How do I go about buying bitcoins?
Sourcing a "wallet" & buying your first bitcoins.
This is part of our Layman's Guide series and you can find similar articles on our website www.cloudmaitre.com.
This article is for your information only. Always do your research and seek professional investment advice.
1. Set up an account to store your bitcoins
Firstly you'll need a bitcoin wallet which is where you keep your bitcoins. You could download the entire bitcoin programme but due to it being so large (around 150MB) and the fact that cloud most likely offers more security than your own computer, the best option is to use an online wallet, which is kind of like a digital bank account.
There are lots of wallets out there but it is vital you do your research and opt for a legitimate provider. (As with all emerging markets there are disreputable outfits offering services related to cryptocurrencies, rising through the ranks.) One of the largest and most popular wallets is Blockchain.info, which has millions in venture capital funding .
2. Set up the security for your wallet
Signing up for the wallet in the first place is as straight forward as for any social media account. Next you'll need to look up your Wallet ID (equivalent to your account number), as you'll need this to access your account in the future. If you have a Blockchain.info wallet, you'll find this in the Settings.
Wallets should have similar security protocols and it's key to set this up to protect your bitcoins. Maximise the security on your account by verifying your email address, setting up two-factor authentication, blocking Tor access and creating a recovery process. You can also set access and transaction alerts. Once this is done, you're all set to buy your bitcoins.
3. GET a broker
One bitcoin is currently worth over £3,000 (17 Aug 2017) - the good news is they are divisible so you can buy any amount you want, for example £50 worth (about 0.01486 bitcoins).
You have to find a broker so you can buy bitcoins. To recap, the wallet acts as your account to keep your coins in and the broker you can compare to a Bureau de Change you buy foreign currency from.
You will need to open an account with the broker which is free of charge. Legal bitcoin services are heavily regulated, given the currency's association with online black markets, and its cryptographic nature means security protocols can be complicated. Brokers therefore have strict "Know Your Customer" requirements that include identity verification. Depending on what level of transacting you are planning to do you will be required to provide proof of name with a national ID such as your passport, along with proof of your address.
4. Buy your Bitcoins
The brokers are the ones transacting your money. You can login to your account online, agree a trade on the amount of GBP you want to exchange for BTC. Once the trade rate's locked in you'll be given details of where to transfer your GBP to which can be done by bank transfer or debit/credit card for a fee. You'll have a time limit to do this in, i.e. 30 minutes before the agreed rate expires. Subsequently the broker will transfer the bitcoins you've purchased to your wallet.
You will need a bitcoin address to give to the broker when you go to buy bitcoin - it's a unique identifier that tells them where to send your coins to. To find this, login to your wallet - in the case of Blockchain.info you can get this under the "Request" button. A new ID code is generated for each new transaction.
A repeat of the disclaimer. We write about Blockchain because we are passionate about it. We don't offer investment advice. Always get professional investment counsel and never invest money you can't afford to lose.