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Get Started With Bitcoins!

Hello weary traveler! You probably stumbled across this page because you saw a forum post or heard a friend talking about Bitcoins and wondered, “what are those things?” Wonder no more! I’ll tell you what I know in the following paragraphs.

What is Bitcoin, you ask?

Very simply, Bitcoin is digital money. It’s money just like the cash in your wallet. You can receive it. You can spend it. It can be stolen and it can be stored safely. It’s actually very surprising how similar Bitcoin is to physical currency.

What can I do with Bitcoin?

You can do the same things with Bitcoin that you can do with regular money. You can buy goods or services from a few different vendors. You can gamble it. You can save it.

So it’s money. Why not just use physical money?

There are a few different reasons you might prefer Bitcoins to physical money. First and most importantly, Bitcoins can be transacted across the globe nearly instantly. Sending cash would take a week. Secondly, some economies aren’t stable and the local currency is not very strong. At the time of this post, Iran is of particular note. They are using Bitcoin more because of this very reason. Third, Bitcoins are even more difficult to forge that physical money. Lastly, Bitcoins have all the convenience of a digital payment system while having all the behavior of physical money.

So it has some nice features over physical money, but what about compared to a credit or debit card?

The primary reason is fees. To transfer money using Bitcoin, it will cost approximately 0.001 Bitcoins. That is about $0.01US right now. To transfer money using a credit card, it will cost about 2% + $0.10US. To pay via PayPal it will cost 2.9% + $0.30US. You can see that Bitcoin is much less expensive. You might not directly pay these fees when you buy groceries, but they are accounted for and ultimately they are charged to you somehow. Secondly, and especially regarding PayPal, nobody can take any more Bitcoins than you give them. Further, when someone pays you Bitcoins, the address you give them describing where to send Bitcoins does not allow withdrawals.

That sounds pretty nice, but what’s the catch?

There is always a catch, isn’t there? Here the catch is security of your wallet is entirely up to you. Just like a physical wallet, if your Bitcoin wallet is stolen you lose your money. What makes this more complex is most people do not understand computer security very well, so securing a digital wallet becomes quite the challenge. Also, there’s no such thing as a chargeback. Once you send money to someone, it’s gone. It works just like when you give someone $10. Once they possess those bills, you can no longer just take them back. Additionally, Bitcoins don’t have wide acceptance yet. This area is improving, but you still cannot buy groceries from Wal-mart with Bitcoin. Finally you have value risk, both against your local currency and over time. The value of Bitcoin constantly fluctuates against the currencies of the world and, if it doesn’t gain wider acceptance, can go to zero. This, I think, is the most significant risk.

I’m not sure about Bitcoins. How can I try them out and see what it’s about before diving in completely?

Easy! Just head over to www.bitcoin.org and download a wallet manager. There are a couple to choose from, which might be a bit daunting. I’d recommend heading to the clients page, and download Multibit. You will also need Java from Oracle to run Multibit. Download the JRE from that page. This should have you up and running in about 30 minutes. The full client takes much longer to setup and doesn’t give the average user any more benefit.

Now Multibit is setup, but I don’t have any coins. What do I do?

Since you’re only giving Bitcoin a test drive, we’ll just get you some free coins really quickly. In Multibit, click the Request tab at the top, and then the copy button next to Your Address. Your address is going to look like a mess of letters, but that’s what you give other websites so they know where to send payments to you. Next, visit www.cointube.tv or www.bitvisitor.com. Follow the directions and they’ll deposit small amounts of Bitcoins into your wallet for viewing advertising. It’s not particularly enjoyable, but it gets you some coins to play with.

Now that I have coins, what resources are out there that I can check out?

www.bitcoin.org — official website

www.weusecoins.com — education website

www.bitcoin.it — Bitcoin wiki

www.bitcointalk.org – Bitcoin forum

Where can I spend these coins?

Probably nowhere because you won’t earn enough coins by viewing ads, unfortunately. I’ll write up another article describing different websites that accept Bitcoin as payment later! For now, you’ll have to be content transferring coins to yourself.

I hope this article helped you learn some basics about Bitcoin! Stay tuned for more information!

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