As the 'tech' person in my circle of friends and family, 'what is the deal with bitcoin?' is the only question I get more often than 'can you fix my computer?' and 'what is wrong with my internet?' So, I decided to document the set of instructions that I use with my interested friends to get them set up. This is not investment advice and the space moves so fast that this will likely be irrelevant soon enough. But until then, it works and is safe!
Buying and securely storing bitcoin boils down to three key processes:
- Buy bitcoin somewhere
- Create a safe place to store the bitcoin that only you are aware of (a 'wallet')
- Send the bitcoin from step #1 to the place in step #2 (your new wallet)
That's it. There are many, many ways to go about the first two processes and going into all of them would warrant a longer, more boring write up. The instructions I provide aim to find the ideal balance between user friendliness and high security. I follow these same instructions. The only part of these instructions that I would consider a slight inconvenience is needing access to a printer that you can connect to your computer via USB.
The primary mantra to remember with bitcoin and other cryptocurrencies not discussed here is to always maintain ownership of your private keys. If 'private keys' feels scary and unapproachable, I hope to clear it up below.
Let's break down the processes individually.
- A smartphone
- A drivers license or some other valid form of photo ID
- A debit card linked to your bank account
- Access to a computer and printer connected via USB, not wifi or ethernet
Buy bitcoin somewhere
I recommend buying from the Cash app. It is the only non-institutional platform that I know of where users can buy bitcoins without unecessary fees (sorry, Coinbase) while still maintaining control of their bitcoin by being able to send or "withdraw" it to other Bitcoin addresses (sorry, Robinhood).
Here is how to do it.
- Download the Cash app from iTunes or Google Play and follow the in-app instructions on how to set up your debit card / bank account.
- Inside the Cash app, navigate to your profile, click "Bitcoin" in the "Funds" section, and then click "Enable bitcoin Withdraw" in the "Wallet" section. Follow the in-app instructions to enable bitcoin withdraw. It requires you to send Square a picture of your photo ID and then usually within a business day or two they'll approve you.
- Now buy some bitcoin with the Cash app
Create a safe place to store the bitcoin that only you are aware of
The technical term for this is called a "wallet." And with the process outlined below, you would be creating something that is more specifically called a "paper wallet," which is a form of "cold storage."
It is best to follow these instructions closely even though the first few seem weird. Ensuring that no one else can possibly know what your private key is (generated during these steps) is essential to maintaining secure ownership of your bitcoin.
Here is how to do it.
- Visit https://www.bitaddress.org/ and scroll to the bottom of the page. There will be a link to a zip file containing the code for the website. Download it. At the time of this post's writing, the version is 3.3.0 and here is the direct link.
- Close your web browser(s) and disconnect your computer from the internet
- Unzip the downloaded files, browse to the unzipped folder, and click on the file named 'bitaddress.org.html' -- you should see the same thing you see on https://www.bitaddress.org/
- Follow the instructions on screen for generating a bitcoin address. Once complete, you should see two QR codes and a bunch of random characters. One is a bitcoin public address, the other is a bitcoin private key.
- Click on the "paper wallet" tab.
- Once on the paper wallet tab, check the 'BIP38 Encrypt?' box and enter a passphrase THAT YOU WON'T FORGET!!
- Choose how many unique keys/addresses you want and then generate them. I personally choose to hide the bitcoin art but that preference is irrelevant for the matter at hand.
- Connect a printer to your computer via USB (NOT WIRELESS!) and print the page from #10. It should look something like the below image.
Congratulations, you now have a bitcoin paper wallet. If you become serious about owning a lot of bitcoin and plan to use this paper wallet, then do not lose it under any circumstances.
Send bitcoins to your wallet
- Open back up the square cash app and navigate to the bitcoin section of your profile
- Assuming you have been approved for withdrawls at this point, click "Withdraw bitcoin" and choose an amount to withdraw
- Scan one of the address QR codes (not private key QR code) from your paper wallet and the app should ask you to confirm your withdraw to the address you scanned.
- Confirm it.
Congrats! You have just successfull transferred ownership of your bitcoin from "the man" to yourself and now you are the only one who can spend it. Well, technically speaking the transaction needs to wait for a few confirmations from the Bitcoin network before going through but that will happen after about 10 minutes and you'll be good to go.
Turns out that paper is...quite destructible. If you are so inclined you can purchase a steel wallet like these which adds an extra layer of security in the case of unpredictable disasters. Either way, be sure to store your wallet in a safe location.
An update to the Bitcoin protocol has enabled private keys to be generated from something called a "Seed phrase." Without getting too technical, a seed phrase is just a bunch of random words in a row that can be used to generate and retrieve private keys (and thus public addresses) just like we did with https://www.bitaddress.org/. If you want to tinker with this option instead of the raw private key + passphrase option, you can try out this site and follow the same general instructions as above (generate keys and print while offline).