What Do You Need To Buy Bitcoin?
As more people are wanting to ride the Bitcoin wave, there is also some degree of apprehension about getting started. News reports sometimes make it sound very easy. You can open an account and buy, sell or transact with Bitcoins. But in reality is not as easy and simple as it sometimes appears. With no central authority regulating Bitcoin, third party agencies offering the services that you need to deal in the Bitcoin system are often subject to the same regulations that governs other financial transactions.
The Bitcoin Wallet and Exchange
You may be surprised to find that you do not need money to become part of the Bitcoin system. Overlooking the entire Bitcoin mining aspect that can be confusing for the average consumer, you do not necessarily require a financial outlay to earn Bitcoin or get paid in it. If you are a vendor, you could earn in Bitcoin (payments from customers) without having bought a Bitcoin yourself. And then there is the possibility of a friend paying back a debt to you in Bitcoin or your Gran sending you your Christmas cash gift in Bitcoin.
There are two aspects of the Bitcoin system that you need to understand before you get started. First is the Bitcoin wallet. Your Bitcoin is held in a digital wallet because it is a digital currency and exists only in the online world. Many third parties offer these wallet services – some are more reputable than others. Then there is the Bitcoin exchange where you can buy and sell Bitcoin if you are not earning or getting paid in Bitcoin through your wallet. Often wallets and exchanges are offered by the same provider.
Email and Telephone
Your Bitcoin wallet is linked to your email address. So a valid email address is obviously necessary. But you may also need to complete a telephonic verification as reputable wallet providers generally require a double-verification system – a valid email address and telephone number. The advantage of verifying contact details in this way is that it removes some of the uncertainty of anonymous accounts. After all buying and selling Bitcoin, as well as transacting in it can hold some degree of risk.
Unfortunately some wallet providers and exchanges will not allow you to be faceless. At least not to management. A photo identification, often in the form of a passport, driver’s licence or related identification document, has to be submitted when you want to make withdrawals. It essentially eradicates any chance of anonymity you may have hoped for by getting into the Bitcoin system. Although other users may not see your real name or photo, somebody is still watching you. But it should be seen as an advantage as it limits the online scammers and fraudsters.
Proof of Residence
There may be millions of John Smiths in your city but only one lives at your residential address in most instances. Some of the more trusted Bitcoin exchanges require you to provide proof of your residential address along with your photo identification.This ensures that the a person is not only reachable over email and telephone, but also in person. It further verifies the validity of the account holder and once again makes the entire system more secure for all users.
You can use a credit card to make purchases with some providers but most will require an active bank account for withdrawals. With most banks around the world now complying with international money laundering regulations, the link up with your bank account limits the liability of Bitcoin exchanges falling victim to criminals. It also ensures that every Bitcoin user can be traced even if they have opted to submit fraudulent documents in terms of a photo ID or proof of residence. However, it can be problematic as some banks have blocked Bitcoin transactions in recent weeks.
Is It Simple?
The simplicity of buying, selling and transacting in Bitcoin is highly subjective. Many will admit that it is not simple, at least not through the more reputable providers. There are services that do not require any verification measures but usually are not as trusted and do not offer the best Bitcoin exchange rates. However, Bitcoin users should not view the need for supporting documents as an obstacle. Rather these are essential security measures that protects the users and the system. It is a little inconvenient at the outset but provides you with the peace of mind that your money is relatively safe – be it in the real world or the digital world.