The One About BitCoin

Twitter tells me a lot of people are interested in bitcoin. So I'll write this ...

First off. This is written April 2013. It'll be out of date fairly rapidly.

Oh wait, yes and this is aimed entirely at UK folk wondering about all this bitcoin fever.

Onwards!

There's a billion articles out there on "What is bitcoin?"
Briefly? Some mystical Japanese guy had this bizarre idea of how to make a digital currency that might have longevity a few years back. I think he's Japanese. Mythology and all that. Anyway.

It's proving to be secure over quite some time now. Bitcoin is money, pure and simple. If there was ever a target for hackers, bitcoin is it. Many have tried and failed. Mining pools seem to regularly DDOS each other in the pursuit of profit, but when it comes down to "Is my money safe in this thing?" .. Cryptographically speaking ... Yes. It looks like it is. In fact the entire thing is based around ensuring it's own integrity. Go read up on it. It's strange but fascinating!

The problem with bitcoin for UK residents is simply getting bitcoins. You can't use credit to buy bitcoin. This should tell you something. The bitcoin transfer is final and not subject to any kind of fraud or deception. Compared to a UK credit card? Pfft. You could pretend you'd pay for anything with that, and it might not be yours. So nobody will sell you bitcoin (BTC) on credit.

You can purchase via bank transfer on many sites, and if you stick to the legit, well used providers, that's certainly an option, but it's a barrier to casual interest. You can't just "stick £10 in" to BTC, because you'll probably get charged £3 for the pleasure in fees if you do it via bank transfer. That's not a problem at all if you're buying £500 worth, but it's not helpful for getting people to play with BTC as an alternative currency.

For the moment, you're left with LocalBitCoins.com as the most cost effective way of getting a few £ in to bitcoin. But ... Why would you?

First problem. Not a lot of services / products can be bought in the UK with BTC. It's slowly expanding as more people get used to the idea, but it's still new ground for retailers over here. In the USA it makes more sense because even though it's still not many, there is simply more stuff you can buy with it over there.

That might put you off. Try not to let it. It's a case of if more people had BTC and wanted to buy things in BTC, then more people would add it to the website as a payment option. It would barely cost them anything to add it as an option, in many cases the processing fees would be less than a credit card company, but it is a cost in hassle to change a website.

The other main reasons for wanting BTC are: CYPRUS aka. Where can I put my money where some idiot won't take a chunk that's safer than a mattress? Or ... Speculation. At the time of writing, 1 BTC is worth just over £65. It's increasing fast recently. You could just stick some money in to BTC and then sell it again back to £ when the rate rises ... assuming it does keep rising. Hey! Congrats! You just became a Forex trader!

What kind or rise? Well ... This kind ...

There's NO guarantee it will continue to do that!!! It might level out right now for all anyone knows, and it may even crash again like it has previously. That's the fun of it all. It's up to you to go and do your own digging and see what you think is plausible, and how much is risk.

But there's where we are. There's .. oh wait! Forgot the important bit!

My own personal recommendation for a secure bitcoin setup!

First off you need this beasty. That's the basic, bog standard, original bitcoin wallet. One thing it does is downloads the entire bitcoin chain, and this can take a couple of days depending on how you use your computer. (It's all part of the security). Basically you're downloading the entire condensed history of every single transaction that ever happened in bitcoin. Your copy HAS to match every other copy of that transaction history, and if you buy or sell and BTC? That will be recorded in the history, on every single computer that has bitcoin installed. Can we begin to see how this is a little bit secure yet?

The next thing I'd advise you to do is install this beasty! And run it. It gives you yet another wallet on top of the basic bitcoin wallet you already had. Why bother? Because Armory allows you to produce a paper backup record of your wallet that you can restore, with all your BTC still in it, even if your computer mangles every bit of data on the hardrive. Now THAT is one secure mattress! It's also where you start to think ... hang on ... this system is actually more secure for storing my money than my bank is ... and it costs virtually zero.

All you have to do then is remember once in a while to transfer any BTC in your basic bitcoin wallet to your Armory wallet where it's safe.

Why you'd go through all this to play with BTC? Is up to you. I'm just setting out the cheapest ways to get money in to BTC (you'll have no trouble at all cashing it out back to £, Euro or $ at the moment!), and the most secure way to keep it safe.

Andddddd I think I'm done. Mining for BTC is another issue entirely.