $10 credited to your account for FREE!

  • UnoCoin

Since we have a good Indian following in our blog, I am adding a wallet which is exclusive to Indian members. It’s based on Bangalore and recently got $250K funding from overseas. Accounts can be linked with the bank accounts and needed to be verified by ID/PAN card.

What’s a BitCoin Address?

Bitcoin address is an identity like a bank account number. For someone to send you bitcoins, he only needs to know your bitcoin address. Personal information is not shared during transactions and no one can identify who owns a bitcoin address as it is completely anonymous to the public. A bitcoin address is a weird combination of letters and numbers like 3Lj8N9tzg5rjJ44gZNRjU96kUXhRAghnsV.

Another interesting fact is that you can have any number of wallet addresses and usage of multiple wallet addresses are favored for security and privacy purposes. Using same wallet address means anyone can track to which address you have sent your bitcoins to and the total BTC balance that you have. So, usually, bitcoin wallet providers(exchangers) like Coinbase automatically provides you a new wallet address every time you get a BTC payment to the existing bitcoin wallet address.

But every bitcoin receiving address you have ever had with Coinbase will remain your address forever. Even if you have multiple addresses, you will still be able to receive a payment to any of them, at any time and it will show up in your coinbase account automatically.

What All Can We Do Using A Bitcoin Wallet Provider Like Coinbase?

  1. Send Bitcoins
  2. Receive Bitcoins
  3. Sell Bitcoins
  4. Buy Bitcoins

Sending and receiving Bitcoins have almost 0% fees (7 cents+, to be exact) and it can be performed between bitcoin addresses (wallets). You can send bitcoins to your friend’s wallet if you have his bitcoin address and you will receive BTC from your friend once he sends it to your wallet. You just need to provide him your bitcoin wallet address.

Selling and buying are the processes by which bitcoins are exchanged into real currencies like dollars or euros and vice-versa. Some bitcoin wallets websites provide facilities to sell and buy bitcoins and they are also called as bitcoin exchanges. For example, Coinbase is a bitcoin wallet provider as well as a bitcoin exchange since they allow both storing bitcoins and buying bitcoins with your local currency.

If you want to have some bitcoins, fund you currency wallet straight from the linked bank and then buy bitcoins using the currency wallet. Now you have transformed your USD/INR to Bitcoins!  (All bitcoin wallet websites will have two wallets, one for bitcoin and one in your country currency)

Unocoin bitcoin wallet and INR wallet

 Is BitCoins Safe For Investment?

Bitcoins fluctuates a lot even on a daily basis. Even though the value of every physical currency like euro, USD e.t.c fluctuates in a marginal level every day, we hardly have an effect unless we have a hell lot of money with us.

Bitcoins can fluctuate even 20% in a dramatic day. If you have left some bitcoins in your wallet, your bitcoin value could get diminished or could even multiply with the passage of time. The last such dramatic day I could remember is July 31, 2016, when a hacking news of Bitfinex, a bitcoin exchange, broke out. Price decreased from $$656 to $552 in a matter of 48 hours. That’s why we say that Bitcoin value is highly volatile comparing to physical currencies like USD or EUR and a single positive/negative news can affect the price a lot. Anyway, the good news is that Bitcoin recovered from the decrement in about 70 days as it touched $656 once again by October. As of November 2016, the price is at $745 per bitcoin.

The point I am making is that the bitcoins can be risky if your aim is solely investment for long term. It can go both ways. If there are not much negatives news coming around, BTC is destined to go up with its push from Chinese investors and usual traders from all around the world. The catch is that vast majority of the world’s population don’t know about Bitcoins and it is very appropriate for fluctuating economies like Zimbabwe or Venezuela.

Bitcoin Price History

Ahh, it’s going to be interesting to know how BTC has worked until today. You would wish you were there on those forums which discussed bitcoins back in 2010.

From 2009 to July 2010, no one was interested in having BTC in their portfolio. Few people even listed 10000 BTC for $50 in Ebay and still didn’t find any buyers. Did the calculation on how much 10000 BTC is worth today? Yeah, 7.5 million dollars! It was there on Ebay just 7 years ago for $50. Missed fortune, yeah?

By July 2010, BTC was available through an exchange for the first time and in just 8 days the price increased by 1000% ($0.008 to $0.08). After 1 year, the price was at $31 per BTC. From that point started BTC’s first downfall to $2 by December 2011, 5 months later.

But that was only the beginning. From $2 in Dec 2011, it had grown to $266 in about 15 months, only to see an another downfall to $100 by July 2013. By November 2013, bitcoin started to get into newspapers all around the world. People who were unaware of bitcoins started to search about what it is and how to purchase a bitcoin for the first time. They all came crashing down and the price skyrocketed from $100 to $1000 in November 2013 itself. Actually, the price hike was just based on a buzz about the new internet-based anonymous coin.

The price fluctuated between $500-1000 between November 2013 to January 2014. Bitcoin price reached its peak of $1242 and future was looking good. Then came the hammer hits. Mt Gox and China.

Mt Gox was the most popular bitcoin exchange back in that time which was carrying out about 80% of the whole bitcoin transactions. Mt Gox got hacked and about 850,000 BTC went missing from member’s wallets. BTC price crashed down. The crashing was further fueled by China when their financial regulation department’s instructions caused Alibaba to ban all services and goods (mining instruments) from their marketplace where people were selling bitcoins and related hardwares. Even though it was not a 100% ban on bitcoin in China, such news was enough for the newborn coin. It continued its fall and got stabilized at $200-300 by January 2015 and stayed in the range until October 2015.

So, now we are talking about BTC events happened just a year ago. From $250 in October 2015, the price increased to $730 by June 2016. The increase in price was mainly due to Chinese who are trying to shift their capital from China due to the government’s policy to reduce the value of its coin, Yuan. Many of the Chinese investors shifted to BTC and it increased a lot which then got stabilized at $600-700 ever since. Still, China is the biggest BTC market and they decide where BTC should go.

It has again started to show an upwards trend by October and has again reached $730 range. As of today, Nov 15, 2016,  the price is at $735 and the future looks good!

bitcoin price chart

 

 

34 Comments

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