A really simple helpful guide to trading in Bitcoin

Many people have heard of Bitcoin, and know it has made a lot of people very rich. They may want to learn more, and consider trading it themselves. This guide is to help the complete novice.

Is Bitcoin legal?

This depends on the country, but in most countries it is. One notable exception is China. In the UK, and in fact anywhere in the European Union, Bitcoin is legal, but you do need to pay taxes on capital gains from it.

What is Bitcoin?

Bitcoin is a currency, so like any other currency, it may be used to purchase goods, or exchanged for another currency. You can buy Bitcoin with pounds, Euros, dollars etc. You can sell convert Bitcoin back to another currency. However, Bitcoin has some unique characteristics which make it different from currencies we are more familiar with.

Obtaining Bitcoin

There are several ways of obtaining Bitcoin.

  1. Mine Bitcoin, using a specialised computer, designed exclusiviely for that. Whilst at one time this was easy, it is now much more difficult and any attept to mine Bitcoin will likely use far more electricity than the Bitcoins are worth.
  2. Buy Bitcoin from a currency exchange.
  3. Have someone send you Bitcoin, as either a gift, or in exchange for goods or services.

Buying Bitcoin from a currency exchange

This is the simplist way to obtain Bitcoin. There are many currency exchanges, but Coinbase is the largest and best for the begginer. It has been in existance since June 2012. If you sign up to Coinbase using this link, then if you spend a certin amount of money, you will get some free. How much depends on where you are, but

Coinbase front page

Signing up with Coinbase is very simple, needing only an email address. There is a mobile phone app for Coinbase, but do not sign up with the app, otherwise you will not get the free money mentioned above. Once you are signed up, then use the Coinbase phone app if you wish - I personally find it very conventient. before you can actually trade, you will need to prove your identity. This is to stop money laundering. (Coinbase is regulated in the USA). A passport or driving license is needed. I used my UK passport.

Once you are registered and your identifty confirmed, you can buy Bitcoin, paying via either a debit card, credit card, or bank transfer. When I initially did this, I used a debit card, but there's a surcharge for that, so using a bank transfer is best. This was where I got a small problem. When I tried to add the Coinbase bank details, they could not be confirmed by my bank, but since I only needed to deposit £2; to verify my bank acccount, I did that. A few minutes later I received confirmation from Coinbase that the £2; had been received.