Throughout this week, we have been discussing Bitcoin. We have given you a simple introduction and some background regarding where money derives its value. We’ve also discussed the risks that you should consider before getting involved with Bitcoin. In this last post, we go through some of the ways you can earn Bitcoin and where you can spend them.
How Do I Start?
Firstly, you will need a digital wallet to start using Bitcoin. A digital wallet is where you can store the details regarding the Bitcoin that belong to you. There are many different types of wallets that you can get depending on the device you are using e.g. Desktop computer or mobile phone and there are also wallets that are based online.
It is important for you to make sure that your Bitcoin wallet is secure from hacking, much like how you would keep your wallet safe from pickpockets or your bank details safe from online scams.
Once you have a digital wallet, it will then enable you to obtain Bitcoin in one of the following ways.
The simplest way to obtain Bitcoin is to trade currency (e.g. Rands) for Bitcoin. This can be done through a Bitcoin exchange. The exchange will charge a fee for using the service. Due to the fluctuating value of Bitcoin against other currencies, there may be opportunities to trade Bitcoin like currency trading. The currency ticker used for Bitcoin is either BTC or XBT.
Currently, one Bitcoin can be exchanged for a little more than US$4000 or R60 000 at the time of writing.
Bitcoin Mining is a way in which Bitcoins are created and is an important means of ensuring that the Bitcoin system functions correctly.
Bitcoin miners compete to add blocks of transactions to a system called the block chain by solving complex maths problems. The first to solve the problem gets rewarded with 25 Bitcoin. The Bitcoin system adjusts the mining difficulty depending on the amount of computing power being devoted to mining.
To start mining Bitcoin, you would need specialised computer hardware devoted to this task. In addition, it can also be time-consuming as the competition among miners has increased.
Where to Spend Bitcoin
Earning Bitcoin would, of course, be useless if you were not able to spend them. Currently, in South Africa, many popular online stores accept Bitcoin as a means of payment. Stores such as litmail.co.za, takelot.com, bidorbuy.co.za, raru.co.za and the gadget-shop.co.za currently allow Bitcoin to be used. In addition, you can also transact with Bitcoin with other users of the system through transfers.
Thank you for joining us this week as we discussed Bitcoin. As always, we encourage you to do your own research and to consult a financial advisor before making any investment decisions.