Insights from listeners – Tue 5 Dec, 2017

A Primer on Bitcoin from Mr. J.H. Pace

Hi Big Al,

Here’s what I’ve been sending to family & friends about Bitcoin, crypto currencies, etc.  It’s changed over the past four months since I stopped dabbing my toes in the water and dove in.

Practical discussion:
The first thing to understand is that what they call an “exchange” is an online foreign currency marketplace.  NEVER keep your Bitcoin at an exchange!  You want a “desktop wallet”, or even an “USB key wallet” (or “hard wallet”).  Wallets can make more wallets, like multiple accounts at a bank account.  Incoming transactions are grouped together, but you send out individual accounts, and you can separate an existing account into many accounts.

Getting started, you first need to transfer your USD into Bitcoin. That’s done on an exchange.  I use https://gemini.com/ because they recognized my credit union.  https://www.coinbase.com/ is another exchange to use, but I’ve had problems getting them to accept my ID verification.  There’s also https://www.bitfinex.comhttps://poloniex.com, etc.  You can compare these exchanges on https://www.cryptocompare.com/ .  Just get into one for now, I would have to recommend Gemini.com.

After you’ve been verified and have transferred USD into your Gemini.com account, which can take days the first time, Gemini.com does allow you to buy Bitcoin (BTC) or Ethereum (ETH) on their exchange immediately.  You know more than I about “Market”, “Immediate-or-Cancel”, etc, as well as timing dips and such.  I always use “Immediate-or-Cancel” to buy BTC or ETH.  Then I wait 6 days for the USD->BTC or ETH to clear before I download to my desktop wallet.  You can check the minute-by-minute prices of Bitcoin on https://coinmarketcap.com/.

(Due to the volatility of BTC/ETH, it might be best to keep an USD “reserve” on Gemini.com for when those 12-hour-long dips occur in BTC or ETH.  Then you’re not waiting 6 days for the USD to clear before you can download to your wallet.)

Exchanges have centralized servers, CEOs, can be shut down for any reason, etc, so it behooves you to get on multiple exchanges to buy or sell, and to download/transfer your Bitcoin or alternative coins (altcoins) as soon as possible from an exchange after purchase.  For that you need a desktop “wallet”.  A wallet is more like a personal bank account, but you can make multiple wallets, like having multiple bank accounts.  There are even “paper wallets” and “USB key” wallets.

https://www.exodus.io/ is the best “light-wallet” in my opinion.  It does multiple altcoins and Bitcoins, and has a built-in link to https://shapeshift.io/, which allows you to change from one altcoin to another within the Exodus wallet.  The only drawbacks are limited wallet send/receive addresses and high transaction fees and limits.  You can go and get a desktop wallet for each and every Bitcoin or altcoin type that you want, but then you’ll need to download and synchronize the blockchain for each and every wallet every day of the week.  Bitcoin Core QT’s “heavy wallet” program takes 145 GB+ for the blockchain, which meant a week of download time for me.  Exodus is less than 11 GB on my hard drive, and updates every 10 minutes or so.

So downloading your Bitcoin from Gemini.com is as easy as opening Exodus and getting your Bitcoin wallet Receive address, and putting it into your Gemini.com account with a Withdraw command.  Always use cut-and-paste, those 16+ character lines should not be inputted manually.  Then your Bitcoin is in your Exodus wallet in seconds or minutes, which you can protect behind a password, and not on the Gemini.com exchange.  Exodus will contact the various blockchains every few minutes to tell you what your Bitcoin/altcoins are worth at the present time.

Make backups of your wallet.  For Exodus, that means writing down the 12-word recovery phrase and password and putting it into a secure offsite location.  For other wallets, that means making a backup copy of your password and wallet data file onto an USB stick once a week or so.  If you have an online e-mail account like Gmail, go in and delete any password-confirmation e-mails from Exodus or Gemini so hackers can’t get your passwords.  Also, turn on 2-way authentication, get a smartphone to use 2-step authentication, etc.

There are several online YouTube videos showing you how to start in Bitcoin, Exodus, etc.  Just do a search.  There are YouTube “part-time” experts on alt-coins.  Look up “jsnip4”, “Bix Weir”, “Gregory Mannarino” and “David Hay” to get the best advice. I also keep a spreadsheet of my crypto currencies, which is easier with https://coinmarketcap.com/ to synchronize what my Bitcoin and altcoins are worth rather than opening up four or five wallets on my desktop (which I have to do anyway to update their blockchains, but I can do them one at a time).

Going back the other way, from BTC->USD, means you have to transfer from Exodus’ wallet with a Send address for Bitcoin, into your Gemini account.  At this point the US government says you have made a taxable transaction for capital gains tax, which is another reason for keeping a spreadsheet with dates and amounts.  You then use Gemini to transfer the USD to your usual credit union or bank account.

That’s the primer.  I hope this helps!  Obviously I have not gone into smartphone wallets, or buying coffee with Bitcoin, but taken more of an investor approach.  E-mail me back if you want to go up to Intermediate level with crypto currency mining, altcoin day-trading, or the predictions for 2018 onwards.

Sincerely,


Comments:
  1. On December 5, 2017 at 1:04 pm,
    b says:

    i found that informative, thx.

  2. On December 8, 2017 at 4:45 am,
    silvernotabug dave says:

    When you talk of a hard wallet and that kind of them, do you mean something like a Yubico FIDO U2F security key? I had never seen these things until yesterday.

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