Bitcoin: It's Here and Not Going Away Anytime Soon

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This is my public Bitcoin wallet address to the right.  I finally got my very own wallet!  I have to admit, like many people, the recent Fed auction of the seized Silk Road Bitcoins renewed my interest in the cryptocurrency.  Like many people, I find myself asking "Why didn't I buy Bitcoins three years ago?"  Being an IT guy, I should have--Bitcoin caught my attention when it first started appearing in forums and blogs across the Net.  But, I never brought myself around to buying any.  Of course, I have to wonder how the first guy to ever buy something with Bitcoin feels.  He spent 10,000 bitcoins on two large pizzas.  At today's exchange rate, that would be US$6,197,500.  Hopefully, he held on to a few aside from what he spent on the pizza.

It has been a bit of a learning process these past couple of weeks getting started with cryptocurrency.  If you are interested in doing the same, hopefully my experience can help you along and save you some time and trouble as well.

First and foremost, you must get a wallet.  They are free and are available on all platforms now, I believe.  I know Apple had banned Bitcoin apps at one point, but I read that the ban has been lifted.  A cursory search in the iTunes store resulted in a few Bitcoin apps, but I have yet to look into them any further.  I downloaded the Android version of Bitcoin Wallet (by Andreas Schildbach) for my phone.  I have yet to download a desktop wallet as I want my bitcoins available to me at all times.  However, if my balance grows as such that I am leery of carrying around ALL of my bitcoins on my phone, I will install the desktop version then.  Remember, bitcoins are like cash--if you lose your phone or it gets wiped, you will lose any bitcoins on it.  However, if you have a backup, you can restore your wallet and your bitcoins.  Against all of the advice I have give my clients over the years, I have been really bad about backing things up.  This is different and I have diligently backed-up my wallets in multiple places.  More about this later.  Let's continue getting started.

Let me add that there are web-based wallets as well.  But, in my eyes, this defeats the whole underlying principle of Bitcoins.  They are meant to be anonymous and disconnected from any centralized control and as far as I am concerned, these online wallets are just unregulated online Bitcoin "banks".  My research has turned up a few bitcoin exchanges and online wallets that have shut their doors (usually due to being hacked) and the members have lost their deposits.  The largest of these was Mt. Gox.  They filed for bankruptcy and closed up shop--you can read more about it here.

So, now I had my wallet installed on my phone, but it had a big fat zero in my balance.  So, off I went in search of buying some coins.  My research led me to Coin Base (coinbase.com), an online wallet, but not wanting to give them my bank account info, I kept looking.

I found an app called Free Bitcoins which I promptly downloaded.  Essentially, it was a list of links to Web sites offering free bitcoins in exchange for banner ad views.  The downside of this is that the payouts for each visit were miniscule and you could not have your "earnings" sent to you until you reached a payout threshold.  I did this for about three days and realized that once I reached the threshold, I would only be receiving about six cents (US$0.06) for all of my "hard work."  This was not the way for me.

Next, I found a similar type of deal, but much better implemented.  Plus, I actually felt like I was doing something productive to earn my coins.  This was CoinWorker.com.  This site partners with CrowdFlower.com to allow users to get paid for doing jobs--most of which are verifying search engine rankings for SEO companies.  They operate on a points system; each job pays a certain number of points for completion, usually from 1/2 point to 6 points until you reach a higher level where you can do the 25 point jobs.  Again, they have a minimum level of points you must reach before cashing-out and after about five days of this, it got repetitive and I gave up.  I may go back and finish soon (I have 124 points out of the 180 required to cash out) and collect my US$1 to US$2 worth of Bitcoin.

By this time, a week has passed and my frustration was growing.  I found a site called LocalBitcoins.com, but there was no one in my area listed.  I did find a local group on Facebook and joined, but we have yet to have a get-together to buy/sell bitcoins.  I checked CraigsList.com for any Bitcoin ads and found one guy selling a physical Bitcoin for $1500.  Too much for my budget, but I did text him to see if he would be willing to sell me any bitcoin.  I never heard back from him.  I continued to ask around to friends and acquaintances, but everyone of them heard of Bitcoin, but did not have any to sell.  "Isn't that used for drugs?"  "What can you buy with them?"  Same questions, over and over.  I did my best to educate the masses.

I found a cool site called CryptoThrift.com where users can sell items for bitcoins.  It looks legit and seems to be building up a sizable following.  I listed a couple of low-cost items there to test it out, but they have not sold yet.  Looks very promising, though.  Definitely will look to these guys as my future eBay alternative.

I finally found a buddy of mine who has an open account with CoinBase.  I chided him for keeping his money online, but did not hesitate for a second to ask him if he would buy some bitcoins for me--US$100 worth.  He agreed, so I copied and texted him my wallet address.  He bought them and sent them right over.  They were in my wallet in less than 30 seconds.  There was a small fee of about US$1.30 for the transaction with CoinBase, but after all of the trouble I was having obtaining bitcoins, I didn't blink an eye at the fee.

Finally!  I was in on what is surely to become one of the most significant technical and economic progresses in history.  I see Bitcoins the way I saw the Internet back in 1993--it was new, it was scary, it was confusing for most people.  But, I could see the potential for what it would become and that it would change the world.  Bitcoin is here and it is here to stay.

Future posts will cover the topics of security, minint, and other cryptocurrencies like Litecoin, and Dogecoin.  Stay tuned!