The world of Bitcoin and other cryptocurrencies (that would be coins like Litecoin, Devcoin, Quark, Next and many more) is in a nearly constant state of flux. Websites offering various services come and go, and even the coins themselves sometimes only last for a short time. Things that once looked like profitable investments sometimes turn out to be scams, or they get hacked and funds stolen, or they just turn out to be not that great an investment in the first place. Finally, there’s always a learning curve for the experienced. For all these reasons, the best way for a beginner to get into Bitcoin often changes, and so an article like this with new information becomes necessary quite frequently.
This article, and my entire website, is created with the new to Bitcoin and cash poor in mind. Someone with plenty of fiat capital to invest need only visit an exchange like Camp BX and use their cash to buy Bitcoin and then direct it to whichever address they want. People in that situation likely are already really good with money and investments and do not need my advice. The rest of us who do not have $800 or more just sitting around to spend on one solitary Bitcoin need to know the ways to obtain Bitcoin without investing hard earned fiat cash. They also need to know how to obtain Bitcoin without needing to know a ton of technical details about how the Bitcoin network functions. If this describes you, then this article is for you.
The very first step: get a wallet There are basically two kinds of wallets–the kind that is hosted and lives on your PC (and only on your PC) and the kind that is offered through a website which you can visit from any Internet connected computer. As you get into the Cryptoworld you will very quickly own both kinds, but at the beginning stages, it is perfectly OK to stick with an online Bitcoin wallet.
The trading platform Cryptsy is a very good wallet provider for beginners. The main reason is that it costs no more to send funds out of your Cryptsy wallet than it does to send them out of a PC wallet. Most other web based wallets charge fairly high withdrawal fees. The other reason Cryptsy is such a great wallet provider is that it also provides wallets for many of the numerous other cryptocoins out there. If you decide you want to obtain Devcoins or Litecoins, you don’t need a new wallet for them. You simply have your Cryptsy account generate an address for each coin you want to deposit, and that becomes your wallet address. Another good wallet provider/trading platform with a completely different set of cryptos is AllCoin. It works just like Cryptsy.
Cryptsy will look a bit complicated because there are so many options and it is a trading platform after all. For now, you can ignore all the trading stuff and just go to the navigation tab at the top of the screen called “balances.” This will show how much of each cryptocoin you have in your account. They will of course all say zero when you first open your account. All the possible cryptos are listed in alphabetical order, so Bitcoin is near the top. Click on the button in the far right column that says “BTC Actions” and select the “deposit/autosell” option. This will reveal your wallet address. If that field is blank then click on the “generate new deposit address” button. That long string of letters and numbers which usually begins with the number 1 is your Bitcoin address.
Visit some faucets Once you have your address, it’s time to have some Bitcoin sent to it. This gives you the opportunity to verify for yourself that your address really works, and it’s always nice to seed it with some Bitcoin, even if it’s a small amount. This is where Bitcoin faucets come in. A faucet is a website which dispenses a small amount of Bitcoin (though there are faucets for other cryptocoins as well) to anyone who asks. You ask by entering your Bitcoin address and solving a puzzle (usually a ReCaptcha) to prove that you’re human. Free Bitcoin is a generous little faucet which dispense every hour. It will show your accumulated earnings each time you log in (you log in with your Bitcoin address), and it makes weekly payouts on all accounts which have accumulated 0.00005460 BTC. Once you register an account on Free Bitcoin, leave a tab open and whenever you input your address to get another dispense, an hour long timer will count down until you can do it again. Payments are processed on Sunday and usually hit your account by Monday depending on what time zone you are in.
A must visit faucet is QoinPro. The great thing about QoinPro is that once you create an account, the faucet dispenses automatically–you do not even have to log in to collect your earnings. It will be a while before you can withdraw funds, but they will accumulate in your account while you do other things. It dispenses not only in Bitcoin but several other cryptocoins, so you get a fun introduction to them to LiteCoin, FeatherCoin and others as well.
Another good set of faucets are what I refer to as the CoinBox faucets. All of these faucets dispense every thirty minutes or an hour, and the tiny amount you get from all of them is combined and when it reaches 0.00005500 BTC it is paid out in one lump sum. The CoinBox faucets are dispensing 0.00000020 BTC (or 20 sat) each time so it will take a while to accumulate enough for a payout, but if you don’t want to wait until Monday for your Free Bitcoin payout, CoinBox faucets are another option.
Earn some Bitcoin Faucets can be a lot of fun and they are a great way to test your wallet addresses, but you’ll figure out very quickly that you’re not going to get rich off them. You’re going to want to get into the more lucrative ways of earning Bitcoin as soon as possible.
The number of sites out there which allow you to earn small amounts of Bitcoin for doing all kinds of fairly easy things is overwhelming. I am going to talk about just a few which I consistently use. CoinAd and BitVisitor are two services which sell advertising. Click Bitcoin is a new service that is similar to CoinAd. You get paid a small amount of Bitcoin for each ad you view. The earnings are not great but they do add up, and it is easy to flip through ads when you have some idle time especially if you own a tablet PC or smartphone. BitVisitor only asks for your Bitcoin address before it takes you to advertisements; you need to register an account with CoinAd and Click Bitcoin.
There are two sites which pay you for performing simple crowdsourced tasks. They are CoinTasker and BitcoinGet. The earnings potential through these sites is higher than what you’ll earn just through viewing ads.
More lucrative ways to earn At this point the path you take could go in any number of directions. One important thing to keep in mind is that the Cryptocoin community is new and has a high percentage of entrepreneurs who use the Bitcoin Forum to launch their new ventures. These entrepreneurs often need help with various aspects of running their business. What this means for you is that if you have specific skills you may find people who are willing to pay for those skills. For this reason, although participating in the Bitcoin Forum doesn’t pay directly, it is worth doing for the networking potential. Not only that, you will learn a lot just by reading the various threads.
My marketable skill happens to be writing. If you have any writing skills whatsoever, you need to know about the Devtome opportunity. The Devtome is a wiki (similar to Wikipedia) which accepts contributions on any topic of interest to the contributors. The content can be fiction or non-fiction. It just has to be written reasonably well and not violate any rules against plagiarism or spamming.
The Devtome is currently accepting author applications and applying is as simple as sending the appropriate admin on the Bitcoin Forum a message stating your intent to write for the Devtome and including a small writing sample.
The Devtome pays its writers in Devcoins, and in order to accept them you will need a PC based wallet (in this case your Cryptsy wallet will not work). I have provided a more detailed explanation of how to get set up as a Devtome writer as well as more detail about how it works in this article called Writing for the Devtome.
Once you earn your first Devcoins (usually about six weeks after you begin submitting content on the Devtome), turning them into Bitcoin is a simple matter of registering an account on Cryptsy (or using your existing account) and selling them on the Bitcoin/Devcoin market. Devcoins do have their own value and many Devtome writers hang onto a significant portion of the Devcoins as a long term investment. You can direct some of those to your Cryptsy account. You generate a Devcoin address the same way you generate a Bitcoin address.
If you publish consistently on the Devtome you will earn and the potential dwarfs all the other earning sites mentioned in this article. For this reason I highly recommend it as the way to go unless you truly hate writing. I will say that writing for the Devtome has gotten me to where I’m at now.
Now that you have Bitcoins If you trade some of your Devcoins for Bitcoins on Cryptsy you will start building up your Bitcoin earnings, and very likely you will actually own whole Bitcoins, not just fractions of them. If you followed all these steps you have not spent one penny of fiat money to acquire your Bitcoins, though you will have invested quite a lot of time. Now that you have Bitcoins, the next question becomes what do you do with them?
You can at this point cash them out for fiat and use the proceeds to pay bills or otherwise get further ahead in the fiat world. The best place I have found for US citizens to do this with no hassle is Coin RNR. You register an account, place an order, then send your Bitcoin to the address given. Orders currently process between fifteen minutes and an hour after the transaction confirms.
If you’re feeling ambitious and want to go with a full blown exchange, Camp BX is a good option for US citizens. You deposit your Bitcoin to a single use address the site generates for you, then you wait a half hour to an hour for that transaction to confirm. Then you can sell it. When you’re ready to spend the cash, you request an ACH deposit to your fiat bank account. The ACH deposit costs two dollars. UPDATE: Camp BX currently has suspended ACH transfers, so please check the website for fiat withdraw options before sending your Bitcoin.
But it would be more satisfying to hold some of your Bitcoins back and invest them so they can grow into more Bitcoins. I’m going to quickly run through a short list of some of my investments which have worked out so far. I will also say that one of the risks of investing your Bitcoin is that you can lose them, and I have lost thousands of dollars worth of Bitcoin in some of my less than stellar attempts. This is why I’m a firm believer in taking profits (cashing out some of my Bitcoin earnings) every step of the way, and why it is important to only invest what you can afford to lose.
Bitcoin mining I know of no other Bitcoin investment that is more profitable than cloud mining Bitcoin. Mining is the way new Bitcoins are created and you can participate in it without having to invest in mining hardware by simply registering a cloud mining account and purchasing some hashing power. The Bitcoin Commodity Exchange hosts a trading platform where you can trade Bitcoin for Gigahashes per second (GHS). Once you buy some GHS, it will begin mining for you. Check back on your progress in a few hours or the next day. With cloud mining there is no investment too small–you can purchases tiny fractions of GHS, which means that even your CoinAd and BitVisitor earnings can be put to work. However it goes without saying that you will reap greater mining rewards with larger investments. My strategy for growing my mining rewards is that I reinvest half of my Bitcoin earnings and all of my merge mined alt coins.
UPDATE: Because Bitcoin mining gets more and more difficult with time, the price of hashing power, or GHS, tends to go down with time. It’s important to be aware of this when buying GHS. The return from each unit will also decrease with time. It is generally believed that one can make back their return within a year, but no one really knows how much mining difficulty will increase during that time. Cloud mining of Scrypt coins such as Litecoin and its forks (clones) is becoming popular and is worth checking out. Scrypt.cc is one service which provides scrypt cloud mining that has recently opened. There is also a security on CryptoStocks called Crypto Power Mining (CPW) which is based on scrypt mining. Scrypt cloud mining is one area where one should proceed with caution and only invest what one can afford to lose. Be sure to do your homework.
Bitcoin Lending One of my favorite websites is BTCJam. People who want to borrow Bitcoins post a listing and users can contribute funds to their loans. If the borrower is a good one, he will repay your investment with interest. The loan will only fund if there are enough people funding it, and if it doesn’t fund you just get your money back. It doesn’t take long to figure out who are the good borrowers who usually get their loans funded and who always repay them. Stick with the grade A or A+ borrowers with high positive feedback scores and you should do fine. Some of my favorite borrowers are CintronDigital, MAC, Victor BC, and marcopolorezende, but there are many other good ones. They borrow money for many different reasons.
UPDATE: After several months of being involved in BTCJam I have pretty much determined that it’s more trouble than it’s worth. I leave the information here for your benefit, but advise caution. Definitely start small.
Just like with cloud mining there is no amount too small to invest, so you can put even a tiny amount of Bitcoin to work for you by investing it in loans.
Bitcoin securities If you want to invest your Bitcoins in stocks, you can set up an account on Havelock Investments or CryptoStocks. CryptoStocks has Devcoin denominated securities as well, and two I hold are P2PDVC and VIRTUAL. Havelock Investments has only Bitcoin stocks. I have not personally done as well with stocks as I have on other things, so I’m not recommending anything in particular, just presenting this as an option. Most stocks in the cryptoworld pay dividends. Some stocks turn out to be lame, so you want to be sure to read prospectuses and make wise decisions, and you probably should plan on losing some money at first.
Buy and hold alt coins There’s a new altcoin being developed every month or more it seems, and you can find a few of them on AllCoin and even more of them on Cryptsy. Some people have made out very well buying a whole bunch of a particular alt coin when it was cheap and then selling off some or all of it after it had exploded in value. This happens quite often. I’ve heard of a few that increased in value by 500 or 1000 percent in one week! Devcoin enjoyed an amazing rally like that in the weeks just before Christmas. Because of this it can be fun to try to pick and invest in the next golden alt coin. Of course knowing which one to pick is the tricky part. I hold positions in a couple cryptocoins besides Bitcoin and Devcoin but this isn’t really my thing either. I might buy a few thousand of an alt coin if someone I trust recommends one, but otherwise I stay out of this game. A lot of the new coins end up fizzling or going nowhere. I would consider this to be more of a risky game, but some people really enjoy it, and it’s probably at least one step up from outright casino gambling.
Simply hold Bitcoin Some people buy Bitcoin as a long term investment because they expect the value to increase even more in the future than it already has. I’m actually planning to hold some Bitcoin in my Cryptsy account and you should consider holding some of yours too. You can do the same with Devcoins that you earn from writing for the Devtome.
Some warnings Bitcoin is actually surprisingly easy to come by even if you start off with nothing. I hold quite a few Bitcoins in various places and I’ve cashed out a few as well. The most fiat I ever spent on Bitcoin was around $80 and that was only when I first got involved and didn’t know about all these neat other ways to get them. All the Bitcoin I ever bought got stolen from me in a scam early on, so for all practical purposes I started out with nothing. I’ve definitely cashed out way more than $80 from my Bitcoin adventure.
There are a few things to keep in mind as you’re starting out, especially if you are acquiring some of your Bitcoin through viewing ads. You can’ t believe all the ads. Some of them are scam sites and a lot of them are gambling sites. Stay away from both. If an opportunity seems too good to be true, then exercise caution. A lot of scams can be ferreted out by entering the opportunity name on Google or the Bitcoin Forum. Take scam warnings seriously, but you can’t always believe those either. You have to do your due diligence and make your own decisions. And you need to understand that you will probably lose some along the way. When you lose in a venture, don’t beat yourself up but try to learn as much from the experience as you can. You can always share about it in an article you publish on the Devtome. That way you’ll earn something from it and you’ll help others too.
Bitcoin and all the cryptocurrencies are still very new so getting involved with them is considered a high risk venture. It can yield great rewards so it’s worth doing but you do have to accept that sometimes things won’t turn out in your favor and not get too upset about it. You don’t want to be one of those people you find often on the Bitcoin Forum who immediately want to go crying to the Feds whenever they’ve lost some Bitcoin in an unregulated site. Bitcoin just isn’t a regulated currency or investment and all the Feds will do with your sob story is use it to try to crack down on the rest of us who like it that way.
When you do start to make some profits, cash some of them out and use the proceeds to better your life or your finances. That way if the whole thing crashes tomorrow you’ll at least have taken some profits. Don’t be greedy and hold out everything for a higher value tomorrow. Take some profits today and earn some more for tomorrow.
You can learn more details about any part of this article by reading the other articles on this website. Keep in mind that some of the older posts are obsolete because they talk about Bitcoin-related opportunities that no longer exist or have turned out to be problematic. If I didn’t mention the opportunity in this article, there’s probably a good reason. If you have any questions, please post a comment and I will do my best to answer it.
Here’s to a prosperous 2014, and I hope you’ll take the plunge and make Bitcoin a part of it.