Business Technology

Wednesday 25 April 2018

A beginner's guide to buying bitcoin and avoiding scams

A pile of Bitcoins
A pile of Bitcoins

Aatif Sulleyman

The value of bitcoin hit a new record high of $11,879.80 over the weekend, and mainstream interest in the cryptocurrency has skyrocketed.

The notoriously volatile currency continues to fluctuate wildly, and numerous financial experts are advising people to avoid getting involved with bitcoin, believing that the boom can only end badly.

However, if you’re really curious and either want to dip your toe in the water or simply find out more, here’s how you can buy bitcoin.

The easiest way to get involved is by signing up to a bitcoin wallet service. You can also "mine" bitcoin using a supercomputer – an unrealistic option for most people – or set up and control your own wallet, but using a third-party service is far simpler.

Some of the most popular options are Coinbase, Blockchain.info and Xapo, which you can use on both desktop and mobile.

You can sign up to these as you would sign up to any website. Enter your name and email address and set a password to get started.

After that, it’s time to connect your bank account, debit card or credit card.

Use two-factor authentication to secure your account, but don’t use your phone number or SMS for this. According to security researchers, criminals only need to know your name and number in order to steal from your bitcoin wallet.

Instead, use Google Authenticator or a security key, such as the YubiKey.

Once you’ve done this, you can start investing in bitcoin. Whichever service you decide to use, you’ll be able to access a graph showing how bitcoin’s value has changed over time. It's likely to look extremely jagged.

The value of bitcoin hit a new record high of $11,879.80 over the weekend, and mainstream interest in the cryptocurrency has skyrocketed.

The notoriously volatile currency continues to fluctuate wildly, and numerous financial experts are advising people to avoid getting involved with bitcoin, believing that the boom can only end badly.

With the value of bitcoin so high at the time of writing, it may come as a relief to hear that it is perfectly possible – and not at all unusual – to purchase small fractions of bitcoin.

Once you’ve established how much traditional money you’re willing to invest, complete your exchange through the wallet service, following their instructions.

However, we can only reiterate how risky the move could be. Not only is bitcoin extremely volatile, but investors in it and other cryptocurrencies are frequently targeted by criminals.

Earlier this month, for instance, the value of bitcoin dropped by 5.4pc after $31m worth of cryptocurrency Tether was stolen. Coinbase users have been targeted successfully too.

The best thing you can do to protect yourself is to always proceed with extreme caution.

Scammers constantly use phishing attacks to try to trick people into visiting malicious websites that look official, but aren’t.

They commonly send out fake but legitimate-looking emails, which you need to be wary of. To stay safe, you simply shouldn’t engage with them.

Don’t follow any links in the messages or enter any private details they ask you for. Instead, you should always make sure you’re on the right website or app.

People are also being duped by malicious websites promising quick profits and trading tips. Again, use common sense to protect yourself, and don’t take any unnecessary risks.

Bitcoin transactions are irreversible, so if any of the currency leaves your account, you won’t be able to get a refund.

Bookmark your wallet service’s website if necessary.

Some services, such as Coinbase, allow to you set price alerts that tell you when the value of bitcoin has dipped below or climbed above certain values.

When you decide it’s time to sell up, you can complete the transaction through the wallet service.

Online Editors

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