If you’re looking to get into the game of Bitcoin and hold your own coins, there are many options available. Here are some of the different methods available for acquiring some Bitcoin of your own.
Buy them from an exchange
One of the most common ways to acquire bitcoins is through an exchange. Websites like Bitstamp, BTC-E, or Cavirtex here in Canada, allow you to purchase Bitcoin. They don’t sell bitcoin exchange themselves, but how it works is the exchanges pair you as a buyer with a seller who’s selling for whatever price you’re looking for.
This sounds like a great option, and in some ways it is, but it has its disadvantages as well.
One of the major ones is that the exchanges require you to add your personal information to them via Know Your Client legislation that’s present in many countries in regards to currency-related businesses. This might not be a concern for everyone, but in a post-NSA scandal era, it’s becoming more and more clear, at least to me, that data you put out there is more accessible than you think.
I might be a little paranoid, but who knows what might happen in the future. After all, just ten years ago the idea that the government is spying on everything we do was purely the realm of tin foil hat conspiracy theorists, and now it’s just common knowledge. Who knows what’s next?
As you can tell, I’m not a big fan of the exchanges. The idea that I have to give up my personal information to an entity which might have to release that information seems to go against the spirit of Bitcoin.
Fortunately, there are other options.
Of course, there’s only one place Bitcoins really come from; mining. Every Bitcoin you’ll ever own, see, or hear about, was at one point mined via the Bitcoin mining network.
If you find yourself in possession of a mining rig, go ahead and mine away! Or if you have a computer fast enough to make it worthwhile, that’s cool too.
But be careful! If your computer isn’t cooled properly, you run the risk of overheating it, which could potentially brick it.
Frankly, mining with your computer isn’t really worth it. Not anymore. As the mining difficulty increases, it becomes more and more difficult to gain any profit from it. And unless you have a dedicated mining rig, your chance of getting any sort of return from mining is pretty low.
Some argue that mining is on its way out, and even buying a dedicated mining rig isn’t really a valid option anymore. I disagree, but that’s a topic for another day.
Buy them from a private broker
If you’re able to find a private broker, you can hook up with them and exchange. This has some obvious benefits, but it also has drawbacks.
First off, it’s completely anonymous. Even if you meet in person, there’s no reason you need to use your real name, or any details about yourself other than your wallet number so they can transfer the funds to you. And if you pay cash, the banks can’t trace it either. So if that’s a concern for you, you’re in business.
But of course with anonymity comes some risk as well. Dealing through an exchange, the risk of getting ripped off is lower. Of course, exchanges have disappeared in the past, taking everyone’s Bitcoins with them, but the bigger, more established exchanges have had time to build their brand and prove themselves as more trustworthy.
You may pay a price premium for that anonymity as well. From my experience, it can be as much as 15-20% higher than average exchange prices. But again, if anonymity is important to you, that’s a small price to pay.
When you trade with someone anonymously, you don’t have the security of the exchanges. They could be legit and honest, but they could just as easily be shady and willing to rip you off. That said, buying from a private broker is my preferred method of purchasing Bitcoin. But it’s important to have safety measures in place, otherwise you’re leaving yourself open to getting burned.
Accept them as payment for goods and services
This one is so obvious, yet often people forget about it. Amidst all the investors getting involved with Bitcoin and the excitement around the movement, it’s easy to forget that Bitcoin is not just a hot commodity or high value stock. It’s designed as a form of currency. And if you run a business, you can accept Bitcoin as payment instead of cash.
There are many different businesses which accept Bitcoin as a form of payment. If you live in Canada, check out this directory of businesses which accept Bitcoin.
In fact, several directories have popped up to help people find local businesses which accept Bitcoin. And, if you’re a denizen of the web (and if you’re reading this, you obviously are), there are tons of places which accept Bitcoin as payment. Tiger Direct, Reddit, and WordPress are just a few of them.