Fastest way to buy bitcoins

BC changer

Currently, the safest, fastest and easiest way to purchase Bitcoins is by using coinmama.com Western Union & MoneyGram accepted.

This is a breif overview of how to buy Bitcoins using PayPal® credit.

Most major Bitcoin exchanges do not allow funding through Paypal. I'm yet to find anywhere that reliably sells Bitcoins using PayPal®. This is largely due to repeated cases where someone pays for Bitcoins with Paypal®, receives Bitcoins then fraudulently complains to Paypal® or their credit card company that they never received the goods. All too often Paypal sides with the fraudulent buyer, understandably most Bitcoin exchanges will no longer allow this method of funding due to the high risk of fraud.

While fraudulent PayPal® transactions may occur, there is also another major reason selling Bitcoins via PayPal® is not widespread. Some Bitcoin sellers have had their PayPal accounts frozen by PayPal®. From what we understand PayPal has taken this action because they consider Bitcoin to be a "ecurrency" (e.g. similar to PayPal), and depending on which PayPal® department you speak to is against PayPal's policy to sell other e-currencies using PayPal. According to coinpal's founder "Someone inside PayPal specifically decided that Bitcoin was a big enough risk that it should be prohibited". PayPal frowns upon alternative currencies.

Buying Bitcoins from individuals using PayPal® is still possible, but requires mutual trust. We encourage Bitcoin sellers to limit PayPal transactions to trusted bcchanger.com buyers only, sellers should be aware of the buyer's feedback scores before accepting PayPal® transactions.

Fastest Way to Get Bitcoins

The fastest and easiest way to buy Bitcoins is by looking for sellers who accept cash deposit at  Local Bitcoins .  Go to this site, create an account, log in, and go to the  Buy Bitcoins online in the United States with Cash Deposit  section (or to your relevant country's site), and find a seller who is asking for a cash deposit to a nearby bank.

Once you find a seller who has a price you like with a good trust rating at a nearby bank, and click on [Buy]. Then enter the dollar amount and click [Send Trade Request].  At this point, the bitcoins you are buying are deducted from the Seller's account on Local Bitcoins and placed into Escrow  for 4 hours.

You will see information or receive an e-mail with the sellers' name and account number at that bank. Once you have this, go to the bank with your cash.  Get a deposit slip if needed and fill it out with the account number (some banks just have the teller take your account number verbally) and bring it to the teller.  Tell the teller you want to deposit cash into the seller's account.  Hold onto the receipt for the cash deposit from the teller as proof that you made the deposit in the unlikely case of any dispute.

Go back to your computer / phone and mark the transaction on Local Bitcoins as [Deposit Completed].  This will automatically notify the seller that you've completed your deposit.  They will log onto their on-line banking website, and confirm that you made the deposit.  Because the trader may be accepting multiple trades at the same round dollar amount, it is a best practice to add a few cents to the deposit so that it is a unique dollar amount and less likely to be confused with other depositor's deposit.

How to buy and sell Bitcoins -- Part 2: Practical

In this two part series I'm looking at the practicalities of buying and selling Bitcoins.

In Part 1, I looked at the theory of Bitcoins

In Part 2 (this part), I'll take you through how I bought and sold them.

Off we go

As I mentioned in Part 1. "mining" is no longer a practical way to get into Bitcoins because of the requirement for specialised hardware and because it's very difficult for small scale operations to get any money to drop out in that way.

The easiest way to get started is to send some "proper" money to a Bitcoin exchange.

There are a few of these, the most famous being Mt. Gox. I used Bitstamp -- my method of selection being "random". I went to Bitcoin Charts to find a list of exchanges, and went through a few until I found one that made me feel in some way vaguely confident.

You can't get started on this journey with a credit card -- you need something more like hard cash. I had to phone my bank to incept a wire transfer to Bitstamp's bank. This happened to be a bank located in Slovenia.

HOW TO BUY BITCOINS NOW

The problem with credit cards is that they can be clawed back on the lightest suspicion of fraud. Everyone involved wants Bitcoin to feel and act like cash -- if you have Bitcoins, the premise is that they are definitely yours. (Plus, if you could use credit cards, the whole system would be absolutely slapped to pieces by credit card fraud.)

Thus the first step on this journey was to wire EUR 200 (USD 260) to a company I'd never heard of in a country I'd never been to. But I guess it's my problem that I'd never been to Slovenia.

This did, I should say, work and within a couple of days my Bitstamp account showed some USD.

My Bitstamp account showing a USD balance as a result of the wire transfer.

Next step was to buy some Bitcoins. I spent my whole allowance, and Bitstamp took a small commission. Notice the amount in BTC. This isn't really a system where you buy round numbers of units -- everything is done to eight decimal places.

Placing an order to buy Bitcoins.

And there we have it. The trade went through almost instantly and I had some Bitcoins.

My Bitstamp account now showing a Bitcoin (BTC) balance.

So now I had to have something to do with them. In order to spend them, you have to download them to a wallet. I used Bitcoin-Qt. for the simple reason that this is the one that is listed on the official Bitcoin site .

Wallets are slightly odd things in that in this era of put-everything-in-the-cloud, this is very much a "device local" arrangement. You end up with a "wallet.dat" on your device that contains the references to your Bitcoins. Lose the wallet, lose the Bitcoins.

Sending money requires an address. Each wallet comes configured with one address, but you can create as many addresses as you like. This is to get around some of the issues with regards to lack of anonymity -- creating multiple addresses against one wallet supposedly makes it harder to trace transactions back to real people.

Anyway, I initiated a withdrawal from Bitstamp and after some time, the money appeared in my wallet.

The money now showing in my local wallet after being transferred from my Bitstamp account.

I should stress "some time". This actually took ten hours. The wallet has to synchronise itself with the Bitcoin network. This seemed like it too an oddly long time -- I'm not confident it would always take this long.

Part of the issue appears to be that every wallet downloads the entire transaction history for every Bitcoin transaction, ever. That's useful, I suppose, upon the eventual coming of the zombie apocalypse. If you happen to have a wallet on your laptop, you're in a position to reboot the world's Bitcoin currency should you be asked to do so.

The next thing I tried was sending the Bitcoins somewhere. This time I used Mt Gox.

Like when I transferred money from Bitstamp to my wallet, sending money to Mt Gox requires an address. All of the exchanges provide for funding through Bitcoins. I plugged the address into the wallet and transferred my entire balance.

To increase anonymity on the system (remember, the system is not anonymous although people tend to assume this) wallets have multiple identities. The idea is that you create separate identities for each party that you want to work with.

This worked fine, but it also took hours. As discussed in Part 1. all of the transactions have to be mashed up into this giant distributed transaction log and this process takes a long time. However, eventually it did appear in my Mt Gox account.

(I must say though, this is a little stressful as it disappears from your wallet immediately.)

Buying things

In Part 1. I touched on the issues around actually buying things. In the first instance, there is a lack of merchants out there that accept Bitcoins. (It would be nice if Amazon accepted Bitcoins, but they do not.)

I did want to buy something as part of this guide -- although this was tricky. Most of the small merchants don't peg Bitcoin prices to a proper currency. This results in companies that set their prices up on a Monday, but by Friday the market has moved so much the prices are so adrift from the underlying currency that the whole thing falls apart.

BitcoinStore is one of the more advanced merchants with systems that do peg prices to USD. So I bought a mousemat and shipped it to one of the ZDNet editors. (They wanted $50 to ship a $3 mousemat to the UK.)

BitcoinStore uses a system called BitPay to handle the Bitcoin payments. You can implement this on your own site if you like.

It works just like you'd expect. You're given an address to send money to. All you need to do is go to your wallet and send the money.

Checking out of BitcoinStore. All I have to do is ask my wallet to send Bitcoins to that address.

After a short while, the money transaction processes through. On this transaction log I took some Bitcoins out of my Mt Gox account into my wallet and sent it from there. Technically I didn't need to do this -- I could have sent the Bitcoins from Mt Gox directly to BitcoinStore through BitPay.

The transaction log in my wallet showing various transactions, including payment to BitcoinStore.

Conclusion

Once you get your head around it and set-up, working with Bitcoins is actually very easy.