This is a follow-up to the introductory Bitcoin post. You now know what bitcoin is and why it was created. So what do you need to get started?
First of all, you need a bitcoin wallet address to receive bitcoins, the same way you need an email address to receive an email. And just like email, you need a service provider that offers a wallet service to house your address. A bitcoin address is a unique identifier made up of numbers and letters that enable you to receive bitcoin. It looks something like this:
You can generate a bitcoin address yourself by simply downloading a bitcoin wallet app on your smartphone or even visiting one on your computer. The most popular website and app for many years is the Blockchain wallet. It has had many upgrades over the years, enabling the storage and exchange of other cryptocurrencies too. We love it here at Digipesa. Below is a list of others we use and recommend too:
Today, you will find that a lot of exchanges provide bitcoin wallets. For example, Coinbase, the biggest exchange in the US and all the ones mentioned above are exchanges. That means you can buy and sell bitcoins within the app too.
Remember the cryptography we talked about? For every bitcoin address, there is a private key that belongs to the owner too. This adds an extra layer of security to it. For many wallets, you also log in with a PIN and 2-factor authentication, depending on your preference. With bitcoin, the more layers you have, the better. Trust us. You don’t want to leave your wallet without a PIN or password for anyone to transfer those coins when your phone is away from you.
Now speaking of security, the wallets we have described above are all examples of hot storage. Meaning, you access your bitcoin by being connected online – they are basically stored on the cloud. Now the thing with this kind of storage, though rare, is that hackers have been able to steal millions of customer funds from exchanges around the world by moving bitcoin stored in exchanges. The most famed one was the Mt Gox. Although at some point there were stories about it not really being a hack but being an inside job. Whatever the case, bitcoins were lost and that’s not funny. We have seen this happen too, within wallets we have had access to. You walk out for lunch, the next thing you know, your bitcoins have been moved by someone somehow while you stepped away.
This is where cold storage comes in. It might sound a bit complicated, but it’s not. You can own a bitcoin wallet that is not connected to the online world either on desktop, mobile or even on a hardware wallet. For a long time, paper wallets were also popular as the most secure way to store bitcoin – that is, the keys – by printing them onto a paper and storing the paper. However, if you think about it, even though this is protected from malware and hacking on the internet, you can lose this paper or many other things like ink washing out.
You can share your bitcoin address with anyone to receive bitcoins from anywhere in the world in minutes. Now that you have your wallet address, let’s get to how you can acquire bitcoin and reap the benefits. Coming up next.
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