How to Get Bitcoins: A Fairly Comprehensive (Yet, To-The-Point) Guide

The recent drop in Bitcoin’s price may signal you that it’s a good time to buy and invest in bitcoins. If time is money, then let’s not waste any time at all. You can own bitcoins or a fraction of a bitcoin by determining which of these three methods work best for your situation.

Buy Bitcoins:

Assuming you have some cash or money on hand, you can simply find an outlet/channel that can sell you bitcoins directly. Since cash is king (for now), this is the fastest way to get your hands on some bitcoins. This is further divided into three ways to buy:

Bitcoin Exchange: This option is especially ideal for those who intend to buy bitcoins as a speculative vehicle—you know: buy low, sell high, repeat. It is ideal because this is the most cost-effective way as exchanges charge much less in terms of fees compared to how much you end up paying if you buy from a bitcoin ATM. If you are dealing with a legitimate exchange, they may require you to provide them with proof of ID and address to make sure that you are not involved in any money-laundering schemes. It takes about 1 – 2 business days before you can start depositing funds into the exchange platform. But once you cross this bridge, access to the convenience of trading and making money without leaving the comfort of your home far outweighs the time you spent to set up your trading account online. Consider this process as a short-term pain for a long term gain.

Pros:

• Low fees
• Access to more liquidity
• Online wallet service
• Escrow service between traders
• Everything is done online–physical presence not required to trade

Cons:

• Bank transfers can be slow and costly
• Must provide valid proof of ID and current address
• Counterparty risk can be high with non-legit exchange (Read more: Telltale Signs of a Bitcoin Scam)

In-person Trades: You can buy bitcoins directly from another person who’s looking to sell from sites like https://localbitcoins.com/ Note that I listed “no chargebacks” as both a pro and con because it depends on who ends up with the shorter end of the stick. Since there is no middleman to settle any payment disputes, try to deal with a regular bitcoin seller/buyer that you trust to minimize the risk of a bitcoin-trade gone bad.

Pros:

• No questions asked
• No need to submit ID documents to a third party
• No chargebacks

Cons:

• Must use cash
• Potential target for theft/robbery. Case in point: NYC bitcoin robbery
• Physical presence required on every trade
• No escrow service
• No chargebacks

Bitcoin ATM: Many metropolitan cities like Hong Kong have a number of bitcoin ATMs in operation. If you are looking to buy bitcoins quickly and don’t mind the premium charged for the convenience then buying from a bitcoin ATM may be a good choice. Just be sure not to lose that paper wallet/receipt that contains the password to spend your bitcoins.

Pros:

• Quick
• Easy
• No questions asked
• No ID verification needed

Cons:

• Potential target for theft/robbery
• Physical presence required
• ATMs usually charge higher fees
• Bitcoin purchase limited to smaller amounts

Mine Bitcoins:

If you’re tech savvy and have some very powerful computers around, you can try bitcoin mining. You can either buy hardware mining devices (called ASIC chips) to start mining bitcoins on your own or you can buy mining power GHash on a cloud hashing platform. Before you invest in mining hardware, consider the cost of your bitcoin mining operation vs return on investment. Use this bitcoin mining calculator to help you in deciding if mining bitcoins is worth your while. As it stands, mining solo is very nearly deprecated. The process of finding blocks is now so popular and the difficulty of finding a block so high that it could take over three years to generate any coins. While you could simply set a machine aside and have it run the algorithms endlessly, the energy cost and equipment depreciation will eventually cost more than the actual bitcoins are worth.

Pros:

• Can be very profitable if power cost is low and you already have the hardware/computing power needed

Cons:

• High cost of electricity can make bitcoin mining unprofitable
• Expensive cost of mining hardware
• Higher computing power required & increasing difficulty to mine bitcoins make mining hardware obsolete very fast

Earn Bitcoins:

If you have no cash or money to spare and you don’t want to buy costly mining hardware, there are still ways to get bitcoins. One easy ways to get bitcoins for free is through a Bitcoin faucet. Faucet: It is a website that gives out “free” bitcoins (BTC) in exchange for doing a simple task, such as clicking on an advert, solving a CAPTCHA, or viewing a webpage for a certain amount of time. Just as the name suggests, you can get bitcoins for free but in very small amounts like the drops of water from a faucet—in this case, just a very small fraction of a bitcoin in terms of Satoshis. They are free, but you won’t get rich waiting on it.

Pros:

• A good start for bitcoin-newbies to earn bitcoins for free
• Something to do on the side while you’re working on your computer all day

Cons:

• Cost of running your computer all day is higher than the amount of Satoshis you can earn

If you have the time and some skill, service/product or content worth paying for, you may want to explore other options to earn your bitcoins. Skill: If you’re tech savvy, you may consider being a part of a bug bounty program. A bug bounty program is a deal offered by many website and software developers by which individuals can receive recognition and compensation for reporting bugs, especially those pertaining to exploits and vulnerabilities. These programs allow the developers to discover and resolve bugs before the general public is aware of them, preventing incidents of widespread abuse. If you are a serious bug finder (the non-horticultural type), Pay4Bugs is one startup you need to know about.

Pros:

• Be a hero and get rewarded for exposing web-based security issues
• Be the first to learn and try out a new platform/web-based service
• May lead to a long term career if you play your cards right (two people got full-time jobs with Facebook)

Cons:

• You are competing with other bug bounty hunters
• Must follow specific requirements on what qualifies for a valid bounty

 Service/product: First, set up your bitcoin wallet to store bitcoins. You can download a local wallet here but make sure you keep a copy of your data backed up. Once you’ve created a wallet, you get an address like this:

1K2CoA2JE3hXubkroBWKmTMn2yEDcfdeDM

This (case-sensitive) chain of letters and numbers is a direct way to send bitcoins to your wallet. Second, advertise your service or product and be sure to state that you accept Bitcoin as a form of payment. Done!

Pros:

• Accept payments from clients globally
• No chargebacks issues
• Set-up cost for accepting Bitcoin as payment is much less than other forms of payments
• You can call yourself a Bitcoin entrepreneur
• Volatility in price of bitcoins—value in fiat may grow

Cons:

• Majority of customers don’t pay in bitcoins, yet
• Volatility in price of bitcoins—value in fiat may shrink

Content: What happens if you put Pay-Per-View, Youtube, and Bitcoins in a Las Vegas night club? You get Streamium. This startup is a fully decentralized paid video streaming application that uses bitcoin for payments, allowing content producers to get paid in real time. The platform is designed to facilitate teaching/tutoring/mentoring, monetizing geo-cams, monetizing sporting events that don’t have large enough crowds to allow monetization through ads, etc.

Pros:

• Great for video producers with a niche target audience
• No service fees
• No middlemen

Cons:

• It’s still in Beta and there are still security/bug fixes to be made

So, there you have it. Perhaps one or a combination of these methods suits your situation best. In either case, we would love to know how you got or plan to get your first bitcoin in the comments below!

See profile of Gatecoin on Startbase.hk