Beginner's Guide to Bitcoin
By the time you finish this 15 minute guide, you will have learned what Bitcoin is, the difference between Bitcoin and Bitcoin Cash, you'll install your first Bitcoin wallet, receive some free coins, practice making a transaction, and learn how to keep your coins safe. We'll also help you learn how to earn crypto-currency and show you where to spend it.
1. What is Bitcoin?
Bitcoin is a new type of money. It is a digital currency that can be sent directly from person to person, without the need for a middleman such as a bank or credit card company. This allows the near instant transfer of value across borders at very little cost to the user.
In fact, It doesn't matter if you're sending $1 or $1,000,000 , your transaction is just as cheap and just as simple to complete either way. And the best part? No one can stop your transaction, or freeze your funds, or seize your bitcoins. You are in charge of your own money.
Bitcoin also has a predictable supply, which means that no single entity could decide to 'print' more Bitcoins, thereby reducing the value of other Bitcoins. This is in contrast to governments and central banks which have the ability to add or remove dollars from existence at the push of a button.
2 . Where do Bitcoins come from? Where are they stored?
Individuals around the world run specialized computers called 'miners' which validate each and every Bitcoin transaction, adding the latest group of transactions to an ever growing public ledger that includes every transaction ever made. These miners compete to find a solution to a cryptographic puzzle. The first miner to find the solution is rewarded with Bitcoins + any transaction fees earned during that 'block' of transactions. On average, a new Bitcoin block is generated every 10 minutes.
All transactions are stored on the “block chain” which is a distributed ledger that is stored on thousands of computers around the world. The difference between this and say a bank’s ledger, is that the banks are the only ones who store their ledger, and only ones with access to it.
With the block chain, anyone can view the ledger publicly, and there is no one entity that stores it. For instance, you can view all transactions of money going in and out of our charity's publicly available donation address by clicking here.
3 . What is Bitcoin Cash (BCH)? How is it different from Bitcoin (BTC)?
Early on in the days of Bitcoin (BTC), it's inventor added a limit to the amount of data that can be processed by the Bitcoin network. That limit was 1 MB of data, which works out to about 4 transactions per second. This limit was temporary and was meant to prevent someone from spamming the network with millions of transactions while the network was still small.
However as Bitcoin became more popular, the 1 MB limit was no longer enough. There became a backlog of hundreds of MB of transactions. People started paying increasingly higher fees to have their transactions included in the next block. This got so bad that by December of 2017 the average fee for a Bitcoin (BTC) transaction was close to $50.
On August 1st 2017, frustrated with the lack of progress on removing the 1 MB limit, a group of developers and miners created a fork of the Bitcoin (BTC) code and ledger, changing the 1 MB limit to 8 MB and eliminating an important bottleneck that Satoshi worried about, thereby creating Bitcoin Cash (BCH).
Because BCH has a large maximum block-size, there is plenty of room for everyone's transactions to go through even during periods of high traffic. Thus with Bitcoin Cash (BCH) your transaction goes through instantly and you pay less than a penny in fees.
Simply put: Bitcoin Cash (BCH) is Bitcoin, upgraded.
4 . Installing your first Bitcoin Wallet
To send and receive Bitcoins, you will need to install a wallet. We recommend the Bitcoin.com mobile wallet, which can send and receive payments in both Bitcoin Cash (BCH) and Bitcoin (BTC).
Mobile wallet: We recommend a mobile wallet as it allows you to make payments anywhere, anytime without needing access to a computer. Mobile wallets are also able to scan QR codes with ease, which is much more difficult to do with Desktop wallets.
Desktop wallet: Some people prefer to keep only a small amount of funds on their mobile wallets for daily spending and keep larger amounts on a desktop or hardware wallet.
*Note: To run the Windows wallet, extract the entire folder (i.e.to your desktop) and run the Bitcoin.com.exe file to open your wallet.
This is what you should see when you open up your wallet. In the next few sections you'll learn the ins and outs of this wallet, get some free Bitcoin Cash (BCH), and then practice sending those coins in your first ever transaction!
5 . Receiving your first coins (for free!)
When you open the wallet, you will be greeted by the Home screen (pictured below). Here you see two wallets that have been created by default: A Bitcoin Cash (BCH) wallet and a Bitcoin (BTC) wallet (referred to in this app as "Bitcoin Core"). You can create a new BCH wallet (for instance a "savings" wallet) by clicking the plus sign to the right of the Bitcoin Cash (BCH) wallet section. The same is true for the Bitcoin (BTC) wallet section below it.
How to Receive Coins
To receive BCH into your wallet, click one of the "Receive" buttons at the top left of the wallet, or at the bottom of the wallet next to the Home button.
You will then see a QR code with an orange "BCH" at the centre. Anyone who scans this QR code will be able to send you Bitcoin Cash to the address written below it. For instance, you can ask someone to pay you by physically showing them this QR code, or taking a screenshot of it and having them scan it with their wallet.
You can also receive BCH from someone by sharing your address with them. You can copy the address by clicking on it. In our example below, the address is:
Receive Some Free BCH (Bitcoin Cash) in seconds!
Now that you know how to copy an address, copy the address displayed by your wallet and paste it in the text bar on this website : www.freebch.cash .You will receive your first ever crypto-currency coins (a couple of pennies worth of Bitcoin Cash). Who said pennies are not spendable these days? With Bitcoin Cash (BCH), micro-payments are a reality!
6 . Making your first BCH transaction
You can now practice making your first transaction by sending a penny to our charity BCH address. There are two primary ways of making a Bitcoin transaction :
1) scanning a QR code and
2) inputting an address
Option 1: Scan a QR Code
1a. A very convenient method for paying someone is to scan a QR code with your mobile wallet. To do this with the Bitcoin.com wallet, simply hit Scan option at the bottom of your wallet.
Option 2: Copy and Paste an Address
1b. In some cases it is not possible to scan a QR code (i.e. if you are using a desktop wallet), so copying and pasting a payment address works just as well. Copy the address below and then open your Bitcoin.com wallet, hit the send option at the bottom of your wallet and then tap the yellow Paste Address button.
Copy the address below:
2. Next, you'll be asked to enter the amount of BCH you want to send. Since you only have about a penny in your wallet, you may use the convenient 'Use All Available Funds' option to send all your funds to the address you just scanned/inputted. If you'd like to keep some sub-cent change (referred to as dust) then feel free to enter 0.01 cents and hit send. Our wallet shows the price in Canadian, however yours may show USD by default (this can be changed under settings)
3. You will then see a message indicating how much will be deducted for fees. The average BCH transaction costs only 246 Satoshis (a fraction of a penny) no matter how little or how much money you are sending.
4. Finally you simply Slide from left to right and Voila! Your transaction has been sent.
You just made your first crypto-currency transaction !
You've now learned the ins and outs of sending and receiving Bitcoin transactions. The next couple of sections will guide you through some convenience features in the wallet as well as an important measure you must take to ensure your Bitcoins are secure.
7. Adding Contacts to your Bitcoin.com Wallet
If you want to easily send payments to someone without having to scan a QR code or input an address every time you want to pay them, you can add them as a contact. To do this head to Settings -> Address Book and click Add Contact.
There are two primary methods of adding someone as a contact. a) copying and pasting an address or b) scanning a QR code. To add Coins 4 Clothes as a contact using the copy paste method, simply copy the address below and paste it in the Bitcoin Address section in your wallet's Add Contact screen. To add Coins 4 Clothes as a contact by scanning a QR code, tap the Square Frame in your wallet's Add Contact screen then scan the QR code below.
Copy the address below:
Scan this QR Code:
Copy and Paste this Address:
You can also add contacts by copying their address from the Recent Transactions section on the Home screen then pasting it like you did in the step above.
8. Backing up your wallet
Imagine for a moment that your phone or computer (whatever device you installed the Bitcoin.com wallet on) freezes up, and crashes forever, never to work again. What would happen to your Bitcoins? Would you ever be able to access them ever again?
The answer is : it depends on whether or not you backed up your wallet.
Backing up a wallet means copying a series of words that can be used in the future to gain access to that wallet. Think of it like a secret pass phrase which, no matter how many times you need to re-install the Bitcoin.com wallet, will always lead you to the same wallet that you have control over. You have control over the wallet because you know the 12 secret words which no one else (including Bitcoin.com) knows.
To back up a wallet, open it up from the Home screen. You'll notice a message indicating the wallet needs to be backed up. Click on it and follow the prompts. You will be asked to write down 12 words and then to re-enter them. These 12 words can be used at anytime to recover your Bitcoin wallet, so keep them somewhere safe and confidential. Screenshots are not recommended. It is better to write them down by hand.
Restoring a Wallet
Once you've backed up your wallet you can access your funds from any device by restoring your wallet to it. Simply choose the Import Wallet option when creating a new wallet.
If you'd like you can try this out by deleting your Bitcoin.com app, and re-installing it. Once you open it up, add a new BCH wallet and choose the Import Wallet option and just like that you have access to your funds again! As long as you know the recovery seed, and don't share it with anyone, you never have to worry about losing access to your funds ever again.
9. Where can I spend BCH ?
Bitcoin Cash (BCH) is meant to be used as digital cash, and it does this job flawlessly. This might be the reason it's one of the most accepted crypto-currencies in the world. Bitcoin Cash is accepted by thousands of online and brick and mortar retailers, however no exhaustive list exists of all the places you can spend this sweet currency.
The resources below can serve as a starting point:
Save up to 30% on all of your Amazon orders when you pay with Bitcoin Cash
You heard that right. One of our favourite ways to spend Bitcoin Cash, is to shop on purse.io , a website which allows you to order anything you want off Amazon, while you set your own discount (up to 33%). It works by matching you up with 'earners' , people with extra Amazon gift cards that want to trade them in for cryptocurrency. You create a wish-list, set your discount, and then 'earners' pick up your order and fulfill it for you. The bigger you set the discount, the longer it will take for an earner to chose your order. In our experience, orders set with a 20%-25% discount get fulfilled within a couple of days.
Spend Bitcoin Cash at Online Merchants
Below are two listing services for Bitcoin Cash accepting merchants worldwide.
Spend Bitcoin Cash at Local Brick and Mortar Stores
Below you'll find a listing of over 1,000 Brick and Mortar stores (physical locations) that accept Bitcoin Cash. Simply click the Green Pin to view the listings online.
10. Start earning BCH today
Congratulations on completing the Bitcoin Basics Guide! You learned what Bitcoin was, the difference between Bitcoin (BTC) and Bitcoin Cash (BCH) , set up your first wallet, received your first coins, and made your first ever crypto-currency transaction! It's now time to graduate to the big leagues and start earning some Big Bucks!