Our team has been involved with Bitcoin and digital currencies since about 2013. Over that time, we've seen plenty of changes in the landscape and noted a variety of ways on how to use Bitcoin.
We've lost plenty of coins through ignorance, exchange failures, forgetting passwords and made basically every mistake known to man - but we’ve still managed to navigate the space reasonably well and at this moment in time extremely energised by its possibility and its prospects.
We'll look at a range of concepts inside of that, including wallets, private and public keys, exchanges, agents, transferring coins, costs, speeds and why bitcoin and other digital currencies are the future for transacting online.
Firstly, you're going to have to exchange some dollars (or traditional currency) for your Bitcoin. There are lots of ways to do this, but the first issue you’ll need to address before you buy is where will you will store your Bitcoins.
You’re going to need somewhere to hold them; this is called a wallet.
A Bitcoin wallet is analogous to a bank account, although you’re responsible for keeping your wallet safe.
There is no bank sitting behind it and there is no government ready to bail you out should you lose your wallet.
But wallets are safe. In our view, they are safer than putting your money in the bank, provided you manage your security well.
You can get yourself a wallet from a wallet provider.
It will have a public key; this is the Bitcoin address where people can send you Bitcoin.
When you buy Bitcoin, you'll give your wallet's public key (or address) to the seller and they will send it to that address.
After the transaction, they will transfer the Bitcoin to your public address, and after about fifteen minutes, (depending on how busy the network is) your bitcoin will be transferred into your wallet.
A public key is used when telling sellers where to send the bitcoin. If you want to send Bitcoin to somebody, make sure you are the only person who has access to these Bitcoins and the ability to send them to somebody else.
What you have is a private key. It's yours and gives you access to your funds, although, due to the key being private, losing the key will result in losing access to your wallet.
Now, most wallets will have some procedures in place where you can recover your private key if you lose it.
Many of them require a twelve-word phrase, which when plugged into a particular algorithm will generate your private key.
Therefore, before you get your Bitcoin, make sure you remember all your passwords. Write them down and put them somewhere secure.
Once you're armed with your wallet, you can go to either an agent or a Bitcoin exchange to buy your Bitcoin.
An agent is a company that will swap traditional currency for Bitcoin. They'll ask you to provide your wallet address (public key).
You'll make a bank transfer (or a Poli Pay, BPay or Credit card payment) and after a period of time, once they’ve verified you've made the deposit, they will transfer Bitcoins into your wallet.
The other way to purchase Bitcoins is from the best cryptocurrency exchanges. An exchange is where multiple buyers meet multiple sellers.
Some exchanges worth considering are listed below with a review where available:
Just like the stock exchange, when you want to buy shares, there are people who want to sell. The exchange merely facilitates the transaction between buyers and sellers, and in the process, charges a commission.
Normally the price you deal at on an exchange is much closer to the real market price of Bitcoin than when buying from an agent.
You'll need to go through all of your identity verification and make a deposit into the exchange.
After you're verified and the deposit's received, you can go into the market and buy Bitcoin or any other of the digital currencies available for purchase on that particular exchange.
When you buy through an agent, the Bitcoin you buy goes into your wallet. You then control it and you are the only person who has control over that Bitcoin. If there is one overriding rule about owning Bitcoin, is that you must protect your Bitcoin.
If you use an exchange and you keep your Bitcoin in their wallet, there are now two people who have access to your Bitcoin (you and the exchange). It is important to note that exchanges have been previously hacked.
Exchanges that fail could potentially risk losing your bitcoin. There are some high-quality exchanges out there, but understanding whether your coins are kept in your own wallet or a shared wallet is an important decision.
You can buy Bitcoin through an exchange and transfer it to your own wallet, but that requires an additional transaction, which for a beginner is something to consider in terms of additional cost and time.
If you're actively trading, buying Bitcoin to actively trade both Bitcoin and other digital currencies, then it is certainly easier to do this on an exchange.
Some traders are watching Bitcoins price using live charting software and reading all the related Bitcoin news, in order to buy and sell bitcoin actively.
Others are focused more on the long-term prospects of the Bitcoin blockchain technology and the opportunity for growth in this rapidly growing sector.
If you're buying them as an investment for the future, then it makes sense to house them in your wallet that you completely control.
There are two costs you should be aware of when converting traditional currency to Bitcoin, whether you are doing it through an agent or an exchange.
The buy price the agent or exchange will sell Bitcoin to you (this is called the spread) and the commission charged for the pleasure.
Both the spread and the commission are usually cheaper with most exchanges as opposed to agents, but then there are additional fees for transferring your Bitcoin from the exchange to your wallet.
The least secure method is leaving your Bitcoin in a wallet on an exchange because you aren't the only person with control over that.
Then there are software or web-based wallets (web wallets), like blockchain.com. They will store and maintain your wallet while you are the only one who has access to it.
Only you have access to your private key. You control it over the web as it is a web-based wallet.
You can log into your account at that particular organisation, and through them, you'll be able to send or receive Bitcoin.
Because it's your wallet and you own the private key, you're the only person who can send from your wallet.
If your website went down, all your transactions will be stored; not inside that wallet provider, but on the blockchain.
You would simply go to another wallet, and by using your private key or your twelve-word phrase, you can just plug into any wallet, anywhere, any time.
Once you have that private key, no-one, as long as you haven't given it to anyone, can touch what you have in your wallet (inside that private key account).
This type of wallet is very functional in terms of being able to transfer and make Bitcoin transactions over the internet.
There are also hardware wallets. Think of a USB stick that you plug into your PC.
It records all your transactions and allows you to transact because it has your public and your private key.
A lot of people opt for this method because once you unplug it, you are virtually off the network and it becomes very hard to be hacked.
These are less functional than a software wallet, yet some people feel they are more secure – although, one could argue that they are less secure if you lose them.
There are hardware specific wallets, which require you to download some software onto your local hard drive that acts as a wallet.
If you lose your PC, you can download the software onto a new machine, and as long as you have your private key and/or your twelve-word phrase, you can still access your Bitcoin.
Some of these wallets are multi-currency also, which is an additional feature. They are transactionally functional, however, cannot be accessed remotely.
There is also a paper wallet, mainly for people who make a large investment and want it completely off the grid.
You can have a paper wallet, which is just writing down the details and storing essentially. Functional, but then you've got your hardware specific wallets; things like Exodus which are specific to the computer you're using.
If you lose your computer, you cannot access that wallet; you have to go to a new computer, download the Exodus software and plug in your private key or the private key generated by your twelve-word phrase.
This form of wallet is not designed to be used to transact regularly. As you can see, there are a number of practical ways to store Bitcoin, keep your transactional history safe and maintain control.
This is the lovely thing about digital currencies - it’s extremely easy. If you can follow simple instructions, it becomes a matter of cutting and pasting the address you wish to send your Bitcoin to, and the amount of Bitcoin you wish to send.
The address is a collection of letters and numbers and the amount can be small fractions of a Bitcoin.
It’s a good idea to always double check the first two letters and the last two letters of the address you're sending to, and always check the amount you're sending to avoid mistakes.
Once you press send, you normally see the transaction as ‘pending’ in your wallet (and the receiving party in their wallet) within seconds, it then needs to be confirmed on the blockchain before the transaction is complete.
Well, there's some forward-thinking merchants out there who accept Bitcoin.
Click play on the video below to see how easy it is to buy gift cards using Bitcoin.
It’s just like shopping online, except at the checkout, you’ll opt to pay using a digital currency instead of credit card or debit cards.
Accepting Bitcoin payments is a great PR opportunity for industries. You will see many retailers and services hitting the news as the first in their space accepting Bitcoin payments.
Here at the checkout, you’ll be given an address to send the correct amount of digital currency to, and again, it will show as pending until the transaction is confirmed on the blockchain.
You will find over time that more and more merchants will be accepting Bitcoins as payment.
By using blockchain.com as a web-based wallet, for example, a $100 transaction might cost around $0.08-0.13.
Using a credit card, this process can cost up to 3% in credit card fees, plus, if the transaction is in USD and the purchaser is in Australia, the spread on the traditional currency transaction can cost another 1-5%.
So, the difference in transactions costs can be significant.
In addition, transacting using digital currencies and being decentralised in nature doesn’t require a centralised third party to confirm the transaction, while credit cards obviously do.
This adds a layer of cost to the transaction which will continue to put pressure on the business models of banks and credit card companies.
Secondly, security. This is particularly important for merchants.
Credit card fraud is a material drag on business over the internet.
Based on our experience, there have been zero incidences of fraud using digital currency to transact on our website, while credit card fraud has been rife.
Did you know you can buy Australian gift cards from major retailers using your Bitcoin? Click here to find out more.
Most people involved in the cryptocurrency space who aren’t motivated purely by monetary gain will likely find themselves at some point saying something like this: “One thing I really like about cryptocurrency is that it’s decentralised, and that the currency isn’t owned or controlled by a bank or state.”
With all that in mind, this article will teach you to understand the key differences, successes, and failings of both centralised and decentralised crypto exchanges.
What is a Bitcoin Gift Card?
A Bitcoin Gift Card is the perfect way for the newcomer to get their first Bitcoin. It comes with a paper wallet and simple instructions to set up a software wallet so that you can transact with Bitcoin over the internet. Bitcoin Gift Cards are available in AU$25, $50, $100 and $500 denominations.
Who should buy a Bitcoin Gift Card?
Anyone new to Bitcoin will find no easier way to get their first Bitcoin.
They can be gifted by an existing cryptocurrency enthusiast, or bought by anyone wanting to get involved for the first time themselves.
How can I pay for my Bitcoin Gift Card?
You can pay with either cryptocurrency through our coinpayments.net payment gateway, or you can use Australian Dollars through our POLI Pay facility.
Can I use a Bitcoin Gift Card to top up an existing software wallet?
Yes. When you receive your additional Bitcoin Gift Card, you can simply import the "Secret" wallet identifier from your Bitcoin Gift Card into your existing software wallet. This will move your Bitcoin from your Bitcoin Gift Card into your existing software wallet.
What does my Bitcoin Gift Card include?
Your Bitcoin Deposit, wallet and key generation and network transfer.
How long does it take to receive my Bitcoin Gift Card?
Going through to checkout takes about 2 minutes. You won't find an easier process anywhere. Once you've placed your order, it can take between 10 and 60 minutes to receive your Bitcoin Gift Card depending on the speed of the Bitcoin network at time of purchase.
We have partnered with GiftPay, an aggregator of online deliverable eGift Cards in Australia.
Through our agreement with GiftPay, you are able to purchase a Flexi eGift Card from us, redeemable at a broad range of retailers in Australia.
Watch the Video to see how it works
What is a Flexi eGift Card?
A Flexi eGift Card is an electronic gift card that lets you choose where you'd like to shop! In the past if you were given a gift card for a particular shop but didn't want to buy anything from that shop, you were stuck. But now with a Flexi eGift Card, you get to choose at which shop you spend your gift.
What's more, you may be able to split your Flexi eGift Card and spend it at different shops! For example, if you have a $30 Flexi eGift Card, you could choose to split it up into a $20 Myer eGift Card and a $10 iTunes eGift Card.
Where can I spend it?
You can spend your eGift Card at a broad range of Australian retailers. For a full list of our retailers, click here. (page showing full list of retailer logos)
How do I redeem it?
Your Flexi eGift Card will be emailed to you. Click the link in the email to open your Flexi eGift Card.
Then convert your Flexi eGift Card into any combination of gift cards or vouchers up to the total available balance. How you redeem your chosen gift card depends on the card or voucher chosen.
What Bills can I pay?
You can pay any bill that has the BPAY logo and Biller Code including credit cards.
Are there any payment limits?
Yes. You can pay a maximum of $1000 per transaction based on regulatory limits. You can however break up a bill into multiple $1000 tranches and enter the same biller and customer reference code.
How does the transaction work?
When you enter the amount you wish to pay, the BPAY biller code and your bill’s customer reference number, you will click through to our checkout.
At checkout, you will be asked to leave your details, which enables us to satisfy our legal requirements under the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2017. This sounds ominous, but takes about 2 minutes.
When you proceed to payment, you will be shown the digital currency amount payable and the wallet address to send your digital currency to.
Once you have sent your digital currency to our payment gateway wallet, you will receive an email notifying you that your payment has been received. We then convert your digital currency to AUD and pay your BPAY bill on your behalf.
Are there any fees?
Yes. At checkout you will notice our 3% fee added to your bill amount. This is to help us manage the currency risk of a volatile digital currency market when converting to AUD for us to pay your bill. We use a third party payment gateway to enable the digital currency transaction. Our considerations when choosing a gateway was security, pricing (spread) and speed. You’ll note when at checkout (before proceeding to payment) that the price you receive on your digital currency is very competitive. Other digital currency BPAY facilitators charge up to 6% per transaction on the currency alone, which in our view is akin to highway robbery.
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