Tutorial on how to sell bitcoin on paxful

Can I Use Regular Money to Buy Bitcoin?

Cash can be used to buy Bitcoin and there are a number of ways to do this. LocalBitcoins is the most popular exchange that allows Bitcoin to be purchased by cash. The Bitcoin trade can be carried out in person or by way of a cash deposit.

LocalBitcoin locates a Bitcoin seller willing to accept cash and requests the prospective buyer to place the order for the number of Bitcoins wanted who then receives the account number of the seller for cash to be deposited. Once the buyer provides proof of the cash deposit, the Bitcoins are then sent to the buyer’s LocalBitcoin wallet.

The alternative to depositing the cash into the seller’s account would be to meet the seller face to face and give the money in person, though as always, it’s important to make sure that buyers remain vigilant. Also, it’s important to be aware of the fraud.

Because LocalBitcoin and similar agents ensure privacy, the price of Bitcoin is between % higher than the price on exchanges and there is a flat 1% fee for each transaction.

Other companies that look to match cash buyers with Bitcoin sellers include:

BitQuick, Wall of Coins, LibertyX, Bitit and then there are Bitcoin ATMs that also allow cash purchases of Bitcoins.

Do note that buying and selling Bitcoins on LocalBitcoin and the other agents listed above are for smaller transactions. Buying a large number of Bitcoins is more difficult and Bitcoin ATMs will have limits that would require additional information for larger purchases.

Getting a Bitcoin Wallet

When looking to buy Bitcoin, it is strongly recommended that the Bitcoins purchased are not stored on the exchange once purchased and that the Bitcoins are kept in a wallet created by the buyer.

A wallet is essentially the same as a bank account and in very much the same way, allows the owner of the wallet to send, receive and hold Bitcoins

Two common forms of wallet used are software wallets and web / hosted wallets. Software wallets are installed on a computer or mobile, with the owner of the wallet in complete control over the security of the Bitcoins held. Hosted wallets are created on 3^rd party websites and are considered much easier to create and use, the only issue is that the host would need to be trusted to ensure that adequate privacy measures are always in place.

For those looking to create a wallet, recommended sites include Coinbase and tallerembajador.com.mx

Face-to-face, or ‘over-the-counter’ (OTC) trades

As we discussed earlier, the two most common ways to buy or sell Bitcoin are either face to face with cash or on an exchange/broker.

Face-to-face transactions are the small investor looking to buy and sell a small number of Bitcoins anonymously. In stark contrast is the OTC market, where particularly large amounts of Bitcoins are bought and sold, the buyers and sellers being referred to as whales within the crypto world.

The benefit of an over-the-counter trade for those looking to buy a substantial number of Bitcoins is that the entire transaction would be carried out at a negotiated price that is likely to be more favorable than an average price for Bitcoins bought through an exchange.

Exchanges will have significantly less liquidity and Bitcoin buyers would need to break down the total number of Bitcoins to buy through smaller lots. The issue here is that each purchase could push the price up and more so if there is a lack of liquidity, by the time the buyer purchases the final batch of Bitcoins, the price may have moved considerably. This is not only likely to be less cost-efficient, but also less time efficient.

The commonality between face to face and over-the-counter transactions is that, in both instances, a counterparty is located for the trade. The difference will be that there is unlikely to be a negotiation on price in a face to face trade, while OTC transactions will involve a negotiation on price.

OTC transactions will be carried out through exchanges and broker/dealers. Dealers will generally trade using their own funds, while brokers link buyers and sellers and negotiate on price for the buyer, whilst charging a fee. Bitcoin exchange OTC trading desks are used for the more sizeable transactions that go into the millions of dollars.

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Bitcoin Exchanges

It’s quite important to select the right exchange. Unlike deciding which bank account or credit card to apply for, Bitcoin and the crypto world is unregulated, making it essential to ensure that the exchange chosen is not going to put your money or your Bitcoins at risk.

The location of the exchange is the first consideration. Where the buyer lives and the laws and regulations differ by geography, so it would be recommended to buy Bitcoins on an exchange that is in the same country as the buyer.

Once the list of exchanges has been identified by geography, the next step would be to identify the most competitive and also the most widely used exchanges. Transaction fees vary across the exchanges and some may have additional fees. While looking to find an exchange with competitive fees, it is worth paying a little more to use an exchange that has a sizeable order book.

Exchanges that have a large number of customers will tend to make public their order book, which then shows how liquid the exchange is.

Other factors to consider when deciding on the best exchange include:

• How well known is the exchange? There are a number of forums on the internet where reviews are available on the exchanges and it is worth doing some due diligence.
• How long it takes for Bitcoins to be received following a purchase and how quickly funds will be received in event of a sale. On this note, it would also be important to make sure that prices are locked in at the time of purchase or sale and not on the day on which the Bitcoins are received or funds are remitted.
• Exchange security is of significant importance. For greater security, exchanges selected should be on an HTTPS site and should request secure logins to limit the possibility of being hacked.
• Finally, obviously knowing how you can buy and sell Bitcoins is of importance and will vary from person to person. Some exchanges will accept payments by wire transfer, credit/debit cards, PayPal and even cash.
• When considering the method of payment, exchanges may not always carry the currency of the country that the exchange is located in and it is important to gauge how competitive exchange rates and fees are across the exchanges available.

Bitcoin Mining

While the majority are looking to buy and sell Bitcoin to try to make a tidy return on investment, there are those that are looking to enter the world of mining. Mining for Bitcoin is perhaps the most challenging of the mining environments within the cryptoworld, with miners needing significant computer power to be able to compete with existing miners.

Bitcoin mining is the validation of transactions that take place on each Bitcoin block. The decentralized nature of Bitcoin means that transactions are broadcasted to a peer-to-peer network and once broadcasted, needs to be verified, confirming that the transaction is valid and then having the transaction recorded on the public transaction database, which is known as the Bitcoin blockchain.

Miners basically are the people involved in the processing and verifying of transactions before then recording the transactions on the Bitcoin blockchain.

Miners will then receive transaction fees in the form of newly created Bitcoins.

Miners compete with everyone on the peer-to-peer network to earn Bitcoins. The faster the processing power, the more attempts are made by the hardware to attempt to complete the verification, etc., earning the miner the Bitcoins that are highly sought after along with transaction fees.

The speed of processing power in Bitcoin mining is referred to as the hashrate and the processing power is referred to as the hashpower of the hardware.

In the early days, Bitcoin was mined using CPUs, but in the race to generate more income, miners shifted to Graphic Processing Units (GPUs). Then came Field Programmable Gate Array (FPGA) followed by Application Specific Integrated Circuits (ASICs) that are used today.

For miners, the key metric is hashing power and the more hashpower, the more money miners can make. Today’s miners have warehouses of mining equipment, with Bitcoin’s mining community concentrated to a small number who account for the majority of the hashpower.

Because of the concentration of hashpower, not to mention the significant cost to set up a mining network, it’s recommended to join a mining pool, where miners combine computing power or to mine via cloud mining. For those looking to mine using a CPU or laptop, entering a mining pool will be of little value, since the mining income earned is proportional to the computer power contributed. A CPU or laptop just won’t be offering much compared with GPUs and ASICs hardware.

For cloud mining, you won’t feel the mining experience, just the income, though after fees etc., it’s not going to be earth-shattering.

Bitcoin cloud mining does provide a medium in which to receive newly mined Bitcoins, without the need to own costly mining hardware or even have any mining know-how, allowing the mining world to not only attract the technically minded but a far wider audience, who lack the technical knowledge needed to get into Bitcoin mining.

One of the major concerns over cloud mining is fraud, however. There have been plenty of reports of fraudulent activity, not to mention lower profits and even mining companies having the ability to halt operations should Bitcoin’s price fall below certain levels, so some due diligence on a mining company is recommended, with some basic steps to reduce the risk of being defrauded including:

• No mining address and/or no user selectable pool.
• No ASIC vendor endorsement. If there are no advertisements from the ASIC vendor, the mining company may not even own the hardware.
• No photos of the hardware or data center of the mining company.
• No limit imposed on sales or does not display how much hash rate sold against used in mining.
• Referral programs and social networking. A mining company willing to pay high referral fees should be avoided as these may well be Ponzi schemes.
• Anonymous operators should certainly be avoided…
• No ability to sell your position or get the money out upon sale.

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Bitcoin ATMs

Bitcoin ATMs are not like your traditional bank ATMs that dispense with cash from your bank account. The purpose of Bitcoin ATMs is to facilitate the purchase and sale of Bitcoins on an internet connected machine.

The ATMs allow you to insert cash to purchase Bitcoins or dispense cash in the case of a sale. Unlike the traditional bank ATMs, Bitcoin ATMs are not linked in any way to banking networks and it’s also worth noting that transaction fees can be particularly high.

The world’s first Bitcoin ATM was reported to have been introduced in Vancouver, Canada back in October

Today, Bitcoin ATMs are located worldwide, with a reported 30 different types of Bitcoin ATMs and as Bitcoin becomes increasingly more popular. ATM providers will likely widen the net to attract the traffic that can generate transaction fees of 7%, before even considering exchange rates that are certainly considered less competitive than high street banks.

Conclusion

It’s a whole new world for many even though Bitcoin has been in existence since The continued rise in value and talks of $, have brought in a new wave of investors. With the scheduled launch of Bitcoin futures in December and the likely influx of institutional money, there will be more interest and the Bitcoin net will be widening. Whether this is a Bitcoin bubble or something more sustainable remains to be seen, after all, even the tallerembajador.com.mx saw a mix of institutional and retail investors get burned. For now, the key to Bitcoin’s growth will be dependent on the Bitcoin world’s ability to educate and facilitate the buying and selling of Bitcoin.

A multitude of new companies has been established that have begun fundraising through the Initial Coin Offering market, with the cryptocurrency world in a hurry to catch up with the more mature, traditional financial markets.

Certain countries have already begun accepting Bitcoin as a means to buy, Japan has been one of the first movers and this is likely to continue to evolve in time.

Cash may be king, but knowledge is wealth. Going into Bitcoin at such levels requires both cash and knowledge, not to mention a resilience to noise and volatility. After all, this is the only asset class that has left investors ruing an early sale when faced with adversity.