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A Beginner’s Guide To Bitcoin & Bitcoin Wallets

Any hallmark of a developed society can be measured by its
currency.

Throughout history, we started off with simple bartering.
Then we progressed to banknotes and coins. As the Internet advanced its rapid
pace, it was inevitable that the next stage of currency evolution was just
around the corner. Of course I am talking about cryptocurrency, in particular
Bitcoin.

What Is Bitcoin?

Like the Dark Web, cryptocurrency’s reputation suffers a bit
as it is most commonly associated with Dark Web transactions such as drugs and
guns. Plus the exchange rate is notoriously volatile, making it extremely
difficult to have long-term trust in.

When it comes to cryptocurrency, Bitcoin is the world’s largest, occupying almost 50% of the digital currency market. Of course, Bitcoin has its rivals such as Ethereum, Litecoin, and Dogecoin, each with its own exchange rate. But Bitcoin benefits from wide name recognition and 16.5 million Bitcoin in circulation.

A Peer-To-Peer
System

With Bitcoin, there are no actual banknotes or coins. This
means no single government controls it because it is just numbers on a screen.
Since governments can manipulate currencies for political purposes, this makes
Bitcoin extremely attractive to many people.

Instead, it is a peer-to-peer (p2p) currency. This means that
instead of a financial institution controlling it, Bitcoin is decentralized. It
is passed from one user to another online.

Bitcoin transactions are publicly recorded in a ledger called the “blockchain”. This information is permanently and publicly viewable on Blockchain.info and cannot be edited or deleted. Blockchain therefore acts as the proof of a transaction.

Is It REALLY
Anonymous?

Yes – and no. It is anonymous in that you can send and
receive Bitcoin without revealing your name, address, and bank details to the
payment recipient. There would also be no bank with your identity details on
file to link that Bitcoin address to.

This is an example of a Bitcoin address :

1AhN6rPdrMuKBGFdkR1k9A8SCLYaNgXhtz

Obviously this means no-one can see who owns that particular
Bitcoin address. You’re just a sequence of letters and numbers. But if anything
subsequently reveals it to be your address (say law enforcement tracks down
drugs to your address and can connect a Bitcoin address to those drugs), then
all transactions to that Bitcoin address will then be linked to you.

This is why it is generally recommended to use multiple
wallets, and to not reuse a Bitcoin address for multiple transactions. That
way, it becomes more difficult to pin a particular transaction on you.

Bitcoin Wallets

Since you can’t walk into a bank and withdraw Bitcoin notes
and coins, the only way to obtain the currency is to get them online. This is
done through the use of a “wallet”. It enables you to pay someone with the
currency, as well as receive payments.

There are so many options for wallets, that I am going to
recommend two of each kind, the ones I consider to be the best, in my opinion.

Desktop Wallets

Our two choices for desktop wallets are Electrum and Armory.

Electrum (Windows, Mac, Linux, Android)

Whenever I have asked around for Bitcoin desktop wallet
recommendations, this is the one most frequently mentioned. Electrum seems to
be the one everybody makes a beeline for and I have yet to hear a bad thing
said about it.

Encrypted keys stay on your computer. You can recover funds
using a secret phrase. Multiple wallets are supported as well as third-party
plugins.

Armory (Windows, Mac, Linux, Raspberry Pi)

Armory is highly praised but it is more oriented towards
people with a bit more advanced technological knowledge. Armory is free and
open-source, which means you can crack it open and inspect its programming
code. You can satisfy yourself how good it is and not take the company’s word
for it.

You can manage multiple wallets, which as we’ve said before,
is good for making it harder to pin payments to you. But the nicest feature of
all is something called “Cold Storage”. All private encryption key data is
stored on an offline computer,
making it impossible for someone to hack in and steal accounts.

Mobile Wallets

Again, there are many options for mobile cryptocurrency
wallets. But I focused solely on ones available for both iOS and Android.

CoPay

CoPay is a free open-source cryptocurrency smartphone app
where you can manage multiple Bitcoin wallets with ease.

The best part of CoPay is that the account is co-owned by a
group of people (yourself and friends, for example). To make any transaction requires the permission of every account
holder.
That’s a really neat feature and stops one of the account holders
from emptying the account and running off.

CoPay is even available for the Windows Phone. But honestly,
who uses that these days? I doubt even Bill Gates does.

Xapo

When you sign up for the Xapo app, it automatically comes
with its own debit card, so you can withdraw your balance from ATM machines.
But you don’t have to use the card if you don’t want to. You can use the app on
its own. But the debit card is a nice touch.

Xapo also heavily promotes their heavy security vault for
storing customer Bitcoin balances. The vault is in a decommissioned Swiss
military bunker. Beat that Dr Evil.

Keeping Track Of The Exchange Rate

The exchange rate for buying Bitcoins is where your blood pressure is going to get tested. If you don’t believe me, this is the exchange rate today (April 12th 2019), if you want to convert one Bitcoin into US dollars.

Yes, just over $5,000
for one Bitcoin
. And in the last five minutes, that rate has jumped up and
down like a kangaroo on crystal meth.

Obviously though, you can have fractions of a Bitcoin, the
same way you can have a hundred cents for every dollar. So if you go to Preev,
and enter the amount you want (and the currency) on the right-hand side, it
will automatically tell you in real-time on the left-hand side how much Bitcoin
that comes to.

So one dollar is :

Dealing in cryptocurrency is definitely not for the
faint-hearted. You can make a fortune when the exchange rate goes up. But in
the blink of an eye, it can all come crashing down leaving you penniless. So
the golden rule is don’t leave a lot of money in your Bitcoin wallet unless you
are able to lose it if necessary.

Conclusion

With everything else in the world moving online, it made
logical sense for finance to follow suit. Digital currency has many teething
problems and many underlying faults (lack of regulation and laws to name two)
but it is nevertheless here to stay.

Once it has better security protocols, a more stable exchange
rate, and merchants willing to trust it and accept it as payment, that will be
when it will really get going.