Getting Started with Bitcoin – Complete Guide

New to Bitcoin? Here are some useful tips we’ve rounded up to help you along

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Bitcoin works differently from traditional banks and money you might be used to.

So before you engage in any major transactions, there are some things we think you should know. Consider it like any other cachet – treat it with as much care as you would your savings or checking account!

Wallet security

Is your wallet secure? Whether it’s the wallet in your pocket or Bitcoin, the answer should be a big yes.

One of the great things about Bitcoin is its flexibility and control– you can send funds anywhere with ease, and know you’re in full control.

Unfortunately, such ease and flexibility come with a price – the possibility of exploitation. However, used correctly, Bitcoin can offer surprisingly high levels of security.

At the end of the day, it is your responsibility to maintain good practices to secure your money.

Price volatility

There are many factors that can cause the price of Bitcoin to go up or down seemingly randomly – the fact of its relatively new entry into the economy, its novelty, and its sometimes not liquid markets.

Therefore, dumping all your savings into Bitcoin would not be recommended at this time.

Like any other high-risk investment, Bitcoin should not be funded with assets that you cannot afford to lose. There are also service providers who will happily convert any Bitcoin you receive to fiat currency.

Irreversible transactions

With Bitcoin, there is no undo button. The only way to reverse a transaction is for the recipient to refund you.

What this means is that before you click send, you should be reasonably sure that you are dealing with trustworthy, reputable organizations.

On the flip side, businesses should be on top of which payment requests they are displaying to their customers.

If you make a mistake and attempt to send funds to an incorrect address, Bitcoin can detect this and will likely not send. Consumer choice and protection may also be improved in the future with additional service rollouts.

Limited anonymity

Protecting your privacy with Bitcoin will require some effort. As all Bitcoin transactions are recorded on the public ledger (the “blockchain”) for anyone to see, any Bitcoin address can be opened to scrutiny.

This does not mean, however, that the identity of the parties involved is made public – not unless and until this is required for any reason.

Consequently, it makes sense to use a Bitcoin address only once. At the end of the day, it is your responsibility to maintain good practices to secure your privacy. Find out more about protecting your privacy.

Transaction confirmations

Transactions aren’t irreversible per se. Instead, they get a confirmation score that’s an indication of how hard it is to reverse them (see table).

Anything between a few seconds and 90 minutes is required for confirmation, 10 minutes being the average. If the transaction payout is too low or it’s atypical in any way, it could take a lot longer to get the first confirmation.

ConfirmationsLightweight walletsBitcoin Core
0Only safe if you trust the person paying you
1Somewhat reliableMostly reliable
3Mostly reliableHighly reliable
6Minimum recommendation for high-value bitcoin transfers
30Recommendation during emergencies to allow human intervention

Government, taxes, and regulations

While Bitcoin is not yet an official currency, in most jurisdictions you’ll still have to pay income, sales, payroll and capital gains taxes resulting from any transactions.

At the end of the day, it is your responsibility to adhere to tax and other legal or regulatory mandates issued by your government and/or local municipalities.

Bitcoin is still a work-in-progress

Bitcoin is an experimental new currency still undergoing active development.

With each new improvement, Bitcoin’s acceptance and adoption by the general public grow, but that also poses certain new problems. Increased fees, delayed confirmations, or much worse, could be in store during this growth period.

Keeping in mind that nobody can actually predict the future of Bitcoin, prepare for the worst and get the advice of a technical expert before making any major investments.

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