Based on Electrum’s site, this holds true. This one is probably one of the best storage options for investors, since it is software based, rather than online—providing an extra layer of security.
For those who don’t trust the security of wallets, cold storage options allow you to store your bitcoins offline. Some people keep their bitcoin info on a USB locked in a safe deposit box. Others use a paper wallet, which is simply a document containing all of the data necessary to generate any number of Bitcoin private keys (a secret number that allows bitcoins to be spent).
The problem with cold storage is obvious—if your USB drive or paper wallet gets stolen, or you lose it, you have no way of getting your bitcoins back.
Step 2: Buy Bitcoin with cash, or get paid in Bitcoin to get started
Those who don’t have the technology, or understanding of complex computer software, can buy bitcoins with cold hard cash, credit or debit cards (apps like Coinbase currently accept Visa and Mastercard), and wire transfers. You can spend as much as you like, and you obviously don’t have to buy a whole Bitcoin for over $10,000. You can purchase fractions of bitcoins.
You can also get paid with bitcoins. If you’re trying to break into the Bitcoin world, finding a side hustle that pays you in bitcoin is a great way to get started.
Step 3: Transfer Bitcoins to your wallet
So you have a wallet and you have bitcoins, but if you’ve never been in the Bitcoin game before, you may not know how to combine the two.
That’s where your wallet ID (or address) comes in. This is sort of like your bank account info that you give to get your check directly deposited into your account each pay period. You’ll enter your address into the proper field each time you buy or trade bitcoins—which we’ll talk about below.
Ledger offers a range of Bitcoin storage devices. Their most secure wallet is the Ledger Nano S.
TREZOR is another option. It generates your Bitcoin private keys offline, and it’s the original hardware wallet that was built to secure bitcoins.
Step 4: Trade with bitcoins
Like any method of trading (think stocks), Bitcoin trading is a risky endeavor, but it is one of the better ways to make money through Bitcoin.
This site explains Bitcoin trading best:[exchanges]act as intermediaries for currency transactions, converting wealth from Bitcoin to US dollars to other national currencies, back to dollars or Bitcoin. And that’s how you make money. By exploiting the constantly shifting relative values of various currencies…
Since the price of Bitcoin does fluctuate constantly, holding onto your bitcoins until you believe there will be a rise in price, and then selling can make you a lot of money.
This is buying and holding. If you want to trade in order to make money you can do so in a few different ways.
Use an exchange
There are a number of exhanges you can use—Kraken, Bitfinex, and Bitstamp are three of the largest.
To start trading through an exchange, you need to create an account. For some, you’ll need to go through a verification process. In addition, for most exchanges, you’ll pay a fee each time you trade through them.
Each site has a “trading” section that allow you to decide how much you want to trade. It’s as simple as joining the stock market.
Be aware, however, that there are risks with trading Bitcoin. The collapse of Mt. Gox—previously the largest exchange platform—demonstrates just that.
If you don’t want to go through exchanges in order to avoid trading fees, you can trade directly with other Bitcoin buyers.
Sites like Coinbase don’t charge you to trade bitcoins to different users. All you need is the wallet address of the person you want to trade with.
Step 5: Spend your Bitcoins (at legal locations)
If you buy bitcoins to spend rather than just trade, you probably want to know where you can spend them.
Since Bitcoin has grown in popularity, in part, thanks to the media, more and more vendors are accepting Bitcoin. Microsoft is the most notable company that accepts Bitcoin, but others include:
Whole Foods (via giftcards)
Step 6: When you get more experienced, you can “mine” Bitcoin
Bitcoin mining is like digging for gold online—that’s why it’s called “mining”.
With paper money, a government decides when to print and distribute money, but Bitcoin doesn’t have a central regulator, which is what allows anyone to start mining.
The actual process of mining involves one (or more) computer(s) with a special software that, in simplest terms, solves complex math problems. Your computer must correctly come up with the right combination of 64 digits—also known as nodes. You’re then issued a certain number of Bitcoins in exchange for solving them correctly.
Buying and selling bitcoins is becoming easier, thanks to apps like Coinbase. All you have to do is set up a wallet for safe storage, and you can get to buying.
This article was republished with permission from Money Under 30.