Start with Bitcoin. It sounds so easy, but often you soon find out that there is more to it than you thought. In the first part of this two-part guide, we explained the preparations needed to get started with Bitcoin. In this part you will learn the basics about using Bitcoin, buying and selling and how to trade with it.

Receive & send

Once you have chosen a type of wallet, installed a wallet application and created a bitcoin wallet, you are ready to start. You can now consider buying a little bit of bitcoin and try it out. Never do that with a large amount the first time, but test it out with a little so that mistakes are not too costly.

To receive bitcoins, you generate a bitcoin address ( receive address ) with your wallet application. That is a complicated and long sequence of characters, as in the examples below.

Different types of bitcoin addresses (don’t send bitcoins to these addresses!):

• Old (P2PKH): 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa
• Newer (P2SH): 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy
• Latest (Bech32): bc1qar0srrr7xfkvy5l643lydnw9re59gtzzwf5mdq

You provide such an address to the person from whom you want to receive bitcoins. You can reuse bitcoin addresses, but that is not recommended for privacy reasons. Most wallets therefore provide you with a different and unused bitcoin address every time, from which nothing can be traced. That works differently than e-mail, for example, where you always use the same address.

Sending Bitcoins works similarly, but the other way around. You then send bitcoins via your wallet application to a bitcoin address of someone else. The bitcoins you send then come from bitcoin addresses where you have received them before. To make a bitcoin transaction, you pay transaction costs to the bitcoin miners in the form of a miner’s fee . The amount of the miner’s fee varies and depends on how busy the network is. Many wallets offer users the choice to set the miner’s fee, where a higher amount ensures that the transaction is withdrawn faster. In an earlier article we went into more detail about determining the right fee, but on various websites you will find tables and graphs based on which you can estimate the costs.

Bitcoin addresses are error and case sensitive and the transactions are irreversible so be careful. Some wallets support QR codes that can be scanned with mobile phones to make the process easier. If you copy and paste bitcoin addresses, always check that no errors have crept in.

Bitcoin transactions are stored on the blockchain and are therefore publicly available. You can use a block explorer to look up transactions . As soon as a transaction is visible through a block explorer, you know that the transaction has been noticed by the bitcoin network. Depending on the miner’s fee, it will take some time before a transaction is confirmed. The more times a transaction has been confirmed, the more final it can be considered. Usually 6 confirmations are used as a benchmark.

Above: A block explorer provides insight into transactions on the bitcoin blockchain

Buy, Sell & Trade Bitcoins

You can buy Bitcoin in all kinds of ways and different places. There are various companies that buy or sell bitcoins through websites. There are various providers in the Netherlands, but we would of course like to refer you to our own website at www.bitonic.nl.

You enter the amount you want to spend on the website and the bitcoin address on which you want to receive the bitcoins, after which you can pay via iDeal. You will then receive the ordered bitcoins in your wallet shortly afterwards. Selling is done the same way, but in reverse; you will receive a bitcoin address to send bitcoins to and indicate on which account number you want to receive the payment.

Above: Bitonic’s website

Keep in mind that bitcoin companies are required to verify the identity of customers. This can cause a delay with a first order, but is in principle a one-off. Also make sure you buy the right Bitcoin and not another altcoin with a similar name. The real Bitcoin is usually referred to as “Bitcoin (BTC)”. You often have to do the transaction within a certain time due to exchange rate fluctuations. If the transaction is successful, you will receive the payment shortly afterwards in your bank account.

If you have decided to buy a little bitcoin, do not start with a large amount and never invest more money than you are willing to lose completely. Bitcoin is still an experiment and not a guarantee. Therefore, be wise and limit any purchases to the money you can afford to lose. Never spend money that you might need or can’t live without.

To trade

Above: Trading can be done via an exchange, such as BL3P

Some people want to trade with bitcoin. This can be done via a so-called exchange . An exchange is a website where you can create an account, to which a bitcoin address is linked. That is not your bitcoin address, but an address of the exchange’s bitcoin wallet. You can deposit bitcoins into your account via the address, after which it will be added to your account and you can trade with it on the platform.

Exchanges offer many resources to trade efficiently and get the best prices, but for the reasons mentioned above, it is not wise to keep funds with an exchange for an extended period of time. It is safer to only move funds there when you want to trade and not leave them there longer than absolutely necessary.

To learn

Now you are ready to take your first steps into the wonderful world of Bitcoin. However, there is much more to learn and it will be for some time to come.

Bitcoin is still in its infancy and the technology is developing rapidly. New applications are regularly discovered or better or safer ways of using the technology are devised. For example, people expect a lot from the Lightning Network, a new layer on top of Bitcoin that makes lightning fast and extremely cheap payments possible. It just works differently than with normal bitcoin transactions. Other initiatives such as digital tokens or Microsoft’s intended digital identity system may also change how we deal with wallets.

Also, all teething problems are not over yet. Sometimes new vulnerabilities are discovered in software or wallets turn out to be less secure than expected. Moreover, Bitcoin faces not only technological challenges, but also all kinds of social, political and economic ones.

It is therefore good not to sit back, but to proactively keep a finger on the pulse and to stay informed about what is going on. This is of course possible via Bitcoin.nl, or various other websites. There are also many high-quality and educational podcasts worth checking out. The bitcoin community is also very active on social media such as Twitter, Reddit or Telegram.

Part 1 of this guide can be found here. Need more basic information? Then also read our previous articles with Basic Tips for the Bitcoiner or about the Basics of Bitcoin.