This post is for the absolute beginners who would like to buy Bitcoins or get into cryptocurrency but don’t want to mess anything up and lose their money.
This Bare Basics post will use Localbitcoins.com to buy Bitcoin, and I’ve used an example to buy Bitcoins from Pakistan. However anyone in the world can use this tutorial. If you’re not from Pakistan, you can get $10 worth of Bitcoin for free if you buy from CoinBase
In this case I’m going to buy Bitcoins with Rs. 10,000. Obviously you’ll have to pay a little premium on the price of Bitcoin (that’s how the sellers earn), but you might notice the price is a lot higher than what you calculated. That is because at the moment they are charging according to Rs. 123 / USD even though the official bank rate is Rs. 110 / USD. However at the same time you will also get Rs 123 / USD when you’re selling your Bitcoin, so that’s ok then!
The very first step is to go to Localbitcoins.com and register for an account. That’s a fairly easy process. Once you’re done, head over to the following steps:
- Go to the Buy Bitcoins page on Localbitcoins and look at the list of people offering their services
Above you can see the list of people offering to let you buy Bitcoins via a bank payment. By the way, “National bank transfer” does not mean “National Bank Ltd”, it just means any bank in the country. In this list there are a couple of things that you want to verify.
- The reputation and transactions of the seller. E.g. lashari has 100+ successful transactions and a 99% reputation.
- The price offered by the seller. Since we’re buying Bitcoins, we would prefer to have the lowest price possible. Localbitcoins roughly sorts this list by price, I’m saying roughly because its not always sorted like that. In the case of lashari the price per Bitcoin is Rs. 1,949,000 / Bitcoin. Remember you do not have to buy a whole Bitcoin, you can buy a small part of it too.
Also, Localbitcoins will periodically refresh the prices depending on the fluctuations of the price of Bitcoin. The sellers usually tell Localbitcoins how much premium they want to charge.
- The limits of this service. In the case of lashari, you can use this service if you’re buying in the range of Rs. 100,000 to Rs. 2 million.
In my case, I am buying Bitcoin worth Rs. 10,000, so I will go with silk_road174, as that seems the cheapest for the amount of Bitcoin I am buying. Finally click on Buy
- You will now see a screen where you can see the terms of the trade. Go through them carefully. Once you’re satisfied, enter the amount of currency you want to spend, or the amount of Bitcoin you want to buy.
In this case I’ve entered 10000 in PKR. Click Send trade request once you’re done
- Upon doing this, you will get an interface to talk to the seller. Usually they will send you their bank information where you can transfer the amount
Once you get this, you can send the amount to their bank account. While sending, please make sure once you enter their account number, that you see their name. The seller usually sends their account name along with their account number and bank. Make sure the account name you are seeing is the same as the account name they have given you.Remember that once you start a Buy trade request, the seller’s Bitcoins are held in escrow until you mark the payment as being complete or as being cancelled.Once you’ve made the payment, click on I have paid. You will see this confirmation
- Upon confirmation, the seller will verify that they have received your payment. Once they do this (should take a couple of minutes), they will inform you that they have released the Bitcoins.
If you refresh the page, or go to your Localbitcoins wallet, you will see the Bitcoins in your balance
Congratulations, you just bought your first Bitcoins! In my case I got 0.00505978 Bitcoins for 10,000 Rs.
Now you need to know that at the moment Bitcoin transactions are quite expensive. Right now, a normal transaction costs $10 to $30! However if you send your Bitcoins through Localbitcoins, it should cost less because they bundle many transactions together. I sent my Bitcoins to my wallet in this case, which cost me around $4. Still pretty high!
You can leave your Bitcoins in your Localbitcoins wallet if you want, but you won’t have full control of your Bitcoins. Also, it might not be very safe. In the case of Localbitcoins getting hacked, you might end up losing your Bitcoins. This, and for a few other reasons, you might want to move your Bitcoins to your own wallet where it is fully in your control.
What is a wallet? I am not going to go into details about wallets at all, but I’ll just help you store these Bitcoins there.
For web, I like Blockchain.info while for the mobile, you can download Mycelium wallet. They are very easy to use. Once you’re on them, they will give you your very own Bitcoin wallet address. A wallet address is like 1KqvSRNmxoGmGDHLLivZPfeDMxhneLEBKK (that’s one of my addresses btw)
Blockchain.info or your Mycelium wallet will give you your Bitcoin address. Remember, the best practice is to use one address for 1 transaction. So once you receive a transfer on this address, you will automatically get a new address (Blockchain.info or Mycelium will do this for you). You still own the previous address and you can use it too if you want, but its best to use a new address every time. Why? Google it! 😉
To send your Bitcoins from Localbitcoins to your wallet, click on Wallet on Localbitcoins, and make sure Send is selected.
Enter your wallet address in Receiving Bitcoin address and the amount. As you can see, you will not be able to send all your Bitcoins. Localbitcoins will tell you how much you can send. This is the amount that will be left over after subtracting transaction fees.
Once you’ve verified everything, especially that the Receiving Bitcoin address is correct, click Continue. Localbitcoins will do a few security checks to verify things, like sending you a confirmation email or asking for the Google Authenticator code. Once you’ve done that, this will be in pending. You can see the outgoing transaction in the Transactions page (its next to Send Bitcoins, on the wallet page).
In a few minutes, they will have sent your Bitcoins on way to your wallet.
And you’re done! Your Bitcoins safe and sound in your wallet. Oh, and remember to backup your wallet. You will want to see the Backup option in the wallet you’re using. It will be as easy as saving a 12 word code.