I’ve been asked this question so many times by my friends and family over and over again. What is bitcoin? How do I get them and should I get some?
My friends and family know that I am very keen on Bitcoin and cryptocurrencies, as I am always talking about it and sending them updates via WhatsApp. I am not professing to be a Bitcoin or cryptocurrency guru but what, I will tell you in this article, is everything I’ve learned from my own personal experience of buying bitcoins, selling bitcoins and owning bitcoins.
I have written this guide for those of you just like my brothers and sisters, family and friends that simply don’t have a clue what Bitcoin or cryptocurrencies are and have no idea how to get bitcoin or why they should get some. I have tried to write this article in a very simple way in order to explain bitcoin to someone like my grandma, who apart from Facebook and the odd phone call is not tech-savvy at all. Do you understand what I am saying? Yes, of course, you do.
I know that the bitcoin guru’s out there might complain in the comments box below saying that some of what I am saying is not quite right and yes, they are probably correct in saying this, as I will be explaining bitcoin using metaphors rather than all the technical jargon out there.
For example: If I say ‘My girlfriend is as hot as the sun’, then technically speaking this sentence is incorrect as nothing is as hot at the sun. However, as a metaphor, you should understand that ‘My girlfriend is as hot as the sun’ means that I think she is really hot. Make sense? Yes, of course, it does.
What is Bitcoin?
This is one of the hardest questions to answer in layman’s terms. Having explained this to my family and friends on numerous occasions, I have found that, when I explain it in the sentences below, they are able to understand it easier. So let’s get started.
Bitcoin is a digital currency. Think of bitcoin like the money we are using today. Today we have paper money that states a value i.e. £10, $10, €10 etc. Bitcoin is the same but without paper money or coins. It uses codes that state the value hence it’s a digital currency aka cryptocurrency.
So instead of using paper money, you instead have a unique set of codes. Do I need to know or remember these codes? No, you don’t. The codes are stored online in places like Coinbase (which I will come to later) or in an off-line wallet (which is a whole separate article in itself and isn’t something to worry about just yet).
What can I buy with Bitcoin?
Bitcoin is still growing, at the moment, there aren’t many places you can spend bitcoin, but we hope this will start to change as more and more online stores and shops start to accept bitcoin. Ideally, one day soon(ish), all your online stores like Amazon to Asos etc will all accept bitcoin.
So If I can’t spend bitcoin, then what’s the point? This is the next question my friends and family always ask and I tell them this. Think of bitcoin as a savings account, the price/value of your savings keeps rising and in a year or two, or so, you’ll be able to spend all the profit you made or withdraw all the money to your bank account and spend it like normal money.
How much money will I make if I buy some bitcoins?
I cannot answer this question correctly as it all depends on the amount you spend on bitcoins and how much it rises. However if bitcoin keeps rising as it has done for the last year or so, then you’ll see a significant increase in the value of your bitcoin.
How significant is the increase? Again I cannot answer this question correctly as it all depends on the amount you spend on bitcoins and how much it rises. But let me give you an example to help you out.
If you put £100 into a savings account and left it for 1 year, you’ll probably receive up to about 50p in interest after that year. So you’ll end up with £100.50 in your savings account.
If you put £100 into bitcoin and bitcoin continues to rise in the same way as it has done over the last year, you’ll probably end up with close to £400 or £500 at the end of the year. Can you see why everyone is going bitcoin crazy? Yes, of course, you can.
So where do I buy bitcoins?
There are many online places that you can buy bitcoin. For this article, I would suggest COINBASE. But what about the other site that sells bitcoin? (I hear you ask). I suggest Coinbase because it is probably the biggest cryptocurrency exchange at present. Not only is it the biggest, it’s also one of the easiest sites to use.
Plus, If you sign up to CoinBase and buy $100 (£74) of digital currency or more, you will get $10 (£7) of free bitcoin.
That’s free money in your bitcoin account. Sounds good right? Yes, course it does.
What is CoinBase?
Think of Coinbase as a bank and bureau-de-change. You simply sign up for an account, add your debit card, buy your bitcoins and watch them grow. Coinbase charges a small fee for each transaction, so when you buy bitcoin they charge you a few pounds for the service. Just like bureau-de-change will charge a commission for changing your normal paper money to a different currency, i.e. GBP to USD.
Can I lose my money?
The simple answer to this is yes, you can. However in the 18 months that I have been using bitcoin and all my friends that have been using bitcoin too. No-one has lost a penny on bitcoin. We have all only gained.
How much should I invest?
I cannot answer this question. I always suggest to my friends to get a CoinBase account and only buy about £100 worth of bitcoin, to get them started. The reason I say this amount, is that, if for instance, everything on cryptocurrencies went wrong, you will have only lost £100 which is easy to recover from. You don’t want to be investing your life savings into bitcoin unless you actually know what you are doing.
Can I buy less than £100 of bitcoin? Yes, You can also buy any amount of bitcoin. You can spend anything from £10 upwards, so you don’t have to break the bank trying to buy bitcoin. Plus, If you sign up to CoinBase and buy $100 (£74) of digital currency or more, you will get $10 (£7) of free bitcoin and you can buy more at a later date too.
But people say the price keeps going up and down?
This is correct. The reason why bitcoin is a bit scary is that of the price changes dramatically. For example. If you bought shares in a company and the share value dropped by 1 or 2% in normal trading this is would cause a stir. However, in cryptocurrency, the price can go up and down by a £1000 or so. Hence why they say it’s volatile.
What about the other cryptocurrencies out there?
Yes, there are other cryptocurrencies out there, but this article is specific to bitcoin as it is the cryptocurrency that is leading the way and climbing the highest. Other cryptocurrencies such as Etherium, Litecoin, Ripple and more are available too and you can see all the currencies available on the cryptocurrency price chart (it’s a bit confusing for newbies, but its a list of all the cryptocurrencies available).
This article is not telling you to buy bitcoins or how much/many to buy. This is simply an article to help you understand what bitcoin is about, how to get bitcoin in an easy explanation. Remember, there is a possibility that you can lose your money, so only invest small amounts, amounts that you can afford to lose if everything in the world of crypto, one day goes pear-shaped.
If you found this article insightful, then please share with your friends. If you would like me to write other articles on other cryptocurrencies, then leave a message in the comments box below. Good Luck!