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First Steps Into the Cryptocurrency World
Today I will talk about LocalBitcoins, a peer to peer platform that connects Bitcoin buyers to sellers. Even after two years of watching from the sidelines, witnessing the violent volatility of Bitcoin’s price against the dollar and transforming from a Bitcoin skeptic to a believer, I still had cold feet before taking the plunge. It’s understandable, to say the least.
Besides, where I come from, there are a good number of online scams to beware of so unless you have had a good experience buying items online, you don’t just decide to send money (whether to an exchange company or an individual merchant) and expect to get some intangible coins into your virtual wallet. Plus the existing payment methods and banking regulation require you to jump through hoops discouraging the fainthearted even before they take their first steps into the cryptocurrency world.
However, being an online article writer, I already had a fair experience on a variety of freelance platforms dealing with both genuine clients and scammers. Simply put, I knew the online market had both good and bad opportunities, so I didn’t give up my search to find a reliable Bitcoin exchange online.
LocalBitcoins – A Safe and Secure Bitcoin Exchange
If you are like me and prefer to have some privacy and freedom at the expense of convenience, then you will love what LocalBitcoins has to offer. After trying out a number of approaches (most of which I had written articles about) that required me to give out a lot of private information that I was unwilling to part with, I finally settled on LocalBitcoins (a peer to peer platform that connects Bitcoin buyers to sellers through a secure and reliable escrow service.)
What’s an Escrow Service?
Basically, an escrow service works like a referee between two players. After you confirm payment for the number of Bitcoins you want, the escrow service holds on to your payment and prompts the seller to release the bitcoins to the escrow as well. You will then release the payment to the merchant only after the escrow confirms receipt of Bitcoins from the seller. The seller on the other side will confirm receipt of payment and equally release the bitcoins from the escrow to your wallet.
What I learned with my first experience while using a peer to peer exchange is that;
- You will have to do background checks by yourself to find a reputable vendor. It’s a bit of work but it’s important that you only consider vendors with a high reputation score and a good number of successful transactions.
- Different vendors accept different methods of payment, so be sure to select a vendor whose payment method suits you the most.
- Since you are only buying, keep your account simple and take advantage of the two-step verification feature to increase the security of your account. Also, take time to look at the buying details page to get even more familiar with the process.
- You can easily cancel a trade if the vendor is unresponsive. LocalBitcoins allows you to send them a message that they have to respond to. This way, you get peace of mind making the transaction. Also, check the payment window to confirm the exact amount of funds you have to deposit before the traction is cancelled.
So there I was buying my first Bitcoins and thanks to the Bitcoin network gods, the Bitcoins hit my local Bitcoin wallet within minutes. I have to say I was really lucky since, at the time, the Bitcoin network was growing by the day and tales of people’s transactions taking hours were common.
Needless to say, I was pretty excited to have found a reliable exchange and with my exchange needs solved, my next biggest problem was getting a secure wallet for my Bitcoins. Since LocalBitcoins does not have an insurance policy on digital currencies stored on its wallets, I thought it wise not to leave my Bitcoins in its wallet. After all, it’s a common practice in the Bitcoin community to take full responsibility for your fund’s security.
Getting a Bitcoin wallet
When it came to selecting a reliable wallet, the process was fairly easy thanks to research that I had done earlier reviewing a couple of security features that come with a variety of free software wallets such as Blockchain, Xapos, GreenBits and the rest. You need to choose between a hot and cold wallet depending on the level of security you need for your Bitcoins. Read more about wallets here.
Choosing Between Hot and Cold Wallets
At the time, although I had some skin in the game, I remember getting a bit intimidated trying to understand the difference between a cold and hot wallet. However, the difference between the two is simply that one wallet is online while the other is only available offline. Like a typical beginner, I decided to go with the Blockchain Wallet (a free online wallet with an easy to use interface and a reliable two-factor authentication security level.)
If you are considering investing a lot in Bitcoin, it’s advisable you go for an offline wallet that comes with better security features, but you will have to compromise on convenience when sending and receiving Bitcoins. Trazor and Ledger Nano S are great options.
Sending Bitcoins to my Blockchain Wallet
This part was pretty straightforward. First, I logged onto my Blockchain wallet, went to the “receive Bitcoins” page and copied my wallet’s address. Then I went over to my LocalBitcoins wallet and pressed send Bitcoins where a prompt appeared to paste the address you want to send Bitcoins to.
This time around, after sending the Bitcoins to my wallet, it took a bit of time to reach to my Blockchain wallet taking about three confirmations to confirm my transaction. Together with the transfer fees that LocalBitcoins charges your wallet, you will also have to account for a Bitcoin network transactional fee depending on the network you want to use with higher fees enabling faster transactions.
Well, there you have it, my first ever experience buying Bitcoins. I found a reliable method for exchanging my local currency to Bitcoins with negotiable fees from a reputable local merchant, giving me a clear path to the cryptocurrency world. I found that it was free from headaches caused by the red tape that is common with bank regulations and corporate payment services. If you are a beginner looking to get started in the digital currency world let us know in the comment section how you hope your first experience to be. Also feel free to share this article with anyone that is looking to invest in Bitcoin or other cryptocurrencies. I also use brokers like Coinmama and exchanges like CEX.io and Coinbase but I still like to buy privately on LocalBitcoins but that’s just me, my best wishes for you in your journey into this amazing new world of cryptocurrencies.