Bitcoin – my experience as a first-time buyer

Early this year I bought a small amount of bitcoin. Here’s what I learned.

Firstly, purchasing bitcoin is comparatively simple. If you have familiarity with buying stocks on the internet, I really don’t envision buying bitcoin would cause you too much trouble.

I put up an account with an Australian bitcoin supplier, moved some cash into it through internet banking and enter my instructions to’buy’.

Interestingly, though a single bitcoin is worth about $65,000, you can purchase any portion of the major cryptocurrency which you would like – as little as $100 worth. The fact that you don’t have enough to buy a complete bitcoin isn’t a problem. That’s quite different to stocks, in which you generally must purchase one complete share of an organization at a fixed asking price.

But, it is the next area of the trade that was mainly foreign to me personally.

The provider’s recommendation was that I didn’t leave my bitcoin in the internet accounts, or exactly what they called a’hot wallet’. The problem, seemingly, is that the potential for theft or fraud.

I was told instead to transfer my bitcoin away from the web and on a USB attached dongle – about the size of a USB flash drive. I ordered one from Amazon that cost around $100.

The dongle took some while to install but it was worth it to get the wonderful security supplied. It gave me access to some 24-word password. And you could not opt for those 24 words , they’re awarded to you – therefore you need to write them down. By means of this mechanism, in case my dongle is ever stolen, or damaged, apparently I can still reclaim my bitcoin – supplied I will produce this 24-word password.

The reverse side to the bargain is that if I ever lose the dongle and can’t remember the 24-word passwordthen my bitcoin is missing forever.

Therefore, after placing I put up my USB dongle, also called a’cold pocket’, I then moved my tiny fraction of a single bitcoin onto it. This was an easy enough process.

I have place my’cold pocket’ somewhere secure and created a few of duplicates of my 24 -word password, which I’ve stored someplace’just in case’.

Significantly, the bitcoin provider advised to get no electronic record of that password – no photograph of this, no storing it in my own computer, or any place else that may be connected to the internet. It’s a completely offline arrangement.

It does concern me a bit that when I get hit by a bus, then my family might never be able to recover this bitcoin, even though I have explained it to my wife and told her where the key parts of information are stored.

All around, buying bitcoin is exactly as with any other investment – albeit it seems a little less protected. The fact that the supplier where I bought advises you not to keep them within their own platform does not instil significant confidence.

Crypto-lovers, of course, respond to the blockchain solves all this but, for me personally, that seems like a small black box which I just have to take on faith.

Still, I’m glad to eventually own some bitcoin and also to have gone through this adventure.

However, if it will, it is great to know I’ve got a very small bit of this.