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Learn The Bitcoin Rabbit Hole  

This is chapter 7 of a 10!


There’s only three ways to get bitcoin:

  • Earn bitcoin
  • Mine bitcoin
  • Buy bitcoin

Earn Bitcoin

Our absolute favorite way to get bitcoin is to earn it. Maybe the company you work for is willing to pay your salary in bitcoin or even a smaller amount like your annual bonus?

If you have an e-commerce store, you can accept bitcoin as payment by using a tool like Coinbase Commerce or BitPay.

There are also services like Fold and Lolli which pay you rewards in bitcoin instead of points like credit cards do. Getting bitcoin back as a reward is fun because it feels like you’re getting free bitcoin!

One of the many benefits of earning bitcoin vs buying it is that by earning small amounts over time you’re dollar-cost-averaging your way into owning bitcoin without having to focus on buying at the perfect price.

Mine Bitcoin

Astronaut Mining Bitcoin

When we learned about how Bitcoin works, we learned that miners receive block rewards in exchange for securing the network. Mining bitcoin is definitely for the more technically savvy bitcoin user as it requires setting up nodes and mining equipment. That being said, mining is one of the only ways to get your hands on “freshly minted” bitcoins (via block rewards) with no transaction history. Some people like that…

You would need a massive amount of mining equipment to win the mining lottery on your own, so most miners join a mining pool. Mining pools allow miners to “pool their resources” evenly distributing the rewards based on the amount of processing power they contribute to the group.

You’ll also stumble into cloud mining and ways to invest in other people’s mining operations. The overwhelming majority of cloud mining operations are scams and should probably be avoided.

Buy Bitcoin

The most common way to acquire bitcoin is to buy it via an Exchange or a Crypto Bank. Crypto Banks charge a fee for selling directly to you and exchanges earn a smaller fee for matching buyers with sellers.

In 2018, all the major crypto banks/exchanges were pressured by governments to implement AML (Anti Money Laundering) and KYC (Know Your Customer) policies. This means that in order to exchange bitcoin, you’ll be required to provide lots of personal information. When buying via these exchanges, your identity will be “connected” to the bitcoin address you withdraw to, meaning they can tie you to all future transactions of those coins on the blockchain.

There’s a few different places you can buy bitcoin each with various pros/cons:

Crypto Banks

  • ✅ Good for small amounts
  • ✅ Fast and easy to use
  • ❌ No access to your private key
  • ❌ High fees
  • ❌ Lots of personal information required
  • Examples: Coinbase, Crypto.com, Cash App

Centralized Exchanges

  • ✅ Good for large amounts
  • ✅ Lowest fees
  • ❌ No access to your private key
  • ❌ Lots of personal information required
  • Examples: Coinbase Pro, Kraken, Binance

Decentralized (DEX) & Peer-To-Peer Exchanges

  • ✅ No personal information required
  • ❌ Slow
  • ❌ Higher fees & higher prices
  • ❌ Risk of being defrauded
  • ❌ May be illegal in some jurisdictions
  • Examples: Bisq, BitPanda, Localbitcoins

To get started, we recommend buying small amounts of bitcoin slowly over time from Crypto Banks and withdrawing to a wallet where you hodl the private key.

Never keep your bitcoins on the exchange! Simply withdraw to your wallet when you buy, and deposit to the exchange when you’re ready to sell. Why bother using Bitcoin if you want someone else to hodl onto them for you?

As you become more and more comfortable moving bitcoins around, you can open an account with a larger exchange to take advantage of the lower fees.

Decentralized Exchanges (aka Dex) and Peer-To-Peer Exchanges are more advanced and often times lead to scams and problems. These are typically not recommended except for in extreme cases.

Next up: Bitcoin Forks

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