Bitcoins Part Two

Last month we covered off some of the technical details of what bitcoins are and how they’re kept secure. This month I’m going to tell you how to buy and sell bitcoins and how to make a purchase.

The first thing you’re going to need is a bitcoin wallet. Just like it sounds, this is a place to store your bitcoins. Unfortunately, you can’t just make one out of duct tape. You’ll have to download an app to your phone. For iPhone users, by far the easiest is BreadWallet. I like it because there is no central server to communicate with. All your bitcoins are on your phone. Of course if you lose your phone, it’s the same as losing your wallet – so, don’t do that – except that unlike a wallet, under some circumstances you can get your money back if you lose or destroy your phone. Read on.

I’m assuming you’ve installed BreadWallet from the app store and installed it. Starting up BreadWallet you’ll be asked if you’d like a new wallet or to recover a wallet. If you choose new wallet you’ll be asked to generate a recovery phrase. You will receive a serious warning to never let anyone know your 12 recovery words. Then it will show them to you. Write them down somewhere safe. A good place is on a piece of paper to be stored in a safe (bitcoins are money so this is not unreasonable). Or in your password manager. If ever you lose your phone you can use your recovery words to restore your bitcoins on your new phone. Cool, huh? Try and do that with the crisp $20s that were in the wallet you lost somewhere outside the Griz Bar last night.

Then you’ll be asked for a four digit passcode to use to open BreadWallet. This is to make sure that if someone needs to use your phone they can’t access your bitcoins.

Once you’ve done all that you’ll be presented with a QR Code. That’s the square code with all the squiggly pixels. That code is your receive code. When someone wants to send you bitcoins, they can scan that QR Code and send bitcoins to it. They end up in your wallet. There’s an alphanumeric string version of your receive address at the bottom that you can send if you need to send it in a text message for example.

Once you’ve gone through the help prompts you’ll see that there are two cards you can swipe between: a card showing your QR Code for your receive address; and a Scan QR Code, or “copy from clipboard,” address which you can use to send money.

You now have a safe secure wallet and a way to send and receive bitcoins.

The easiest way to get bitcoins is from a bitcoin ATM machine. Locating one of these reminded me finding an ATM of any kind about 15 years ago. Today of course you can’t swing an empty deposit envelope without hitting three of them. Expect a similar situation with bitcoin ATMs in the next few years. For now you can use https://coinatmradar.com to find one. They’re scattered all over Calgary and the lower mainland.

Buying bitcoins at an ATM varies a bit by machine, but generally the process is 1. select “buy bitcoins,” 2. let the machine scan your receive QR Code, 3. and insert the amount of money you’d like to spend. The transaction usually takes just a few seconds. Perhaps a bit longer if you’re changing a larger amount of cash. Occasionally a transaction can take a long time. This depends on the number of transaction confirmations that the purchaser/seller requires to commit the funds. Check back to last month’s column if you need a refresher on the blockchain.

Quickbt.com is another option for purchasing bitcoins. You can buy bitcoins using Interac online. I haven’t used this method, but it appears reliable.

There are an increasing number of places online and offline that you can buy things with bitcoins. Some examples: PayPal, Microsoft, Dell, etc. A number of coffee shops have started taking it in urban centres. You use the same process as at the ATM to buy your coffee. Using your BreadWallet “send money” card, you scan their QR Code, which will include the amount of purchase, enter your pin and the funds are transferred. The whole process is very similar to using a debit machine in a restaurant, except you’re using your phone instead of your debit/credit card.

There’s a whole bunch more to talk about with bitcoins, so I suggest doing some research.  The wikipedia page is good for an overview. Bitcoin.com and bitcoin.org have some good information.

One last comment. Bitcoins are still pretty new. The technology is very solid, but buying and selling things from people with bitcoin is no different than using cash: caveat emptor.

p.s. If you have any specific questions for the Answer Guy send them to info@clarismedia.com. Chances are good that if you want to know others do too.