Last updated on October 13th, 2017 at 11:00 pm
Bitcoin is an amazing innovation that has many people excited, but for the average person, it is shrouded in mystery. Truly understanding the Bitcoin protocol is a monumental feat, and not one that most are prepared to tackle. Luckily, one does not need to understand everything about Bitcoin, cryptography, or digital currency to obtain, and use, Bitcoin. In the past, Bitcoin, the currency, required a bit of technical knowledge to use, but that is not true today.
We will outline all the steps necessary to get started with BTC, starting with choosing a wallet. However, for users with past experience, you may want to skip ahead. To jump to any of the sections, please click on one of the links below:
[button color="orange" size="medium" link="https://99bitcoins.com/get-bitcoin-today/#online-bitcoinwallets" ] Online Bitcoin Wallets [/button][button color="orange" size="medium" link="https://99bitcoins.com/get-bitcoin-today/#light-and-full-bitcoin-wallets-on-your-computer" ] PC-Based Bitcoin Wallets [/button][button color="orange" size="medium" link="https://99bitcoins.com/get-bitcoin-today/#mobile-bitcoin-wallets" ] Mobile Device Bitcoin Wallets [/button]
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Pick Your Bitcoin Wallet
Gone are the days of learning how to use Bitcoin QT. The standard Bitcoin wallet is still available, and is a powerful tool, but is not necessary for most people. Instead, a light wallet, online wallet, or mobile wallet will suffice, and all are very easy to use. The most difficult part is determining which one you want to use. There are pros and cons to each.
Online Bitcoin Wallets
Online Bitcoin wallets have a bad reputation, and for good reason. When using an online Bitcoin wallet, you must trust your BTC to a 3rd party, and that can be dangerous. However, things are changing, and multisignature online wallets provide more security to the user, though it is still too early to say how effective these measures will be in the long term.
Still, there are trusted companies that provide online wallets, and make it very easy to get started. Coinbase offers a multisig wallet that allows the user to keep 2 of the 3 keys, thus making it impossible for the company to take your BTC, and providing the added security of having access to your bitcoins even if the website shuts down.
Bitgo is also offering this as a standalone product, rather than an extra, which may give them the focus needed to fully flesh this system out.
Other companies are working on their own derivatives, or novel innovations, on the idea of multisig, online wallets, which makes the idea of an online wallet more appealing than in the past. These innovations may even make online wallets the accepted norm.
Even so, online wallets are only simple until there is an issue. If it is a non-multisig online wallet, then the company itself could shut down, taking it’s user’s bitcoins with it, as has happened with many exchanges in the past. If it is a multisig online wallet, it requires a bit of technical knowledge, even if it is just following the directions from the company itself, to regain access to your funds.
While online wallets are the easiest choice for a beginner, and may be the best option for you, please understand that with Bitcoin, you only truly own it if you are the only one that can control it. If you do choose an online wallet, or even if you do not, please check out our tutorial on securing your Blockchain online wallet. This will help you create backup copies, as well as teach you about properly protecting your funds. While not everything in this tutorial would apply to every wallet, it would still give you an idea of some of the steps to take to secure any wallet.
Light and Full Bitcoin Wallets on Your Computer
Lightweight Bitcoin wallets, or light wallets, have been a very popular option for quite some time, and for good reason. These wallets generally store your private key, which you do not need to know, in a file on your harddrive, which gives you the ability to control your bitcoins. The big advantages of a light btc wallet over a full btc wallet are size and speed, and will be the focus of this section. Feel free to use one of the full Bitcoin wallets, which are linked to in the next paragraph, if you would like.
A full Bitcoin wallet needs to download the entire blockchain, which is around 24.5 gigabytes in size at this time, and growing. The download process can be quite time consuming, but for certain individuals, it is worth the time and harddrive space. Of course, it is important that the network has “full nodes”, which are full wallets, such as Bitcoinqt or Bitcoind, running with TCP port 8333 open, as this is the backbone of the Bitcoin network. That being said, as long as there are individuals with a need to run full nodes, it is not necessary for everyone else to do so.
A light Bitcoin wallet gives a user the ability to control their funds, and handle any sort of transaction that the average person would need, but only downloads a small portion of the blockchain. Light wallets only need to download the portions of the blockchain that contain information about the addresses the wallet contains. This means that instead of requiring nearly 25 GB of storage space, the average user would only need to store 25-50 MB of data.
Multibit has had criticism in the past for weaker security features, and bugs that resulted in incorrect accounting, but more recent versions have addressed many of these concerns. In both cases, using the wallet is as simple as downloading the software, installing it, and opening the program. At that point, you have a Bitcoin wallet, with an address, and are ready to receive Bitcoin payments.
Mobile Bitcoin Wallets
Mobile Bitcoin wallets are, essentially, light wallets that work on mobile devices. On the surface, this seems like a bad idea, because losing/breaking your phone, or tablet, would result in the loss of your private keys, and thus your bitcoins. However, to solve this issue, most mobile wallets can also be synced / backed up to a computer, and/or have features that allow your private keys to be regenerated by using a password that you choose when first configuring the wallet. This password is used as a seed for the private key, and allows the private key to be recovered even if the wallet files are destroyed or lost.
Electrum, which was mentioned above, is one example of a light wallet that is also a mobile wallet. It works on mobile devices, and traditional computers, thus allowing you to access your funds no matter where you are, without the need to store your private keys with a company, as with an online wallet.
Mycelium is another popular choice, and has been growing rapidly. It is a robust mobile wallet that can be backed up to other devices, including personal computers. The company behind Mycelium is also working on interesting other products, such as a “Bitcoincard”, which looks like a traditional debit card, but acts as a Bitcoin wallet, and functions without the need to be connected to the internet. This product is in the final stages of development.
After Picking Your Bitcoin Wallet
Once you have decided on which wallet fits you the best, and have set it up, move on to the next page to determine which method of obtaining your first bits works for you. We will start with the simplest way, which is buying bitcoins. However, if you do not want to purchase BTC directly, there are other options to earn coins.