Bitcoin - Mooresville Public Library

Bitcoin - Mooresville Public Library
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‘Digital Money’ Explained
By David Board
The beginner’s guide to Bitcoin and Digital Money
It’s time to educate yourself about the Future of World Currencies.
Copyright © 2015 David Board
All rights reserved. This book or any portion thereof may not be reproduced or used in any manner
whatsoever without the express written permission of the author except for the use of brief
quotations in a book review.
Title Page
Foreword from the Author
Chapter 1: Bitcoin Explained – The Basics
A brief introduction to Bitcoin ‘Digital Money’;
What is Money?
Most people already use a form of Digital Money without realising it.
Why is Bitcoin actually worth anything?
Chapter 2: Bitcoin Explained – The Technical Points
Bitcoin; The Technical Points;
The Block Chain
The Bitcoin Network
How Bitcoin is Made;
Bitcoin Total Supply
Block Chain and Bitcoin Network Security
Why isn’t everyone mining Bitcoin?
Chapter 3: Bitcoin Explained – The Practical Parts
Bitcoin Wallets
MultiBit HD Windows Desktop Wallet – Setup Guide Web Wallet – Setup Guide Web Wallet – Setup Guide
Sending and Receiving Bitcoin;
Multibit HD
How to get Bitcoin
Chapter 4: How and Where to Buy and Sell Bitcoin for Fiat Currency
Bitcoin ATM Locations (World Wide)
E-Coin – Pre paid Debit Card funded by Bitcoin
United Kingdom – Guides by David Board
Account Setup
Verify your Identity & Wire Transfer Funds
Buying Bitcoin via Coinbase
Selling Bitcoin via Coinbase
Account Setup
Verify Mobile Phone Number
Buying Bitcoin via Coinbase
Sending Bitcoin to Off-Exchange Wallet
Selling Bitcoin via Coinbase
France – Guide by Jerome Labarre (aka Cryptorider)
Registering your Account
Sending Fiat (Euros) on your Paymium account
Buying Bitcoin via Paymium
Sending Bitcoins to Paymium wallet
Selling Bitcoins via Paymium
Sending Fiat (Euro) to your bank account from Paymium
Holland – Guide by Sander van der Iaan (aka Fooc)
Buying Bitcoin via Bitonic
Selling Bitcoin via Bitonic
A closing note regarding Bitcoin and an introduction to Alternative Digital Currencies
Chapter 5: Alt-Coins
What is an Alt-Coin?
Why do we need Alt-Coins?
What are the flaws of Bitcoin
Speed of transactions
Growing Size of Block Chain Ledger
Growing Coin Supply
How to solve Bitcoins shortcomings
Speed of transaction
Growing Coin Supply
A Different Way to Process Transactions
So should you forget all about Bitcoin and just buy Alt-Coins instead?
How do you choose a good Alt-Coin to invest in?
Chapter 6: Trading Alt-Coins
Intro to Alt-Coin Trading
Research Before Trading
Learning the basics of trading
Learn the Lingo and Trading Terminology; Satoshi, SAT(s) or PIP(s)
Alt-Coin Exchanges
Learn to Read the Order Books: Buying and Selling
Understanding the Numbers on the Order Books
Closing thought on trading
Closing word from the Author
Contact Information
Foreword from the Author,
In this book you will learn all the practical information you need to understand and use
Bitcoin and other forms of Digital Money.
I also hope to lay-to-rest any negative light that has been shone on Bitcoin by the media over
the last couple of years and educate those who are less informed about this technical revolution that
is Bitcoin and Digital Currency.
You may have seen main-stream media or social media coverage of Bitcoin showing it in a
bad-light due to some unscrupulous individuals or organisations. There have been big news stories
over the last couple of years to do with black-market trading through certain websites, stories about
websites or exchanges being “hacked” and coins being stolen by unscrupulous individuals. However,
Bitcoin is not only used by hackers or criminals, in fact the majority of people who use Bitcoin are
normal and law abiding.
Keep in mind that credit card fraud is a big problem throughout the world and stolen credit
cards, counterfeit currency etc is used every day by criminals to solicit less-than-moral acts like
illegal drug trade, illegal gun sales etc. Any form of money, be it official fiat currency, counterfeit
currency, stolen or forged credit cards can be used for these amoral acts, Bitcoin is no less or more
perfect than any other currency and should not be viewed as ‘bad’ because a small number of users
have decided to use it for those types of acts. Bitcoin is simply a better, easier and cheaper form of
currency to use in certain situations.
If “big business” (specifically financially based business like banks and lenders) are against
Bitcoin and other Digital Currencies, you can bet it is not because they are looking out for the little
guy and I hope by the time you finish reading the next few chapters you will fully comprehend the
benefits of using Bitcoin and Digital Currencies.
Governments can regulate Bitcoin Exchanges and can make certain rules for companies to
follow, such as paying taxes on sales etc, but they do not have any direct control over the Bitcoin
supply as they do with Fiat currency and cannot regulate the trade of Bitcoin between individual
Credit Card lenders and payment platforms such as PayPal earn money by charging
transaction fees and interest to the end-users. Most vendors or merchants who accept Credit Card
payments have to pay transaction fees which are usually passed onto the customers through higher
priced goods or services, with Bitcoin there are no additional charges for transactions.
Bank accounts are great, but can be slow and expensive when sending funds, especially
when those funds are being sent internationally. In contrast, Bitcoin and other Digital Currencies can
be extremely fast to transact between users, geographical location is irrelevant and transactions
costs are nominal meaning goods and services are not increased in costs because of added
transaction fees or interest.
Before you read further into this book, let me just say that I am not against Fiat Currency. I
have a bank account, credit cards and PayPal that I use daily just like you, but I also know that in this
world in which we live, this fast-paced, technologically advancing world, something has to step-up as
a cheaper, easier and faster option for sending money to other people, overseas, online and in
shops. I truly believe that we are on the cusp of big changes where money and payment processing
is concerned.
I have attempted to keep this book as non-technical as possible when it comes to explaining
certain aspects of Bitcoin and Digital Money. Where technical terms have had to be used, I have
tried to explain those terms as simply as possible.
I hope that you enjoy the rest of this book and that you find the information in the coming
chapters both educational and useful.
Chapter 1: Bitcoin Explained – The Basics
In this chapter you will learn the basic information required to help you understand Bitcoin ‘Digital
Money’: What Bitcoin Is, How Bitcoin Works and Why Bitcoin has a ‘Real World’ Monetary Value. We
will also review our existing views on modern money (FIAT).
Once the basics have been covered we will look at the more technical aspects of Bitcoin in further
A brief introduction to Bitcoin ‘Digital Money’;
Bitcoin is a currency, used in a Digital format.
Bitcoin is the first widely adopted form of digital currency accepted all around the world.
Bitcoin is decentralised, meaning there is no control over the price or total supply of coins by
banks or governments.
Bitcoin can be sent from one individual to another with very little effort and almost no
transfer fees or charges, it is as easy as sending an email.
Bitcoin is fast and secure to use, whether sending funds to someone or paying a bill.
There is no possibility of ‘Double-Spending’ Bitcoin.
Bitcoin has a pre-set total number of coins that will ever exist (21 million).
Bitcoin is a digital form of money, meaning you do not have a physical representation of the
Bitcoin you are spending. Instead of having a physical representation of the currency, you have a
digital code stored in a digital “wallet” or program. This digital wallet can be kept on your computer,
smart phone or tablet.
Bitcoin is widely accepted all over the world with many online retailers, travel agents, realestate agents and a growing number of “Bricks and Mortar” companies, i.e. high-street shops.
Bitcoin is decentralised. By being decentralised there is no one entity “in control” of Bitcoin.
The control of Bitcoin is in the hands of the users who use Bitcoin and the vendors who accept
Bitcoin as payment.
Sending Bitcoin to other individuals or paying bills is as easy as sending an email. All you
need is your own Bitcoin wallet (each wallet has its own address or account number), and the
“Address” of the person or company that you want to send funds to. Bitcoin can be transferred to
anyone in the world and boarders are irrelevant.
Sending Bitcoin is extremely cheap, especially when compared to other platforms such as
banks or online money transfer service platforms. The typical Bitcoin transaction fee is currently less
than $0.05 cents (USD). Compare this to an international bank transfer fee which can be anything
between $20.00 (USD) to $40.00 (USD) depending on the type of bank account you have and where
you are sending funds. Third party online money transfer services generally charge a percentage on
the total transaction (with a minimum transaction fee) so if you are sending a large amount you
could end up paying a very expensive transaction fee.
Bitcoin payments are fast to send and payments typically take around ten minutes to arrive
with the recipient once sent. Compare this to an international money transfer, which typically takes
Bitcoin has been developed so that a user cannot ‘Double-Spend’. This simply means that it
is not possible for anyone to send the same Bitcoin to more than one person. I.e. Imagine you only
have one Bitcoin, you could not send that one Bitcoin to Jack and that same one Bitcoin to Jill,
because once you have sent it to Jack you no longer have it to send to Jill.
Bitcoin will have a total supply of 21 million coins. This is pre-set and cannot change due to
the coding that Bitcoin works from. This means that Bitcoin is actually considered deflationary as
Bitcoin can be lost or destroyed through hardware failure or user error such as forgetting passwords
etc. Don’t let that last comment dissuade you however as there are some extremely easy ways to
protect yourself against loss, such as keeping a wallet back-up in a secure place, I explain in detail
later how to achieve this.
You may be reading all of this information and thinking to yourself this all sounds fine, but why is
Bitcoin actually worth anything? In order for me to answer this, we need to break-down what we
currently think and know about conventional money.
What is Money?
In order to really understand Bitcoin as a form of Currency, you first need to re-evaluate what you
know about the money we use today and how “money” was used historically.
Money is really just a way in which we as society put a value on goods and services. A person
could pay for goods or services using any item as long as both parties can agree upon the value of
the purchase and the payment method.
Think back to historical times when trading goods, such as furs and spices, where
commonplace or more recent history when copper, silver and gold coins were used as a means of
payment. The only real reasons that these are no longer used as forms of payment is because the
actual “value” of those materials has increased and it would be too difficult to pay for smaller items
with those types of payments, i.e. they cannot be broken down easily into smaller denominations
and still retain the same overall total value.
Using modern paper money and coins is a far easier solution than semi-precious or precious
metals, because it is very easy to take a $1 and break that down into smaller denominations (coins)
and still have the same total value.
Historically “Paper notes” actually had a gold-counterpart or gold-reserve, which gave each
paper note a set value in gold. You would take your gold to the bank, the bank would issue you a
promise or note against the gold you deposit, and then you could spend those notes instead of
having to carry actual heavy gold with you everywhere. This is actually how the banking system
came about.
Modern money no longer has a gold counter-part or reserve and instead our money supply
is printed by our governments through inflation. Basically, we all accept that a $100 note is worth
$100 because the government prints and controls the supply and we all agree to the face-value of
the notes and coins, this money is called FIAT currency.
For a further example (written by a third party) regarding Money and Fiat Money please see the link
below; “All Money is Fiat Money” article by Pascal-Emmanuel Gobry
With the above information in mind you can now see how, historically, we have gone from
trading goods and services for items such as gold, moving onto paper money in the form of goldbacked notes issued by banks. From gold-backed notes the banks and governments have removed
the entire gold counter-part from the equation, and now a note is simply “worth” what is printed on
it because we as society all agree to the face-value of the notes issued by our governments.
Most people already use a form of Digital Money without realising it.
Bitcoin is not the only form of digital money. Most people receive money via direct bank
transfers, for instance an employee of a company is usually paid their wages directly into their bank
account and do not always receive physical currency.
When money is in our bank accounts is just a code on a banks computer system. When we
use our debit cards to make payment in shops or pay bills etc the code on the banks computers is
simply transferred from our accounts to the account for the shop or company we are making
payments to.
Based on all of the above information, it is not so hard to understand how and why Bitcoin has
amassed a user base of millions of people all around the world, and why Bitcoin has gained value
over the years since it was created in 2009.
In our technologically advancing world, Bitcoin is becoming more and more recognised and
should be considered a World Currency; a currency without borders, with a value agreed upon by
the entire population of businesses and individuals that make up the Bitcoin user-base. The userbase is growing daily and gaining popularity not only with individuals but with big business all around
the world.
As I said in my opening foreword, I am not against Fiat Currency. I do not expect modern
paper money to simply disappear or stop being used. Using Fiat in a local store is still going to
happen and I do not think that will change any time in the near future, however, I do believe that
Digital Currencies such as Bitcoin will be as common-place in the coming years as Card Payments are
“Money” is simply a way that we put a value on goods and services and make payments;
essentially those payments could be transacted using anything, such as a rare gem, a semi-precious
metal, Fiat, or a form of Digital Currency such as Bitcoin.
Now that you I have presented “Money” as simply a way to make a transaction, I hope you can
understand why Bitcoin is being accepted and used by so many individuals and companies around
the world.
Bitcoin is fast to use, secure, direct between users (removing banks from the picture), boarders
between countries are irrelevant and transaction fees are almost non-existent.
As well as all of the above, governments have no control over the total supply of Bitcoin, meaning the
value of Bitcoin cannot be damaged through inflation such as our existing Fiat currencies that we use
Why is Bitcoin actually worth anything?
One of the most frequently asked questions (and arguably one of the most important ones)
that I am asked when speaking to people who do not already know or fully understand Bitcoin is;
“Why is Bitcoin actually worth anything? Isn’t it just ‘fake’ internet money?”
I fully understand the scepticism. I too did not grasp the concept of Bitcoin at first. It was
several years after Bitcoin first launched that I really took notice of what it actually is. I explain below
why Bitcoin is not, “just ‘fake’ internet money” and why something “made up” can, and in fact does
have real world monetary value, unfortunately this is not a one-line answer but most of the minor
points have been covered in the above sections.
Bitcoin has value BECAUSE merchants and users are willing to accept it and use it as a
form of payment for goods and services.
Bitcoin has the same value globally, 1 Bitcoin is worth 1 Bitcoin regardless of geographic
location, unlike Fiat which is subject to exchange rates and conversion fees.
Merchants and users can send Bitcoin anywhere in the world quickly, securely and
without incurring high fees or charges by third parties or banks.
Merchants can exchange Bitcoin into their local Fiat currencies at any time.
By accepting Bitcoin, merchants can lower overheads from credit card machine
Bitcoin payments are irreversible, this helps to reduce fraud against merchants which
can be a big problem in certain parts of the world.
Our current monetary system works because you can go into a store in your country and the
merchant accepts your countries official Fiat currency. If one day all of the merchants in your
country stopped accepting that currency and instead told you they would only accept the currency
of the neighbouring country then the money in your pocket becomes devalued and the other
currency increases in value.
By accepting other forms of payment users/merchants/retailers/manufacturers etc give
those new forms of payment real value. If a merchant told you they would give you $100 worth of
goods or services for a cheap pen that you have, then your pen is ‘worth’ $100 (at least to that
person at that time).
In a similar manner to the example above, Bitcoin is being accepted and used as a payment
method throughout the world and as a result it has gained real value. By transacting in Bitcoin, users
are agreeing to give it value. The same could be said for gold, or even Fiat currency, these items /
money have value because they are an accepted form of payment and are “trusted” to hold value
(within reason).
Now that we have covered the basics of Bitcoin and you understand what it is and the basics of how
it works we can expand on some of the technical points, such as The Block Chain, The Bitcoin
Network, Bitcoin Miners, Where Bitcoin comes from (how it’s made) and Network Security against
counterfeit transactions.
Chapter 2: Bitcoin Explained – The Technical Points
In this chapter we will look at some of the more technical points of Bitcoin;
Bitcoin; The Technical Points;
The Block Chain.
The Bitcoin Network.
Bitcoin Miners, what and who are they?
Where does Bitcoin come from and how is it “made”?
Security against counterfeiting and Network hacking.
Bitcoin Total Supply and why it will take until 2136 for the final Bitcoins to be mined.
The Block Chain is essentially a public ledger that shows every Bitcoin payment transaction
ever made.
The Bitcoin Network is the network of computers throughout the world that are connected
together, to actually process Bitcoin payment transactions between Bitcoin accounts. These
computers are referred to as miners and are owned by individual people and companies around the
A Miner is a computer program that processes payment transactions between accounts. You
can think of a miner as being a bank teller processing payment transactions at a bank and they are
paid for their service with Bitcoin.
How Bitcoin is Made; Every 10 minutes (approx) transactions between Bitcoins accounts are
processed by the miners. When these transactions have been processed, the Block Chain creates, or
rather, releases, a preset-number of Bitcoins and PAYS these Bitcoins to the miners who processed
the transactions between Bitcoin accounts.
Bitcoin Total Supply; Each time a transaction list is finished processing it is given a number,
this is referred to as the Block Number, i.e. Block 1, Block 2, Block 3 etc.
As stated in chapter one, there will be a total supply of 21 million Bitcoins by the time the
final coins are mined in 2136, there are currently around 14.5 million coins at the time of writing this
Bitcoin was “created” in 2009. With over half of the supply already in existence right now, it
might seem strange that the total supply will not be “mined” until 2136, this number and date refers
to the final Bitcoins of the 21 million and the date is estimated. MOST (over 93%) of the total Bitcoin
supply will actually be mine by about 2024.
I want to keep this section brief as I do not wish to overwhelm anyone with lots of technical info and
numbers at this point, therefore I am not going to breakdown the total supply of coins and instead
will breakdown the first four ‘Eras’ and give a link below to the full breakdown for those who wish to
see the full list.
As above, each time a transaction list is processed it is given a Block Number.
Each Block number contains a pre-set amount of Bitcoins to be released to the miners when
the block transactions have been processed, these released Bitcoins are called the Block Reward.
The block reward is set to halve at pre-set block numbers, estimated to be every 4 years,
however this is based on the actual block numbers rather than time.
Each pre-set halving ‘stage’ is called a ‘Reward Era’.
Example of how the Bitcoin Network and Miners process transactions:
“Jack” sends “Jill” Bitcoin.
The Miners that make up the Bitcoin Network process the transaction between Jack and Jill.
The Block Chain is updated and Bitcoin is confirmed as sent from Jack and received by Jill.
Once the ledger is updated, the Block Chain ‘creates’, or rather, ‘releases’, a preset-number of new
Bitcoins. These new Bitcoins are paid directly to the miners who processed the transaction between
Jack and Jill.
After the transactions have been processed and the new Bitcoins released to the miners, the process
starts again. This process repeats every 10 minutes (approx) and will continue to do so until around
the year 2136 when the final Bitcoins will be released.
Block Chain and Bitcoin Network Security;
The Bitcoin Network is very secure. There is no possibility of ‘Double Spending’ and the
system has been specifically designed and coded to make creating counterfeit Bitcoin or fake
transactions impossible.
The above process of transactions between Jack and Jill has been simplified for my example.
In actuality the process is much more complex.
I’ve found that the best way to explain the security of the Block Chain and Bitcoin Network is to
compare some of the points of Bitcoin with a more familiar setting, such as a bank.
Bitcoin adheres to very strict rules through its coding. For the purpose of this comparison we are
applying the same rules to the banking system to allow for a fair comparison.
The above points are factually true for Bitcoin, they are hard-coded, cannot change, and cannot be
interpreted in any other way than they are written. These points are obviously not true for our
current banking systems but for the purpose of this comparison we are applying these rules to the
banking system.
As well as the above points, the Block Chain and Bitcoin Network must process the
transaction list in full every time transactions are made and more than 50% of the network must
agree that the transactions are the same.
Each miner in the network has their own copy of the ledger which shows every transaction
ever made from the very first Block to present day.
Every transaction in the ledger from the very start to present day is checked and confirmed
by the miners each time a new block is processed.
By more than 50% of the network having to agree that the transactions are the same, and by
checking the entire ledger every time a new block is processed, the miners ensure that the Network
is secure and makes it impossible for ‘counterfeit’ coins to be put into the network.
In order to insert a ‘counterfeit’ transaction into the Block Chain or Bitcoin Network the
counterfeit transaction would have to be put into over half of the miners-ledgers throughout the
world at precisely the exact same time and because of the sheer size of the Bitcoin Network no one
has that much computer processing power and it would cost too much money to “hack” the
At the time of writing, the current total Bitcoin Network processing power is approximately
380,000,000 GH/s. To put this number into perspective, this would be approximately 100,000,000
top-of-the-range gaming computers all combined together.
I wanted to explain to my Grandfather (who has never even turned on a computer), how the Bitcoin
Network operates and how secure it is, but without all of the technical information with regards to
processing transactions, miners, networks, ledgers etc. So I came up with this example, removing all
of the technical and computer terms.
Sticking with our above example of there being only one Bank in the world and the outlined rules we
have listed above in the table;
There is only one bank in the world.
There are 100,000,000 bank accountants working in this one bank.
At the front of the room is a bank ledger which contains every single transaction ever made
between every user of the bank since the bank opened.
Each accountant has a personal copy of the ledger and checks that every incoming
transaction matches an outgoing transaction elsewhere (Double Entry Book-Keeping). They check
every transaction from day 1 to present day, not just new transactions but ALL transactions.
All transactions are checked to ensure that the ledger is correct and no one else has
accessed or altered the copy of the ledger without the accountants’ knowledge.
When all accountants have finished checking the transactions in their copy of the ledger
(and as long as more than 50% of the accountant’s transaction lists are the same as each others), the
transactions are “Confirmed”.
By over half of the ledgers being the exact same this removes any possibility of money being
sent more than once in any single transaction time-frame, i.e. it is not possible for someone to send
the same money to more than one person at the same time.
By having more than 50% of the ledgers the same, the possibility of a counterfeit transaction
being created is removed because a counterfeit transaction would need to be shown in over half of
the accountant’s ledgers, in the same place in each copy and be traced back to the same original
Once all of the transactions have been processed, the accountants who carried out the work
want to be paid for their time, so at the end of each “ledger-checking period” the bank manager
pays the accountants their wages at a pre-set amount per ledger.
The money paid to the accountants is “added” to the next copy of the bank ledger, and from
this time on any transactions made with that money is also traceable in all future ledger copies.
Once the ledger has been checked and the accountants have been paid, a new ledger
appears at the front of the room and the process starts over again. Each time a new ledger appears
it is given a new reference number called a “block number”. The first ledger was “Block 1” the
second is “Block 2” and so on and so forth.
Bringing the above ‘Bank’ example back to Bitcoin;
The bank accountants who check the ledger are the Bitcoin Network ‘miners’.
The bank ledger is called the ‘Block-Chain’ and each time it is checked it is given a
reference number called the ‘Block Number’.
The ‘wages’ that are paid to the miners by the bank manager, are ‘Created’, or
rather ‘Released’ by the ledger itself after the ledger has been checked and assigned
a Block Number.
These wages are paid to the miners private wallets in the form of Bitcoins and each
new ‘Block’ will contain a pre-set number of Bitcoins to be paid to the miners wallet.
The pre-set number of Bitcoins to be paid is listed in the above table showing the
Block Number / Reward Era (currently 25 Bitcoins per block).
In order for a Bitcoin to exist in the Block Chain CURRENT Block, it must have been ‘Created’
or ‘Released’ by the Block Chain in an earlier block.
To secure the integrity of the Block Chain, the miners check every single transaction ever
made in the ledger from block 1 until the current block, confirming the existence and current
account number of each Bitcoin in the Block Chain and all transactions made with those Bitcoins.
By checking every transaction ever made, the Network is secured against counterfeit
transactions, because if a transaction does not appear in more than 50% of the miners copies of the
ledger the transaction does not get processed or confirmed.
Why isn’t everyone mining Bitcoin?
In order to mine Bitcoins now-a-days miners require specialist hardware for the process to
actually be profitable, i.e. high processing power with low power consumption.
Due to supply and demand of this specialist hardware it is hard to get hold of and expensive
to purchase.
Specialist hardware is needed due to the ever-growing size of the Block Chain. Every time
the Block Chain is processed the next block becomes slightly larger than the last and requires more
computer power to process the next block in the 10 minute block-time. This is because the block
chain is essentially an ever-growing ledger of transactions.
You can imagine the accountants in the ‘Bank’ example above were using abacuses to check the
ledger at the start and as the ledger became bigger they moved on to calculators. Now they require
specialist computers that are faster and specifically designed for the job of checking transactions.
We have now covered the technical points of Bitcoin and you should understand;
What the Block Chain is (Public Ledger)
What the Bitcoin Network is (Network of individual computers, aka Miners)
How Miners work (Software running on individual computers to process transactions)
How Bitcoin is ‘Made’ (Released as payment to miners when a transaction block is processed)
It is now time to move onto the more Practical Points of Bitcoin.
In the next chapter we will look at Bitcoin Wallets, How and Where to get Bitcoin, and How to Send &
Receive Bitcoin.
Chapter 3: Bitcoin Explained – The Practical Parts
In this chapter we will look at the practical parts of Bitcoin, i.e. the parts you will need to know in
order to actually use Bitcoin yourself;
Bitcoin; the Practical Parts;
Where to get a Bitcoin Wallet or Account
How to Send and Receive Bitcoin
How and Where to get Bitcoin
Backing up and Securing your Bitcoin Wallet
Bitcoin Wallets;
A Bitcoin Wallet is the place where you Store, Send and Receive Bitcoin.
There are several options for Bitcoin wallets as they can be used across a range of platforms
from Mobile Devices to Desktops or Hosted Web Wallets online. The best option is to go to the
official Bitcoin website and find a wallet that suits your individual needs.
The wallet list can be found on the Official Bitcoin website here:
Simply choose the platform you wish to use, e.g. Desktop > Windows > Then click on a wallet
to read the information specific to that wallet and choose the one that you think works best for you.
Once you have found a suitable wallet, click on the “Visit Website” and follow the instructions on the
website to download and install the wallet you have chosen.
Essentially, all of the wallets offer the same type of options when it comes to sending and
receiving Bitcoin, however some offer higher levels of security at the expense of ease of use etc.
Installation and setup of wallets in most cases is relatively easy and if you are computer
literate you should have very little issue with following the on-screen instructions when it comes to
this section, however for those who may need some additional help I have included a step-by-step
guide for download/installation/setup of a few different wallets that I personally use.
Windows Desktop Software Wallet: MultiBit HD – I use this wallet to securely store my “Main”
Bitcoin on my local computer at home.
Step-by-Step Guide for downloading, installing and setting up MultiBit Windows Desktop Wallet:
Note: If you plan to use a different wallet you can skip this guide.
Step 1: Visit the Bitcoin website here
Step 2: Click on Desktop > Windows > MultiBit HD
Step 3: Click Visit Website (top left) on the pop-up-window
Step 4: Click the Windows Logo
Step 5: Click on the multibit.exe file that downloaded
Step 6: Press Run
Step 7: Follow installation instructions and select location to install wallet on your computer
After installation completes;
Step 8: Open MultiBit HD (new icon should be on your desktop)
Step 9: Follow setup instructions, i.e. accept licence agreement, select language and click next.
Step 10: Select ‘I want to create a new wallet’ and click next.
Step 11: READ the preparation information. You will need a pen and paper for this step, a password
you want to use for your wallet, some form of cloud backup account, I recommend for backups but there are several options you could use. Click next.
Step 12: Locate your local Cloud folder (usually you can double click your cloud program icon in your
task-bar or right-click the icon and click “open containing folder”.
Step 13: Write down the random wallet words (KEEP THESE SAFE)
These random wallet words are needed should you ever have computer problems and lose your
software wallet. Having these words will allow you to install the MultiBit HD wallet onto a new
windows computer, then recover the wallet and any Bitcoins and contacts you may have.
Step 14: Create your password and click next.
When creating your account, please ensure your password is STRONG. My own Bitcoin password is
an 18+ alphanumeric password and also includes special characters such as @!*
Step 15: Click Finish
Step 16: Enter your password and then press the Unlock button at the bottom of the screen. Let the
Wallet connect to the Bitcoin network and synchronise, then press Finish.
If you are prompted with a Windows Security Alert, click Allow Access. This lets the Bitcoin wallet
access the internet through your firewall.
Step 17: Familiarise yourself with your new wallet so you know where things are.
I also use two different online Web-Hosted Wallets. These are easier to setup than the Software
based wallets and have some different options in the way they actually work.
I use Coinbase Web Wallet as it is one of the more secure online wallets from a registered
company and there are options for purchasing Bitcoin directly from them via bank transfer.
Setting up the wallet is very easy, all you need to do is fill in your Name, Email Address and
Password and the account is ready to use. You also have recovery options should you forget your
password and the added benefit of a real company you can talk to should you ever require help.
When creating your account, please ensure your password is STRONG. My own Bitcoin password is
an 18+ alphanumeric password and also includes special characters such as @!*
In order to purchase Bitcoin from Coinbase you will need to ‘Add’ your bank account to fund
your Coinbase account with USD / GBP or EUR (depending on the country you are making payments
from). This process can take a few days to setup but once in place can be used immediately. I cover
Buying and Selling Bitcoin in a later chapter along with a step-by-step guide for Coinbase and a
couple of other places.
Step-by-Step guide for setting up a Coinbase account:
Note: If you plan to use a different wallet you can skip this guide.
Step 1: Visit
Step 2: Fill in the form with your name, email and password you want to use, read the User
Agreement and Privacy Policy, tick “I agree to the User Agreement and Privacy Policy” then click Sign
Step 3: You should receive an Email from Coinbase asking you to “Verify your Email Address”. Click
the link in your email and a new page will open.
Step 4: Sign into Coinbase with your email address as your username and the password you used to
setup the account.
Your Coin Base wallet is now ready to use.
NOTE: It is very important to secure your account by setting up 2FA (2 factor authentication). I use
Google “Authenticator” on my phone. Having 2FA setup will mean when you log into the account in
the future, you will need your Email Address, Account Password, PLUS your Authenticator, as this
generates a password that changes every 30 seconds. As you are the only person with your 2FA
device (Authy, Google Authenticator or Mobile Phone), no one else can access your account even if
they were to have your Email address and Account Password.
Guide to setting up 2FA on Coinbase.
Step 1: In the top right-hand corner of the main Coinbase website, mouse over your Account Name
and click Settings.
Step 2: On the right hand side of the new page you will see “Change Password”. Underneath this it
says Enable 2-factor authentication on security page, click this.
Step 3: Press Verify a Phone. Choose your country and enter your phone number, then press next.
Step 4: You will now receive a free SMS from Coinbase with a 7-digit verification code, enter this
code into the box and press Verify Phone Number.
Step 5: Your Phone should now be verified on your account and you will receive texts when
someone sends you Bitcoin or when Bitcoin is sent FROM your account.
Step 6: Click on one of the 2-factor authentication options. i.e. Authy, Google Authenticator (Smart
Phone Apps) or SMS access.
NOTE: Use the authentication that suits you best, SMS is the easiest 2FA but you need to ensure you
can receive a text message from Coinbase anytime you wish to log onto your account. An App such as
Google Authenticator does not require internet or phone connectivity.
Your Coinbase wallet is now set up, secure and ready to use.
As with the Windows Software Wallet above, please familiarise yourself with the platform so you
know where everything is located.
The other web-based wallet that I use is called is the other Web Wallet I use: was my first Web-based Wallet and I still use it today for sending and receiving
Bitcoin payments when I am away from my house.
Step-by-Step guide for setting up your account:
Note: If you plan to use a different wallet you can skip this guide.
Step 1: Visit
Step 2: Press Create New Wallet
Step 3: Fill in the form with email address and desired password, then press continue
Step 4: On the pop-up/next screen - PRINT the Wallet Recovery Mnemonic – It is very important that
you do not lose this. If you were to become locked out of your account or forget your identifier-code
you can use this print to recover your wallet account.
Step 5: Login to your new wallet account
NOTE: It is very important to secure your account by setting up 2FA (2 factor authentication). I use
Google “Authenticator” on my phone. Having 2FA setup will mean when you log into the account in
the future, you will need your Email Address, Account Password, PLUS your Authenticator, as this
generates a password that changes every 30 seconds. As you are the only person with your 2FA
device (Authy, Google Authenticator or Mobile Phone), no one else can access your account even if
they were to have your Email address and Account Password.
Guide to setting up 2FA on
Step 1: On the lower right hand side of the screen find “Account Settings”, Click this.
Step 2: You should be presented with a warning of “Sensitive Data”, Press Continue if you are in a
suitably private place where you are sure your monitor cannot be overlooked by others.
Step 3: If prompted to enter your Main Password, enter now and press Continue.
Step 4: On the left-hand side, click Security.
Step 5: The top option is Two Factor Authentication. Select the option you wish to use and follow
instructions on screen.
Your wallet is now set up, secure and ready to use.
As with the other wallets above, please familiarise yourself with the platform so you know where
everything is located.
Now that you have chosen a Bitcoin wallet and either installed the software on your
desktop, app on your mobile device/tablet or set up a Web Wallet, you will want to know how to
actually send and receive Bitcoin. I cover the basics here, and use the examples of wallets that I have
listed above, i.e. Windows Software Wallet MultiBit HD and the two Web Wallets. MOST wallets are
very similar, and therefore this basic guide should cover most options of wallets regardless of the
platform you are using.
Sending and Receiving Bitcoin with various wallets:
MultiBit HD Windows Software Wallet
Sending Bitcoin;
In order to send Bitcoin to someone, you must know the wallet address of where Bitcoins are to be
sent. For instance, my wife’s unique Bitcoin wallet address 1SAJcJEusoQVgaQ6LNp3ATj4e4jQTqyoc
If I wanted to send Bitcoin to my wife, I would open my wallet, click on “Send” and then enter this
wallet address into the “Recipient” address bar.
Then select the amount of Bitcoin or USD that I wish to send and press “Next”.
Enter my wallet password when prompted then press “Next” and Bitcoins are sent. It is as simple as
that, Bitcoins are sent from one account to another in minutes from any location to any location in
the world.
Receiving Bitcoin;
In order to receive Bitcoin from someone else, THEY must know YOUR wallet address.
In MultiBit HD you would press “Request”.
The Recipient wallet address that is filled in already is YOUR address. This is the address you must
give to the person who is sending you Bitcoin.
You can easily copy this address onto your clipboard by pressing the COPY button to the right of the
address, or by highlighting the address and holding CTRL and pressing C. You could then email the
address to the person who is sending you Bitcoin and they can enter the address into their own
Bitcoin wallet in order to send you Bitcoins as we did in the SENDING example above.
Alternatively, you can press the symbol to the right of the “copy” symbol. This is a “QR” code. This
code can be copied onto the clipboard by pressing the Copy button and then emailed, or if the
person is actually with you, they could scan the QR code directly from the screen on their own
smart-phone or Bitcoin wallet.
Payments will generally show up in the wallet very quickly once sent, however are not accessible
until the payment has been confirmed. The confirmation period USUALLY takes around 10 minutes,
however this can vary slightly. Web Wallet
Sending Bitcoin;
On the top of the main page click on “Send Money”
Enter the Bitcoin Wallet Address you are sending Bitcoin To.
In the Amount field, you can either fill in the Bitcoin amount or the currency amount you want to
Press Send Payment and your Bitcoin is sent to your recipient.
Receiving Bitcoin;
On the top of the page click on “Receive Money”
Under “Addresses Your receiving Bitcoin Addresses” you will see two tabs, Active, and Archived.
“Active” lists any active wallet addresses on your account. You can have multiple addresses under
one account in order to keep payments separate and easy to see from different people.
“Archived” addresses can still receive Bitcoin, but may be addresses you no longer require to be
listed as Active.
Highlight the Address you wish to receive Bitcoins to, and hold CTRL and press C, this will copy the
address, then you can send this address to the person sending you Bitcoin so they can enter your
address into their Bitcoin wallet to send Bitcoins to you.
Once someone has sent you Bitcoins you should receive them in your wallet very
quickly, usually instantly but certainly within 10 minutes. Web Wallet
Coinbase is slightly different to other Wallets I’ve used when it comes to sending and receiving
Bitcoin as it uses an email address system by default rather than “complicated wallet addresses”.
Sending Bitcoin;
On the left hand side of the screen, press Send/Request
On the new page, at the top you should see Send and Request tabs. Ensure you are on SEND Funds
Enter the email address* OR the Bitcoin address of the person you wish to send Bitcoin to
Enter the amount of Bitcoin you wish to send
Select the Wallet you wish to send Bitcoin from (Wallets on Coinbase can be named and also show
the current balance on the drop-down list),
You can also add a note if you want to.
Press Send Funds, then assuming you set up 2FA, enter your authentication and press Confirm.
Your Bitcoin is sent.
*IF you do not have the Bitcoin address of the person you wish to send funds to, but you do have
their email address, you could enter their email address instead of Bitcoin address.
The recipient will then receive an email from Coinbase stating that “you” have sent “them” a
payment. If the email address is already registered with Coinbase then the payment will be received
automatically, but if they do not have a Coinbase account they will be prompted at this time to
create one in order to receive their payment from you.
Receiving Bitcoin; There are two options with Coinbase for receiving
Option 1:
Click on Send/Request on the left hand side and then click on “Request” tab at the top.
Ensure you are on Request Funds tab.
Enter the email address of the person you want to request funds from.
Enter the amount you wish to request, this can be either in Bitcoin form, or Fiat currency form.
Enter an optional message and then press Request Funds.
Once you have pressed Request Funds, your recipient will receive an email from Coinbase saying
they have received a “payment request”. At this point, they are given the option to either log into
their existing Coinbase account if they have one, and complete the payment request, or they are
given your Bitcoin Address and a QR code to use if they do not have a Coinbase account and/or do
not want to create one.
Option 2:
On the main screen of Coinbase when you are logged in, you should see along the top “Balance”. To
the right hand side of the balance you should see a small i (information) and “Wallet Address”.
Clicking on Wallet Address will show your wallet address. You are then given a QR code and the
actual Bitcoin Wallet Address for your Coinbase account. You can either allow someone to scan the
QR code directly from your screen, or you can highlight the wallet and copy (Hold CTRL and press C)
and paste into an email etc.
We have now covered the basics of how to send and receive Bitcoin from various wallets.
Personally, I like the ease of use of the Coinbase wallet, but the speed of the Blockchain Wallet.
For security purposes, I personally have to suggest the Software wallets as they are locally stored on
my own computer and therefore are my own responsibility. I am not trusting in a third party to
secure my funds for me.
How to get Bitcoin;
There are several ways and places to get Bitcoin.
1) Mine Bitcoin. As discussed in an earlier chapter, Bitcoin is mined, meaning you could run a
miner and receive Bitcoin payment for processing transactions, however in order to make
this a viable option now-a-days specialist equipment is required which is expensive to
purchase, hard to obtain due to supply and demand, and expensive to operate because of
the power required to run the hardware. There are entire warehouses full of mining
hardware dedicated to mining Bitcoin, so for the average user this is not a viable option.
2) Sell goods or services and accept Bitcoin as payment.
3) Buy Bitcoin from an exchange or from a third-party person who has Bitcoin for sale. I will
explain these options in full shortly.
1 - As above, option 1 is not a viable option for most users. I left it too late to try mining myself and
so I am unable to write first-hand as a miner. If you are interested in mining Bitcoin I would suggest
looking into mining equipment companies and/or cloud mining services via internet search or
speaking with other miners through forums such as
2 – Selling goods or services and accepting Bitcoin as payment. Depending on your situation, you
may be able to do this. Unfortunately places such as Ebay do not yet allow Bitcoin payments to be
made for auctions, however you could create local listings in your local newspapers, or create a
website and have people purchase goods or services directly from you and accept Bitcoin as a
payment option. Some merchants even offer a discounted rate if the customer is paying in Bitcoin.
3 – By far the “easiest” way to get Bitcoin is to simply purchase it from someone else. You can
purchase Bitcoin from companies, such as Coinbase, or other exchanges depending on your
geographical location or from direct-sellers via some websites, such as
On when logged into your wallet you can see on the right side of the
main page different countries “tabs”. When you click on a tab you will see different companies or
exchanges where Bitcoin can be purchased.
Each of these exchanges or companies is independent and will require personal information
from you for such as passport numbers, photo ID, Government issued ID cards, scan of driving
licence or utility bills with addresses etc. This is all for Tax Purposes and security.
In the next chapter you will find step-by-step guides on where to purchase Bitcoin in the UK and some
European countries. These guides are written by myself, and by colleagues and are from first-hand
Chapter 4: How & Where to Buy & Sell Bitcoin for Fiat Currency
In this chapter we will focus solely on Buying and Selling Bitcoin. The guides for the United Kingdom
have been written by me from first-hand experience. The guides for other countries have been
written by colleagues also from first-hand experience. In most cases, the signup and purchasing
processes are explained very well by the respective websites or exchanges.
In the USA the authorities are trying very hard to regulate exchanges for Bitcoin trading and
purchasing. As I do not live in the USA I have not traded with any of the USA based companies,
however I do use Coinbase in the UK which was originally established in the USA and is one of the
few regulated exchanges in the country. I list below the current regulated exchanges in the USA for
those readers who are trading there.
Places to Buy and Sell Bitcoin;
Bitcoin ATM Locations (World Wide);
If you are lucky enough to have a Bitcoin ATM nearby this is by far the easiest option for
converting Fiat to Bitcoin and Bitcoin to Fiat currency with the ATM operator acting as the third
party to process the transaction.
E-Coin is a Pre-Paid Visa Debit Card, funded with Bitcoin. These cards can be used
anywhere in the world that accepts Visa as a form of payment (Over 30 Million ATMs and 25 Million
Merchants Globally).
To add Fiat currency to your E-Coin Visa Card you simply send Bitcoin to your E-Coin wallet
address and E-Coin loads your card with Fiat to the current market value of the Bitcoin that you
When purchasing a card from E-coin you can select what Fiat currency you want your card to
be in, I.e. USD ($), EURO (€) or GBP (£). By choosing the Fiat currency for your country (or country in
which you plan to use your card) you can avoid paying foreign exchange rates when making
To sign up for a free account with E-Coin click the link above. If you wish to purchase a Visa
Pre-Paid Card, simply select the type of card you wish to purchase, i.e. USD ($), EURO (€) or GBP (£),
make payment for your new card. When you receive your card in the post (usually takes a couple of
days) follow the instructions in the letter accompanying your card to validate it.
Some terms and conditions do apply, such as foreign exchange rates if using your card
outside of that cards area, i.e. using a USD’s card in the United Kingdom would be liable to certain
exchange rates and fees, so you do need to read the terms and conditions. That said, I have a GBP
card and have been quite happy with the service myself.
Coinbase: - Coinbase also operate in the UK.
Coinbase is currently my “go to” exchange for purchasing Bitcoin. Their prices are fair and
close to the current trading rate of Bitcoin at any given time. Unfortunately they do charge a small
transaction fee when buying or selling Bitcoin / Fiat, as well as a bank-transfer fee when depositing
or withdrawing funds from / to your Bank Account, however, in my opinion, these fees are offset by
the fact that Coinbase are a registered and trusted company and the service and support they offer
is extremely good.
In order to buy and sell Bitcoin through Coinbase you will have to submit some forms of
identification; this is for tax and security purposes and is a requirement of most company-based
exchanges and services. If you do not wish to send these details to Coinbase please skip the
Coinbase Account section and continue to the next options where this personal identification is not
Account Setup: Coinbase;
Please See: Chapter 3: Bitcoin Explained – The Practical Parts > Bitcoin Wallets > Coinbase: Steps 1-4
for initial account setup guide.
Before you can Buy or Sell Bitcoin via Coinbase you need to verify your account with
identification documentation and send a wire transfer to Coinbase from your bank account.
Verify your Identification and Wire Transfer;
Step 1: On the left side of the screen, press “Buy / Sell Bitcoin”.
Step 2: You should see a message saying “Your account is incomplete”. Press “Complete Now”.
Step 3: Fill in the form with your Name, Date of Birth, Address, press “Next”.
Step 4: At the top of the page, press “Identify”.
Step 5: Press “Start Verification”.
Step 6: Choose your country from the drop down list and then select the type of identification you
plan to use.
Step 7: Press “Choose file” and locate the file on your computer. Once uploaded press “Confirm”.
Step 8: Wire Transfer from your bank account to Coinbase account.
You will find the relevant bank account information on the Coinbase webpage. I have intentionally
not given this information here just in case Coinbase information changes in the future.
NOTE: Funds will take 1-2 days to arrive with Coinbase from your bank account wire transfer.
When the transferred funds arrive with Coinbase you can actually Buy and Sell Bitcoin.
BUYING Bitcoin via Coinbase
Step 1: On the “Home Page” of Coinbase, Click “Buy / Sell Bitcoin” on the top left side of the screen.
Step 2: On the new page, at the top of the screen press “Buy Bitcoin”.
Step 3: You can see Amount [Fiat] / [BTC], Payment method [Fiat Wallet], Deposit to [My Wallet].
Step 4: Click on the “Payment Method” drop down and select the Fiat wallet where your deposited
funds are shown.
Step 5: Fill in the amount of [Fiat] currency you wish to spend and the BTC box will auto-fill to show
you how much Bitcoin you will receive.
Step 6: Press “Buy Bitcoin Instantly” at the bottom of the page.
Step 7: Review the transaction to ensure you are buying the correct amount of Bitcoin and you have
selected the correct FIAT payment option, then assuming all ok, press “Confirm”.
Your Fiat will be taken from your Fiat Wallet and your Bitcoin will deposit to your Bitcoin wallet.
SELLING Bitcoin via Coinbase:
Step 1: On the “Home Page” of Coinbase, Click “Buy / Sell Bitcoin” on the top left side of the screen.
Step 2: On the new page, at the top of the screen press “Sell Bitcoin”.
Step 3: You can see Amount [Fiat] / [BTC], Payment method [Fiat Wallet], Deposit to [My Wallet].
Step 4: Click on the “Payout Method” drop down and select the Fiat wallet where you want funds to
go once you have sold Bitcoin.
Step 5: Type in the amount of [BTC] you wish to sell and the FIAT field will auto-fill to show how
much Fiat you will receive for the Bitcoin you are selling.
Step 6: Press “Sell Bitcoin” at the bottom of the page.
Step 7: Review the transaction to ensure you are selling the correct amount of Bitcoin and you have
selected the correct FIAT payment option, then assuming all ok, press “Confirm”.
Your Bitcoin will be taken from your Bitcoin Wallet and your Fiat will deposit to your Fiat wallet.
Until Coinbase started to operate in the UK I used for buying and selling
Bitcoin. is a Peer-to-Peer based exchange so there is a level of trust required
between users, however the website itself uses an Escrow-type service to “protect” buyers.
Users submit ratings once transactions are completed (in much the same way as popular
auction websites), therefore you can see if a user has a positive or negative feedback on their
account and decide on a user-by-user basis whether you wish to do business with an individual or
The personal information required to use is far less intrusive than the
Company-Based services such as Coinbase and therefore is faster and easier to set-up and may offer
a better option for some users.
Sellers create an advertisement saying how much Bitcoin they wish to sell and at what price.
Buyers then select an advertisement that meets their requirements and specify how much Fiat
currency they wish to spend in exchange for Bitcoin or how much Bitcoin they wish to purchase.
Each advertisement is different and there are several ways to make payments, such as
PayPal, Internet Bank Transfer (BACS), Cash by finding someone local and actually meeting in person
and many other options.
Account Setup: LocalBitcoins:
Step 1: Open a web browser and go to
Step 2: Click on “Sign up free” in the upper right corner.
Step 3: Fill in the form with a Username, Email Address and Password. Enter the random “Captcha”
text and press “Register”.
Step 4: When you press Register, you will receive a ‘Welcome’ email. Confirm your account by
following the link in the email.
Step 5: Log into your new account, hover over your “user name” in the top right corner and press
‘Edit Profile’.
Step 6: Verify your mobile phone number with a free SMS message. Enter your phone number and
press “Send Verification SMS”.
Step 7: Enter Verification Code and press “Check Verification Code”.
Note: Mobile phone number verification is required by most sellers as a minimum “account
verification” before they will trade with other users.
BUYING Bitcoin via
Step 1: Press “Buy Bitcoins” at the top of the page to load a list of people selling Bitcoin.
Step 2: Find a suitable Advertisement; you want to look specifically for the following points:
A seller who has listed the Bitcoin price close to the current trading price of Bitcoin
A seller who has set a trade minimum / maximum limit that you can meet
A seller that has listed the payment method you wish to use, i.e. National Bank Transfer,
PayPal etc
Most importantly, look for a seller with a high number of completed transactions and high
positive feedback
Note: If you require Bitcoin quickly, ensure that the user is “online” (indicated by a small green circle
by the seller’s name).
Step 3: Click the “Buy” button on the right side of the sellers Advertisement.
Step 4: Read the sellers “Terms of Trade”. These are terms that the seller requires the buyer to meet
before they will complete a trade.
Step 5: Enter either the amount of Bitcoin you wish to purchase or the amount of Fiat Currency you
wish to spend (the opposite box auto-fills when you fill one).
Step 5: Press “Send Trade Request”.
Step 6: Follow the payment instructions set by the seller. In the above screenshot the seller requests
the buyer to send a text message and they will then send back payment details, i.e. bank account
number and sort code. When you have completed payment to the seller, press “Mark Payment
Note: If you have any questions for the seller, you can use the chat-box on the right side of the page.
When you have pressed “Mark Payment Complete” the seller will check to confirm they have
received your payment and then will send your Bitcoin to you. The Bitcoin is received instantly into
your “on-exchange” wallet. Your Bitcoin is now in your account on and you can
send your Bitcoin to your “off-exchange” wallet.
Sending Bitcoin to your “Off-Exchange” wallet:
Step 1: At the top of the page, press “Wallet” to see your “on-exchange” wallet. Here you can see
your Bitcoin balance and all transactions.
Step 2: Enter the address of where you wish to send Bitcoin, i.e. your own Bitcoin Wallet where you
store your Bitcoins, or if you are paying Bitcoin directly to someone else you could enter their Bitcoin
address here.
Step 3: Enter the amount of Bitcoin you wish to send.
Note: It is ideal to leave a small amount of Bitcoin in your LocalBitcoins account to cover the small
“miners fee”. You can send all of your Bitcoin and leave none in your account, but no fees may mean
a slower transaction time for your Bitcoin to actually send.
Step 4: Enter your Password and press “Send from Wallet”. Your transaction will process and Bitcoin
will be sent.
SELLING Bitcoin via
Step 1: Click Sell Bitcoins at the top of the screen.
Step 2: Find a suitable buyer; you want to look specifically for the following points:
A buyer who has listed the Bitcoin price close to the current trading price of Bitcoin
A buyer who has set a trade minimum / maximum limit that you can meet
A buyer that has listed the payment method you wish to use, i.e. National Bank Transfer,
PayPal etc
Most importantly, look for a buyer with a high number of completed transactions and high
positive feedback
Step 3: Click the “Sell” button on the right side of the buyers Advertisement.
Step 4: Read the buyers “Terms of Trade”. These are terms that the buyer requires the seller to meet
before they will complete a trade.
Step 5: Enter either the amount of Bitcoin or Fiat you wish to sell (the opposite box auto-fills when
you fill one).
Step 6: Enter the required details for the method of Payment you have chosen.
Step 7: Press “Send Trade Request”.
Step 8: Wait for the buyer to confirm they have sent payment to you, confirm payment has been
received and then confirm the release of funds to the buyer when prompted by the site.
Note: Do not confirm receipt of funds or release Bitcoin until you have actually checked and received
funds. If you have any problems or discrepancies with the transactions contact the site
administrators who will help.
FRANCE: Guide written by Jerome Labarre (aka Cryptorider)
Paymium is the first and most secure exchange to buy Bitcoin in France.
Registering your Account;
First you have to register on the website with an E-mail Address and Password. After that they will
ask you to send them scanned documents to prove your identity:
A valid ID card, Front/Back
A document to justify your home address, under 3 months old (Phone/water/electricity bill,
tax assessments)
A Bank account IBAN
Note: You can find additional help/advice in the « AIDE » section.
Once you have sent your documents, Paymium will check and confirm your account. This usually
takes 1-2 weeks maximum.
After that verification, you will be able to buy or sell Bitcoin on the exchange.
Sending FIAT (EUROS) on your Paymium account;
Ask your bank for a Wire Transfer; specify the amount to send and the Paymium Bank IBAN:
(Correct at time of writing. You must check Paymium prior to sending funds in case of changes)
Lemon Way
FR76 1020 7001 6921 2148 0343 441
N° de compte Clé
21214803434 41
Don’t forget to write your own Paymium account number in the comment section (“Libellé” or
“motif” in French) each time you are transferring money on your Paymium account (your account
number should looks like this: BC-AXXXXXXXX).
NOTE: Wire transfer takes usually 2 or 3 days.
BUYING Bitcoin via Paymium
Once funds are credited to your Paymium account you will be able to buy Bitcoin:
From the menu click “échanger” then click “Acheter des Bitcoins” from the menu on the left.
Fill in the form with the Euros amount you want to spend and you will receive the amount in Bitcoin.
Sending Bitcoins to Paymium wallet
Go into “Mon Compte” menu and click “Retirer des Bitcoins” from the menu on the left.
Fill in the Amount (Quantité) and Bitcoin Address (Adress Bitcoin) forms and click on the “Retirer”
button to send your fresh Bitcoins to your wallet. Be careful to check you haven’t made a typo in the
wallet address as Bitcoin transactions are non-reversible.
Last step, you will have to check your e-mails and click on the confirmation link sent by Paymium, if
all is correct, to finalise the Bitcoin transfer.
SELLING Bitcoin via Paymium;
Send your Bitcoins from your wallet to your Paymium Bitcoin account.
If it’s the first time you want to sell your Bitcoins, you will have to generate a new wallet address for
your account.
Go into “Mon Compte” menu and click “Alimenter votre compte Bitcoins” from the menu on the
Click on “Générer une adresse”.
Note: Newly generated addresses are only usable for 7 days. After 7 days you will need to generate a
new address. Contact support if you accidentally send Bitcoin on an old address.
Once your Bitcoin are in your Paymium account, go into “Echanger” menu and click “Vendre des
Bitcoins” from the menu on the left.
Enter the amount of Bitcoin you want to sell in the red form box called “Vendre ce montant” and
click the “Vendre” button.
Sending Fiat (EUROS) to your bank account from Paymium
Now that you have sold your Bitcoin, go into “Mon Compte” menu and click “Retirer des Euros” from
the menu on the left.
Enter the amount of EUROS you want to send on your bank account on the “Montant” form, put a
comment in “Commentaire” and click “Retirer”.
You will receive an email to confirm and finalise the transaction.
HOLLAND: Guide written by Sander van der Iaan (aka Fooc)
Bitonic is the biggest Fiat to Bitcoin exchange in Holland.
The company has been selling Bitcoin since May 2012 and delivers from their own supply.
BUYING Bitcoin via Bitonic:
To start buying or selling Bitcoin you can go to
You do not need to register an account to buy Bitcoins. Simply fill in the amount of Bitcoin or Euro
you want and press the buy button (Kopen).
The next step is filling in your Bitcoin address and choose your “Ideal”* bank you wish to make
payment with and click on the pay button (Afrekenen).
After completing the Ideal* payment process the Bitcoin are sent to your Bitcoin wallet.
NOTE: First time customers with orders bigger than €50 have to verify their bank account number by
depositing 0.01 euro to en verify a code by SMS.
iDEAL is an online payment method that allows customers to pay via their own bank.
SELLING Bitcoin via Bitonic:
Selling Bitcoin on Bitonic is an easy process. Simply choose sell (Verkopen) and enter the amount of
Bitcoin you wish to sell.
The amount of Euros will be calculated based on the current prices of Bitcoin and as long as you are
happy with the prices you press the sell button (Verkopen).
On the next screen you enter the Bitcoin address that you are sending your Bitcoin from and your
bank account number, after pressing send, the transaction will be processed.
Note: You can also choose to do an “urgent” payment if you want to have your Euros payment faster
but will pay a premium fee for this.
We have now covered all of the practical information required to understand and use Bitcoin. From
the very basics of what Bitcoin is and how the Network Operates, to the more complicated
information of how to set up accounts and buy/sell Bitcoin.
I hope the information I have provided so far has been helpful and easy to understand, and that you
have now got your own Bitcoin wallet. I also hope that you feel as enthusiastic about Bitcoin and
Digital Money as I do and that you will take the time to try to educate your friends and loved ones
about what you have learned so far.
I truly believe that “Digital Money” is a powerful tool and in the coming years and decades as the
technology develops and big business gets more involved with Bitcoin we will see a paradigm shift in
the world’s economic and monetary systems.
Now that you have a working understanding of Bitcoin, it is time to introduce you to other Digital
Currencies, known as Alt-Coins, i.e. Alternative to Bitcoin.
As you know, Bitcoin was the “first widely-accepted” Digital Currency and everything you have read
so far in this book is relevant. MOST of the information regarding Alt-Coins is based on Bitcoins
technology so understanding Alt-Coins should be relatively easy as you already have a good
understanding of Bitcoin and how things work.
Bitcoin has some operational “Shortcomings”, and because Bitcoin is hard-coded these problems are
not easy to resolve. These operational problems led to the creation of Alt-Coins.
I explain in the next chapter what operational problems Bitcoin faces and how Alt-Coins hope to
resolve these issues.
Chapter 5: Alt-Coins & Why We Need Them
In this chapter I will introduce you to Alt-Coins and we will explore the flaws in Bitcoin which led to
the creation of Alt-Coins.
What is an ‘Alt-Coin’?
An Alt-Coin is an alternative Digital Money to Bitcoin; Bitcoin being the first widely-accepted
and most valuable form of Digital Money.
Why do we need Alt-Coins?
With all of the good that Bitcoin offers, there are some fundamental flaws with the system.
There are three MAIN flaws with Bitcoin:
Speed of Transactions
Ever-growing size of the Block Chain making mining uneconomic
“Growing” supply of coins
Speed of Transactions:
As explained in Chapter 1, Bitcoin is very quick to send to other users, but can take anything
from 10 minutes to an hour to actually become spendable and accessible for the recipient or
recipients system.
Some merchants require the Block-Chain to “confirm” the transaction multiple times, i.e. in
multiple concurrent blocks, before they will confirm the transaction on their own systems. For
instance some merchants may accept the transaction with only one confirmation (1 block) which is
approx 10 minutes, whereas other merchants may want multiple confirmations before they accept
the payment as “officially received” on their own system.
Even with only one confirmation (approx 10 minutes) this still makes Bitcoin unviable for
“every-day” use. Imagine going to a coffee shop and paying with Bitcoin, by the time the coffee shop
receives your Bitcoin (10 minutes), your coffee would be cold.
Bitcoin was coded for the blocks to take approximately 10 minutes to process, so this cannot
be easily changed.
Ever-growing size of the Block Chain Ledger making mining uneconomic:
As explained in Chapter 2, the Block Chain is a ledger that shows every transaction ever
made; this is how Bitcoin ensures network security and protects the system against counterfeiting
and fraud.
Unfortunately the Block Chain ledger storing every transaction ever-made means that the
actual size of the ledger is growing, and as the block chain grows larger it takes more processing
power to actually process the transactions.
With such a large and difficult ledger to process every 10 minutes, the network is becoming
slower, and without the addition of new miners to the Bitcoin Network the network will eventually
take even longer than 10 minutes to process new transactions and with the expensive costs of the
specialist equipment the risk over investment of hardware is uneconomic for new miners to join the
One option that miners may use to increase their chances of breaking even or profiting from
the risk of purchasing expensive equipment is to increase transaction-fees. Miners could potentially
“reject” or “refuse” a transaction if the sender has not set a suitable transaction fee (or commission),
meaning transactions with no, or very low fees, may take even longer to process. We are still talking
very low costs, nowhere near the fees that credit card operators or banks charge, but small cost can
add up quickly.
“Growing” Coin Supply:
You already know from Chapter 2 that there will be a total, pre-set number of Bitcoins (21
million) by the year 2136, so when I say “Growing” coin supply I am not suggesting that there will be
more than 21 million because this is coded and will not change.
NEW Bitcoins are being mined every 10 minutes, as of July 2015 (time of writing this book),
there are currently 14.5 million Bitcoins in circulation, so when I talk about a growing supply of
Bitcoins, I simply mean that not all 21 million coins are currently in circulation. Between July 2015
and ~2136 the number of Bitcoins in circulation is set to increase by just over a third of the existing
coins in circulation.
With the current block reward of 25 Bitcoins per block, just over 1.3 Million new Bitcoins are
released into circulation every year. Miners need to sell the Bitcoin they mine in order to afford
overheads, such as equipment, electricity, maintenance etc, so in order to simply maintain the
current price of Bitcoin (around $250 to $300 per Bitcoin) between $300 Million to $400 Million USD
needs to be spent on purchasing Bitcoin every year just to “pay-off” the miners, otherwise the price
of Bitcoin is forced downwards as miners sell the new Bitcoin they receive from maintaining the
To most people the above figure sounds rather high, especially when you consider the small
percentage of the world population that currently uses Bitcoin (estimated to be less than 5% or
somewhere around 365 million people), but as Digital Currencies becomes more widely accepted
around the world this figure is a very small drop in a very large ocean.
Estimated figures show that between 2010 and 2013 the Gross World Product (GWP) was
between $75 and $85 Trillion USD per year, so hopefully when Digital Currencies are a more widely
accepted form of payment throughout the world, the value of these Digital Currencies will also
increase if they are used to make transactions instead of FIAT currencies.
How to solve Bitcoins shortcomings;
In order to overcome Bitcoins flaws that I have listed and explained above, some developers
have created new Alt-Coins, these consist of alternative algorithms that are far more efficient and
quicker for processing transactions and require far less computer processing power than that used
for Bitcoin.
These new algorithms aim to reduce the costs of mining, speed up transaction times and in
some cases completely alter how miners process transactions whilst still keeping the integrity of the
network and security against counterfeiting and fraud.
Speed of Transactions
The actual speed of transaction is based on the coins coding which specifies how often
blocks are processed. This can be set by the coins developer at the coding stage and can be set to
anything from a couple of seconds to several minutes.
Growing Coin Supply
Some developers have created coins where the entire supply is released in a very short timeframe, or where coins are “pre-mined” and then sold as a set-rate via exchanges by initial public
offering (IPO). In some cases this removes the requirement for conventional miners and also helps to
give coins a pre-set value when based on the price of the IPO.
A Different Way to Process Transactions
Some Alt-Coins have been designed in a way to be “hardened” against specialist equipment.
The Networks and processing of transactions still run in the same way as Bitcoin, i.e. individuals
running software on computers, but they use new types of algorithms, or coding, different to that
used by Bitcoin. They have been built in a way that only specific types of hardware can be used.
Some still use specialist hardware whilst others are “locked” to only allow computer processors or
graphics cards; this allows more miners to join the network and still allows the mining process to be
cost effective for those miners, meaning more miners are willing and able to join the network.
Some Alt-Coins offer a reward system for users who join the network and support the coin;
this is called Proof of Stake (PoS). Basically each user of the Alt-Coin has a software wallet where
coins are kept. This is installed on the user’s device, Computer, Smart Phone, Tablet etc. Each
software wallet has a built-in miner.
These wallets with built-in miners process transactions in the same way any other miner
processes transactions, but as each user of the coin has a wallet, there are far more miners in the
network and thus transactions can process faster with the “power” requirements being spread
across all of the users.
As a reward for using the wallet-miners the developers provide a reward to the users
(through the Alt-Coins coding). The reward is in the shape of interest on the coins held in the users’
wallet. For example, assume you have 100 coins in your wallet, and the coin has been coded to
reward users 2% annually. If your wallet is open 24/7 this would mean you would be rewarded 2%
on the coins you hold in your wallet.
The speed of transactions vary from one Alt-Coin to another, but generally can be anything
from a few seconds to a few minutes for transactions to complete, and as the network is maintained
by more individual users the process of checking transactions is faster and less energy-hungry than
Bitcoin and therefore less expensive to maintain the Network as a whole.
So Should You Forget About Bitcoin and Just Buy Alt-Coins Instead?
There are simply too many alt-coins to choose from and quite frankly most of them will
never become valuable enough per coin to actually trade in the real world. So you could invest time
and money into one Alt-Coin only to find it loses value over time.
Where Bitcoin can be considered the “Gold” standard when it comes to Digital Currency, AltCoins can be seen as a “Silver” option.
As with Fiat Currency and Gold, when the economy looks bad investors start to move Fiat
currency into Gold and vice versa. The same can be said for Digital Currency, Bitcoin is more
established than Alt-Coins and therefore it can sometimes be “safer” to hold your investments in
Bitcoin rather than Alt-Coins. Some traders actually treat Bitcoin as a store of value rather than other
commodities which we have seen in recent months with Greece’s economic problems and Chinas
stock market down-trend.
There are currently a huge number of different Alt-Coins that have been developed (some
would say too many). Currently listed on are 606 individual Alt-Coins, which is
significantly more than the total Fiat tenders used for the whole world.
Some of these Alt-Coins have done very well whilst others have not. Litecoin for instance has
been considered to be “Silver” to Bitcoins “Gold” for a very long time. Litecoin has a Total Market
Value of around $150 million USD compared to Bitcoins current Total Market Value of $3.4 Billion
USD, whereas the Alt-Coin “Selfiecoin” (SLFI) has a Total Market Value of just $300 (and yes that is
an actual Alt-Coin).
As you can see if you look at there are a lot of coins
that developers have made and used ridiculous names, such as MileyCyrusCoin (no longer listed as
of July 2015, but at the time of starting this book this was actually listed and valued at around $12
market value for all coins). The fact that it is no longer listed is not a surprise, but is a good example
of how Alt-Coins can be simply worthless over a short period of time.
Coins such as these will simply never have main-stream adoption by real investors or any
market use outside of the crypto-community. Really, who wants to own MileyCyrusCoin and what
company or shop would accept such a payment?!
How Do You Choose a Good Alt-Coin to Invest In?
If only it were that easy. I would love to say right now, just put everything you own into
“RANDOM NAME COIN”, but it is just not possible.
Some new Alt-Coins have teams of dedicated coders who work relentlessly in order to
improve Crypto-currencies as a whole and possibly rival Bitcoin itself.
Other alt-coins have individual “bedroom” coders who see making their own coin as a
possible “get rich” scheme with the intention of mining from the start with little or no other miners
on the network and then sell the coins they mine as soon as they have any value and leave the coin
in the dirt.
Developers usually create and release a new coin with a road-map of their plans for the
future, a list of ideas and promises that they wish to achieve. Investors and speculators make a
decision to either trust these developers or not, and most “traders” simply see new alt-coins as a
gamble akin to trading in ‘blue-chip stocks’. Purchasing at a very low price in the hope that the
developers or company will make good on their “Road-Map” promises and that the new alt-coin will
find a real-world platform in which to exist and in so doing gain value for profitable returns.
Trading can be very profitable due to volatility of the trading markets and with new coins
you can usually pick up a good percentage of the total coin supply for very little cost, but as the
markets are very volatile it is equally as easy to lose money if or when the coin crashes in price and
you are left holding a large supply of coins with little to no value.
With Alt-Coin trading there is sometimes market manipulation and impatience from daytraders that can have huge effects on the markets.
When an alt-coin is slow to move in price or developers go off radar for more than a few
hours we tend to see manipulation of markets and slanderous accusations (usually false) towards
developers of coins, which can directly influence the value of alt-coins due to low volume trading
that some new coins tend to see. In some cases we may see as little a few USD’s being traded on any
individual coin, and in some cases we see hundreds of thousands of USD’s being traded in short 24
hour period, so when compared to a Foreign Currency (FX) market where several Trillion USD’s are
traded daily it is easy to see how markets and charts can be manipulated.
Unfortunately there is usually no easy answer to which coin you should invest in due to the
volatility of markets and manipulation that can take place. The best advice is to invest in an already
established alt-coin with a good track record, but as with stocks and shares, the opportunity to “Buy
Low and Sell High” has already been missed. This does not mean profits cannot be made by buying
into already established coins, there are always fluctuations in prices but you must take care to find
the best entry point into any Alt-Coin as you would with Stocks or FX markets. Returns will be lower,
but so is the overall risk to your investment. The one thing you must do when trading – DO YOUR
The next section of this book focuses on Alt-Coin trading.
Chapter 6: Trading Alt-Coin on Trading Exchanges
In this chapter we will be looking at trading Alt-Coins on Trading Exchanges. It is advisable to learn
about trading before you actually “Go Live”. There are some useful links in this chapter to get you
started on trading.
Intro to Alt-Coin Trading.
Trading Alt-Coins is very similar to Trading Foreign Exchange (FX) Currencies. In FX markets
you trade one currency for another, and with Digital Money we trade Bitcoin/Alt-Coins. Some
exchanges have more trading pairs such as well-known/well-established Alt-Coins against other AltCoins, as well as direct Fiat to Altcoin markets, however these tend to be less popular and therefore
the volumes are lower.
There are several exchanges where you can trade Alt-Coins against Bitcoin or Alt-Coins
against other Alt-Coins. I detail below the most popular exchanges for Alt-Coin trading and a step-bystep guide(s) for creating and funding your trading account(s) so you can get started with trading.
Each exchange is unique. The User Interface (UI) changes from one platform to another and
each exchange lists and delists several Alt-Coins as they see fit, usually listing new coins when there
is a lot of hype or trading volume is seen/expected to be high. These exchanges earn their money
from the very small fees applied to trades that are made through the exchanges, so it is in their best
interests to list new coins quickly when there is hype about certain coins and they tend to delist
coins after weeks of little to no trade volume.
Research Before Trading.
As mentioned in the last chapter, there are currently a very large number of Alt-Coins on the
market to choose from. Not all Alt-Coins are listed on every exchange and some new coins are not
listed on any exchanges at all. Not all coins are worth investing time or money into and
unfortunately I cannot advise you what coins are and are not worth your time and money, this is
something you have to learn and choose for yourself.
I suggest going to which is where MOST AltCoin Developers announce new Alt-Coins and their intentions as the developers of these coins.
Unfortunately not everything that is said can be trusted, by Developers or other users. You
must “Do Your Own Research” (DYOR) and make up your own mind as to whether you trust the
things that are being said or not. If in doubt, it is best not to get involved with trading that particular
Alt-Coin. It is better to miss the boat completely than get onboard before it sinks.
Learn The Basics Before Trading.
There are some extremely good introductions and guides online for trading; therefore I will
not be covering actual trading tactics, indicators or technical analysis in this book. I will however
direct you to a very easy to use and interactive website where I learned the basics of trading.
The (free) Beginner’s Guide to Forex Trading; which you can find at BabyPips:
I also recommend signing up for a free FX markets DEMO account at which you
can use to test out what you learn from BabyPips website in order to get some practice without the
risk of losing real money.
Most of the information you can learn through the BabyPips school can be applied to
Crypto-Currency trading, however keep in mind that FX Markets average daily trades is around $3
Trillion per day and with Alt-Coin trading volumes are FAR lower, therefore market and chart
manipulation is relatively easy to achieve with Alt-Coin markets if you have the capital to start with.
This simply means that on low-volume coins, charts cannot always be trusted and Technical Analysis
does not always work as it does with high-volume markets.
Learn the Lingo and Trading Terminology; Satoshi, SAT(s) or PIP(s):
In FX trading, the decimal places of the value of a currency are called PIPS. As value
increased the “pips” go up and as value decreases the “pips” go down.
With Bitcoin and Alt-Coins, the decimal places are called Satoshis, or SAT(s) for short. The
name comes from the original developer of Bitcoin, Satoshi Nakamoto.
Before you start trading Digital Currencies you need to know how the Satoshi’s work and
how the decimal places equate to Fiat currency.
Bitcoin (and Alt-Coins) can be divided to 8 decimal places.
1 Bitcoin can be shown as 1.0000 0000
You could send a Bitcoin transaction as low as 0.0000 0001 Bitcoin.
0.0000 0001 is referred to as One Satoshi, or One SAT.
Going from right to left;
x.0000 0001 is One Satoshi
x.0000 0010 is Ten Satoshi
x.0000 0100 is One Hundred Satoshi
x.0000 1000 is One Thousand Satoshi
x.0001 0000 is Ten Thousand Satoshi
x.0010 0000 is One Hundred Satoshi
x.0100 0000 is One Million Satoshi
x.1000 0000 is Ten Million Satoshi
The way in which you refer to the above is a personal preference.
Generally speaking, I say SATS up until about x.0010 0000 SATS (100 Thousand) but when we go up
to x.0100 0000 I refer to the number as Bitcoin again.
x.0100 0000 I would say x.01 Bitcoin rather than One Million Satoshi but again, this is a personal
preference and there is no real right or wrong way.
The actual FIAT value of Satoshi(s) can be worked out by taking the Bitcoin amount and multiplying it
by the FIAT Cost of Bitcoin, i.e. (BITCOIN VALUE) x (FIAT COST OF BITCOIN.
Today Bitcoin costs $280 per Bitcoin, therefore;
0.01 x $280 = $2.80
0.159 x $280 = $44.52
Although I am from the United Kingdom, I tend to refer to and trade in USD price of Bitcoin, this is
simply because most exchanges trade in USD’s and the price is generally more accurate at any given
Alt-Coin Exchanges:
The following is a short-list of the most popular Alt-Coin exchanges in terms of trading
volume and user interface usability.
There are other exchanges you can use, but volumes are generally very low compared to
these exchanges.
The signup process is extremely easy for all of these sites and none of them required any
level of personal information in order to open an account and start trading.
When you have an account, all you need to do is send Funds to the account using the Bitcoin
(or Alt-Coin) wallet addresses that you will find in your account or wallet settings on the actual
The number one priority with Alt-Coin exchanges is security. Accounts can be hacked and
coins can go missing. The exchanges generally will not be able to do much in terms of
reimbursement and take very little responsibility for such issues. Therefore it is HIGHLY
recommended that you use 2 Factor Authentication (2FA) where possible (ALL of the exchanges
listed here have 2FA options) and when possible move funds off of exchanges and to a secure wallet
on your computer or mobile device.
Learn to Read the Order Books: Buying and Selling:
Buy Orders / Buying Order Book:
The “BUY Order Book” shows the number of coins and the price that other users want to pay
for coins.
If you have coins to sell, you can click on the orders on the buying books and then “sell”
immediately to other users at the price they have set as the price they are willing to pay for coins;
this is called a “Market” order.
You must take note of the amount of coins on the orders; you cannot sell 1000 coins if the
order is only for 10. If you do click on an order for 10 and try to sell 1000, the order will complete for
just 10 and the rest of your 990 coins will then appear on the SELL Order book. You can cancel an unfilled order at any time but the already filled orders are complete and not reversible.
Most importantly, you must make sure you are happy with the prices, if you want more
Bitcoin for your Alt-coins, then do not sell them to the buy orders that are on the books, and either
wait for someone to put in a higher Buy Order and then sell into their order, OR put your coins for
sale on the “Sell Orders Books” at the price you want to receive for your coins.
You can also make a “Limit Order” on the buy books by entering how many coins you wish to
buy and at what price you wish to pay, then if someone else wishes to sell their coins to you they can
click on your order and sell to you immediately.
Sell Orders / Selling Order Book:
This shows the number of coins and the price that other users are willing to sell their coins
for. These are users who already have an alt-coin and they wish to sell the coin in exchange for
As a buyer, you can either click on the selling orders and then click “buy” to purchase the
order immediately (Market Order) or if the price is too high you can put in a buy order at a lower
price and hope that another user will sell their coins to you at the price you would like to pay (Limit
Understanding the Numbers on the Order Books:
The below is an example of a real trade on a real trading exchange:
To clarify what the above means;
The “Ask Price” is the price in Bitcoin (Satoshis) that another trader has decided they want to sell
their coins for and has listed them “For Sale” on the exchange. This is the price “per coin”.
This user wants to sell a total of 26388.45107609 Alt-Coins for 0.00 019 009 SATS per coin.
The total Bitcoin for the order would be 5.0162 Bitcoin.
You can work out the Bitcoin cost for the coins by multiplying the number of coins by the Satoshi
Price of each coin.
Bitcoin Price = 0.00 019 009 (SATS per coin) and the number of Alt-Coins is 26388.45107609.
0.0 019 009 x 26388.45107609 = 5.0162 Bitcoin
You do not have to purchase the whole order, so if you only have 2.85 Bitcoin, you can work out how
many coins you could purchase by reversing the equation.
2.85 Bitcoin divided by 0.00019009 Sats per coin = 14992.8981 Alt-Coins.
So for 2.85 Bitcoin, you could purchase almost 15,000 Alt-Coins.
Closing thought on trading;
That’s it in terms of “How and Where to Trade”. Now you need to educate yourself in trading so you
can learn to spot when to enter/exit trades and research different Alt-Coins so in order to find “good”
coins to either trade for short term or invest in for long-term returns.
Keep in mind, trading can be fun and profitable, but be prepared to lose money as well, not every
trade will go the way you think or hope it will and sometimes you may end up down on a trade.
Before trading Alt-Coins, I really would advise learning at lease the basics of trading FX markets from
Babypips website and also open a Demo trading account for FX markets. As I’ve already said, not all
of the chart reading and technical analysis you will learn can be used for Alt-Coins because the
markets are far smaller than FX markets, but if you know the basics it will help you as a trader, and
trading on a Demo account will show you just how quick and easy it can be to lose money as well as
gain it.
Only trade what you can “afford” to lose and keep in mind it is usually not a great idea to put all of
your money into any one individual coin because the markets with Alt-Coins can be volatile.
Closing word from the Author;
To my knowledge no one has really attempted to educate people outside of the already existing
crypto-community about Bitcoin or Digital Money, at least not on a large-scale.
The main reason I decided to write this book is because I have spoken with a lot of people over the
past couple of years who are very enthusiastic about Digital Money, but when asked to explain
Digital Money to their friends or family they found it hard to put across all of the points in a coherent
manner, usually bombarding their ‘audience’ with too much information or presenting the
information in a way that makes it seem like Digital Money is just “fake internet money”.
There are other books similar to what I have written that explain Bitcoin, but in the ones I have read
they are either over-technical, not written in a way that is easy to understand if you are not
somewhat computer literate, or lacking certain information and guides in an attempt to over-simplify
things, to a point where Digital Money seems almost mythical and unsuitable for use in the real
I have found that people who are not really “into” computer tech or gadgets feel that Bitcoin is just a
fad and not something they should “bother” themselves with. So I wanted to present all of the
information in a format that people can sit down and read at their own pace, laid out in a way that
the information is easy to understand in bite-sized pieces, where one point leads onto the next until
the reader understands Bitcoin in its entirety and hopefully even those who are not “into” computer
tech or gadgets will also understand that Bitcoin is simply a form of money that can be transacted in
a more efficient and less expensive manner than our current Fiat currencies.
I hope that as you are reading this, you now fully understand Bitcoin and I hope that you have found
my book to be educational and easy to understand. If you are now as enthusiastic about Bitcoin as I
am, please tell your friends and families about Bitcoin and Digital Money so that they too can
educate themselves. By sharing the information we have, we can help to improve understanding of
Digital Money and hopefully speed-up the acceptance of Digital Money around the world.
Some people will still not understand how Digital Money can and will change the economic and
monetary systems that we use today, others will only understand when they see their friends and
family around them using Digital Money on a daily basis. Some people will simply never understand,
no matter how the information is presented to them and to those people I say just keep in mind that
Credit Cards as we use them today only came about in 1966 and Debit Cards in 1987 (UK), and now
almost everyone in the developed world has plastic in their wallets.
I believe it really is just a matter of time before the masses realise that Bitcoin and other Digital
Monies are here to stay.
I hope you have found all of the information in this book helpful, and hope that your new found
knowledge helps you in the future.
David Board
David Board, Author of Bitcoin, ‘Digital Money’ Explained
Contact Information
Email Address:
[email protected]
@BoardDavid (
Referral Links and Wallet Addresses
Coinbase Referral Link:
Coinbase Account Name:
Coinbase Account Email:
[email protected]
Software Bitcoin Address
Bleutrade Alt-Coin Exchange
The information in this book is intended for educational purposes and I have made every effort to
ensure that the information is correct at the time of writing.
The technology involved with Bitcoin and other forms of Digital Currency is rapidly changing and
therefore the information found in this book may be less accurate in the future than when written
and is subject to the changes with the technology involved.
Please be responsible and careful when setting up accounts and when trading, selling or buying
digital currencies, be it with companies, exchanges or individuals.
I do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption
caused by errors or omissions, whether such errors or omissions result from negligence, accident, or
any other cause.
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