When I started my journey as an online entrepreneur, I was using PayPal to conduct all my business activities.
The reason being that it is a simple, fast and convenient manner to send or convert money.
I’m happy with it. This is why I ignored at first the expansion of a cryptocurrency called “bitcoin”.
I had no interest in potential alternatives and this one sounded a bit geeky :)
But it became popular. There are now several programs that I’m using which accept it as a mean of payment. And more recently, even my local bank started to deal with it through their merchant partners.
I had to admit that “something was happening”.
As soon as I understood the value behind it, I added bitcoin as a payment option to purchase my services and I’m using it regularly for my online activities.
What is Bitcoin? What’s all the fuss about?
To give an extended reply, I could quote some hundred sheets PDF on the topic. But the good news is there are no requirements to read and understand everything.
You don’t need to be the next Bitcoin wizard to enjoy it, as the system is easy and user-friendly for an everyday usage.
But let’s go through a few basics for the sake of clarity:
- Bitcoin is a type of decentralized digital currency, created and held online. It’s a peer-to-peer network, no one controls it. The virtual currency is independent of a central bank or authority.
- Bitcoins aren’t printed, like dollars or euros. They’re produced by people running computers all around the world.
- Some advanced encryption techniques regulate the generation of units of currency (“bitcoin mining“) and verify the transfer of funds.
Here is an explanatory video:
What are the Advantages of Bitcoin?
- Easy to set up: no bureaucracy headaches. You can set up a bitcoin address in seconds, no questions asked, and with no fees payable.
- Be your own bank: send money worldwide, available 24/7, and you never have to ask permission to make a transaction of any kind.
- Bitcoin is a peer-to-peer system which means you enjoy low transaction costs.
- Anonymous, but transparent: the blockchain keep a log of every single transaction that ever happened in the network. But there are no link to names, addresses or personally identifying information.
- No chargebacks. No account frozen. No headaches.
How to open a bitcoin wallet online?
A “wallet” is basically the Bitcoin equivalent of a bank account. It allows you to receive bitcoins, store them, and then send them to others.
You can buy (or earn) bitcoins and use it online in a few clicks.
All you have to do is to pick one safe bitcoin wallet among the many options available.
I personally use and recommend Coinbase, which is, in my opinion, one of the best online bitcoin wallets for an everyday usage.
How To Set Up a Wallet with Coinbase:
The signup process is fast and easy.
The dashboard is clean and intuitive. It allows you to keep an eye on the bitcoin value and proceed all transactions you need to.
You will be requested to add and verify a bank account if you wish to buy some bitcoin with your local currency. And you will also get a welcome bonus of $10 (or local currency equivalent) if you decide to place a purchase for $100+ of bitcoin.
Note: your referrer (who invited you to join coinbase) will also receive that one-time $10 bonus.
I already mentioned it, but let me emphasize this again, with bitcoins, the fees are nearly inexistent.
To put things in perspective, you could, for example, send 10 bitcoins (current value: $6739.90) for a mere fee of $0.15 while by using a processor such as PayPal the same transfer would cost you about $263.16.
If you own a business, coinbase is also easy to integrate with all major e-commerce plugins (such as woocommerce or easy digital downloads).
The security is quite advanced for a web wallet or hosted wallet: 2-Step Verification, SMS and email confirmations, and an enhanced security vault (where you can store funds with delayed transactions and multiple validations required)
Bitcoin hack: can you trust thirty party wallets?
Although most bitcoin users rely on freely-available web and mobile wallets, recent security failures clearly illustrate the need for safer alternatives. Bitfinex and Mt Gox users will agree as both websites got hacked and lost million of dollars… it hurts!
Coindesk sum up the situation perfectly:
Security is never a zero-sum game. It’s a constant cat-and-mouse game, between those trying to protect systems, and those trying to break them.
The idea to be your own bank and skip the fees is awesome. But are you really willing to gamble on how secure and hacker proof your third party wallet is?
If you plan to hold significant amounts of bitcoin, probably not.
Moreover, another bitcoin issue lay in the security of the end-user and their computer.
A simple keylogger is usually enough for a thief to act with close to no probability to be tracked and caught.
How to store Bitcoin with enhanced security?
A secure display, CPU and buttons in portable form are exactly what is needed to solve many tricky security issues – Coindesk
To add an extra layer of security to your bitcoins, you can use a hardware wallet. This allows you to put back bitcoins in your hands, in a safe and secure storage and eliminate the need for 3rd party services. The aim is to ensure that your bitcoins will not get stolen, hacked, confiscated, lost, etc.
SatoshiLabs, a Prague-based company, give a really good answer to the question of “how to store your bitcoins” with their offline hardware wallet: Trezor.
Trezor is a small and durable USB dongle with a small screen. (Purchase this item for $99)
The main advantage with such offline-only vault is that your private keys stay within the device.
How does an isolated environment enhance your security?
Well, no matter how unprotected your computer or internet connection might be, your coins always stay safe with TREZOR. The device never divulges any secrets to the host machine.
By using Trezor, you can not be infected by the malware responsible for most digital asset and private data thefts.
The login process is safer. To access your funds, you need to enter a PIN code. But you will do so, by matching the numbers that appear on your screen with a virtual pad on your computer. Which means that you do not need to worry about keyloggers.
It also adds an extra authentication layer to all outbound bitcoin transactions. You can visually verify the information using small display and confirm it.
This “seed list” (24 words) can be used to backup and regain access to your coins in case of disaster, loss or theft.
The interface is easy to use and compatible with Windows, OS X, and Linux.
As it’s a community-driven and opensource development, things are evolving rapidly.
- CE and RoHS-certified
- 60 x 30 x 6mm (2.4 x 1.2 x 0.2in)
- 12g (0.42oz)
- Water resistant
- Based on an ARM Corxtex M3 processor clocked at 120MHz
- 128 x 64 pixel OLED screen
Trezor Setup: how to get started with the device?
1. Connect the device to your computer using the USB to micro-USB cable.
2. Go to myTrezor.com and download a browser plugin.
3. Once the plugin is activated, myTrezor will prompt you to choose a PIN.
– You don’t actually type the PIN, you have to click on a virtual pad displayed in the browser.
– The position of each number changes randomly, so every time you enter the PIN you will have to check your Trezor device for the new layout.
4. Next, you will have to write down a randomly generated sequence of 24 words, also known as a “seed” (keep it safe, and offline).
– This seed will allow you to recover your Trezor wallet in case you lose the device.
Trezor Transactions: Add/Receive bitcoins
1. In myTrezor, click on “Account #1” on the left of the screen and you will see an empty “Transactions” tab.
2. Select the “Receive” tab to get your first Trezor bitcoin address (a long string of numbers and letters).
3. When someone makes a payment to you, you will see a green (incoming) transaction appear in the transactions panel.
Trezor: how to send payment?
1. Go to the account page in myTrezor and visit the “Send” tab. You’ll be taken to a payment page like this:
2. Enter the destination bitcoin address. Press send and enter your PIN
3. Confirm the transaction on your Trezor
4. You can watch the progress of your outgoing transactions by switching over to the “Transactions” window. Outgoing transactions are marked in red.
Trezor: advanced features
There are several other features to discover such as:
- Multiple assets (store bitcoins, litecoins, dash and more).
- Dropbox synchronization to add comments, tags and wallets names across numerous devices.
- Passwordless login (similar to 2FA, but with Trezor directly).
- Hide wallets under different passphrases (so you could give away access to a wallet with a low amount on it to attackers with physical access, without him behind able to know you have more).
- Trezor is compatible with various bitcoin wallets, including Copay, Mycelium, and Multibit HD. You can setup read-only wallet to keep an eye on your balances from your smartphone (without putting your security at risk). The full list can be found in the Trezor Apps.
Image credit: Randall Munroe xkcd.com
(Used under the terms of the Creative Commons Attribution license)
Thanks for reading. Please, post a comment to let me know if you use bitcoins, for which purpose and how you secure it! :)
If you have experience or asks concerning bitcoin, coinbase or trezor; I would love to read your insight. Cheers.
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