I bought bitcoin - now what?
Jun 19 2018 · by Jonathon Miller
Category: Tech Knowledge
You’ve just bought some bitcoin. Congratulations. You are now an official member of the bitcoin network, and your purchase transaction will forever be a part of the blockchain.
So, what comes next? What can you actually do with your bitcoin? What should you do with your bitcoin?
There are three options:
You can can use it to pay for goods or services. An increasing number of small merchants and large businesses are now accepting bitcoin payments.
You can trade it, either trading bitcoin for fiat currencies (AUD, USD, etc.) or other cryptocurrencies.
You can hold onto it. Some predict that bitcoin’s value will continue to rise long-term.
But, before you buy, sell, or forget about your bitcoin, make sure it’s stored securely.
Whether you’ve invested $100 or $10,000, protecting your bitcoin – from malicious users, dodgy service providers, and forgotten passwords – should be your top priority.
The first thing to consider is your wallet. If you have already dedicated hours to researching the best wallet for your specific needs, skip ahead. But, if you created an account with the wallet provider your mum’s neighbour swears by, it’s worth taking the time to learn a bit more about the types of wallets available.
There are three main types of bitcoin wallets, each with their benefits and drawbacks:
Web wallets, eWallets, and browser-based wallets. These are very popular, and are quick and easy to obtain. Do be diligent when selecting a web wallet, as the wallet provider hosts and holds your bitcoin.
Mobile and desktop wallets. These are installed on your computer or smartphone, and give you complete control over your bitcoin. Be aware that you are responsible for backing-up your software wallet and storing your seed phrase securely.
Hardware wallets. These exist as physical objects, and like software wallets, give you control over your bitcoin. While hardware wallets are very secure, as real-world objects, they can be lost.
You can learn more about wallets here.
The second thing to consider is your password. Create a password that is both random and memorable, and contains both upper- and lower-case letters and numbers. A made-up, nonsensical sentence often makes a secure password.
You may also like to use a password manager, and/or write your password down on a piece of paper. Many wallet providers make it difficult or impossible to recover a wallet if the user has forgotten their password.
Finally, if you are using a web wallet, enable two-factor authentication if possible.
Now that your investment is secured, it’s time to start ‘using’ your bitcoin.
Bitcoin is much more mainstream now than it was a few years ago. As a result, a growing number of companies are accepting bitcoin payments.
You can buy food, electronic goods, sneakers, clothes and a plethora of other goods directly with people with no middlemen using Open Bazaar.
You can even pay your BPAY bills using bitcoin and Ether right from your Bit Trade account!
Finally, check out sites like Coinmap to find businesses in your local area that accept bitcoin.
Maybe you bought bitcoin last month, it shot up in value, and you’d like to cash in. Perhaps you’ve changed your mind about bitcoin altogether, and just want out. Or, maybe you’d like to trade some of your bitcoin in for another cryptocurrency.
Whatever the reason, there are a number of ways you can sell your bitcoin.
The first option is through a broker, like Bit Trade. We connect buyers and sellers, while eliminating any counterparty risks with strict security measures. Similar to exchanges, brokers charge fees that, if you plan on selling a large amount of bitcoin, can become costly. In these cases, it’s worth exploring our OTC offering.
OTC – over-the-counter – refers to the trading of any asset in a context outside of a traditional exchange. Put simply, OTC trades involve buyers and sellers connecting directly; the buyer sends the seller funds, and once received, the seller sends bitcoin to the buyer’s wallet address.
OTC trades have the advantage of being fee-free. They are, however, much riskier than selling via an exchange or established broker. The seller cannot be sure that the buyer will send through the funds, nor can the buyer be sure that the seller with transfer the bitcoin.
That being said, as trade sizes have increased, more user-friendly facilitators of OTC bitcoin trades have been established. Some exchanges now offer OTC trading desks that help high-value clients secure the best possible rates.
The second option is through an exchange. Exchanges will purchase your bitcoin with fiat currencies, such as AUD or USD, or other cryptocurrencies. Although selling via an exchange is reliable and secure, if you have a large amount of bitcoin to sell, you may be stung with fees. In this case looking into OTC options becomes relevant.
Bitcoin’s value has been anything but stagnant over the past decade. In 2010, 10,000 bitcoins were traded for two pizzas. Today (mid 2018), you could buy more than 10 million pizzas with 10,000 bitcoins. In late 2017, bitcoin reached an all-time-high of over $20,000 USD.
Whether or not bitcoin’s value will continue to rise at such a rate over the next decade is unknown. Things like government regulation, security improvements, new second layer technologies like the Lightning Network, and adoption rates will all play a role in shaping the bitcoin of the future.
The potential of cryptocurrency and its past performance has attracted many investors, while the risks involved have scared many away. Whichever camp you fall into, holding on to a fraction (if not all) of your bitcoin long-term – ten years or more – could reap serious returns.
If you want to sell your bitcoin or buy some more, we can help. As Australia’s longest-running bitcoin exchange, we offer a fast and intuitive way to buy and sell cryptocurrencies. We currently offer trading on both Ether and bitcoin with more to be added in the coming months.
Category: Tech Knowledge
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