If you’re new to trading Bitcoin, or having Bitcoin, there is one thing you need to understand right off the bat. Imagine that Bitcoin is cash, and that you are constantly holding it in plain view, and most of the places you can spend this cash can disappear overnight. This is to say, in Bitcoin the risk of a scam is high. In peer-to-peer trading, it has, over time, lowered, but it still exists.
This is why when you go to purchase your first coins on LocalBitcoins (in later articles we will cover other recommended peer-to-peer sites), the sellers will be taking a leap of faith on you.
If you have a brand new account, you will have no feedback. So your best bet is to start small. Note: you will need a LocalBitcoins account to create your first trade.
Step 1: Decide on Your Payment Method
This user prefers Paypal second to Bitcoin. It is the easiest and in some ways the safest way to send fiat currency over the web. On LocalBitcoins, you can use virtually any payment method that people accept. Anything from Google Play store credit, iTunes gift cards, Wal Mart gift cards, prepaid debit cards, you name it. But the markets that are most thriving are cash, Paypal, and bank deposits, as well as Western Union and Money Gram.
As the buyer, the odds are in your favor that the trade will conclude successfully for you. Most sellers are only looking to cash out their coins, not to scam. Using a reversible payment method further increases your safety, but the fact is that if you can prove to LocalBitcoins itself that you have sent the funds, they will force the release of the escrow. This is why, in this article, the writer will not recommend in-person cash trades, as there have been problems with those in the past. This is not to discourage a person who is secure in their person and believes they can make a good trade in person. It is for the safety of the greater general population that we suggest using digital methods, at least at first.
In this tutorial, we’re going to create a Paypal for Bitcoin trade on LocalBitcoins. It could as easily be a bank deposit trade, or a Western Union/Moneygram trade, or another form of trade.
Note: you always also have the option of buying Bitcoins by going through one of the sellers who has posted a trade. By creating your own trade, however, you have the ability to set your price and terms of trade.
Step 2: Create Your Trade
First, as shown below, click “Post a Trade.”
Begin filling out the form. It is pretty self-explanatory but there are some parts that need explanation. In the “price equation” field, you need to specify what you’re willing to pay. For this example trade, and so as to not waste anyone’s time, we’re going to set a discount of 20% on the coin. We do this by entering btc_in_usd*0.8 in the field. The price of Bitcoin in USD times .8, or 20% less than the price of a coin.
We also restrict the amounts people can pay, and set a high minimum and maximum amount of trade. While this is actually to ensure that no one wants to take the example trade, these tools are useful for limiting headache. You can say that the maximum amount per trade is $100 at first, for instance, and this will help you build up trust and feedback by doing multiple trades with a certain amount of funds to invest.
Fill in the terms of the trade. You can say anything you want here, and during any dispute the LocalBitcoins staff will consider these terms when making a decision. You can decide to only trade with people who have 100% feedback ratings, or a certain volume of trade, for instance. In Paypal, the typical terms include the type of payment that the buyer will send to the seller. Goods/services and family/friends have different fee structures within Paypal. Some buyers also decide to even that score by deducting the same percentage for those that need it sent as family/friends. This is not the most friendly approach, but the point is that you can be pretty creative here.
We also fill in the “payment window” time slot. This is the amount of time you will have to conclude the trade before it can go into dispute mode. Some people give themselves six hours, others give themselves 30 minutes. If you don’t mark the payment as complete within that window, then it is automatically canceled by the system. You also have the option of canceling any trade for any reason.
The next option is track liquidity. This allows you to only trade your investment amount, instead of allowing continual trades with the same terms. Then you can set some identification requirements and other bells and whistles at the end of the form.
Step 3: Publish Your Purchase Advertisement
When you’re ready, post it.
Now that your advertisement is published, you can edit it as the market changes. To get to the top of the list, you will want to offer higher amounts and more payment methods. This all depends on how eager you are to acquire more bitcoins.
In our next installment of Acquiring Bitcoin we will discuss the do’s and don’t’s of peer-to-peer trading. In later articles we discuss other methods of peer-to-peer trading, including those which are less used but still useful.
Fidelity Investments is Mining Cryptocurrency
Fidelity Investments is a multi-billion dollar brokerage that just so happens to be mining cryptocurrency. In fact, it has been at it for three years, using its own computers to harvest bitcoin and Ethereum.
CEO Abby Johnson recently told Fortune that its U.S.-based mining operation is “making a lot of money.” This comes despite running a relatively modest operation.
Hadley Stern, Senior VP of Fidelity Labs, described his company’s venture as an “experiment.”
The real reason we began mining, and still do, is to learn how the network works, how consensus works, how difficulty levels work,” he said in reference to the mining process.
The key to profitability has been the dramatic rise in cryptocurrency over the past year. Bitcoin and Ethereum are the world’s No. 1 and 2 cryptocurrencies by market capitalization, and no-one else comes close.
Well Ahead of the Pack
The fact that Fidelity has been at this for three years speaks volumes about the company. Other, much bigger players are still dipping their toes in the market, but are unsure about how to proceed. Goldman Sachs is reportedly on the fence about starting a cryptocurrency trading operation, while J.P. Morgan has already begun handling customer orders for bitcoin-based instruments.
Fidelity is doing a lot more than just mining tokens. Earlier this year, it reached an agreement with Coinbase to let customers view cryptocurrency prices alongside other assets on their Fidelity homepage.
Coinbase is the world’s most funded cryptocurrency exchange with more than 7.4 million users.
The cryptocurrency market ended the week on a firm note, with bitcoin (BTC/USD) reaching a session high of $4,425.00. At press time, the index was up 1.6% at $4,368.
Ether is also trading higher against the dollar, with the ETH/USD rallying more than 3% to $305.
Ripple (XRP) lost momentum on Friday, but still managed a weekly gain of 21%.
Chinese Government Eyeing Fresh Bitcoin Legislation?
The Chinese government could roll out fresh cryptocurrency regulation in the coming months permitting licensed brokers to operate, based on recent information from Xinhua.
The state-owned news publication recently revealed that the government is mostly concerned with stamping out illegal activity involving bitcoin and other cryptos. Government authorities could be planning to regulate the market by creating a licensing program with strict Know Your Customer (KYC) and Anti-Money Laundering (AML) systems.
The Case for AML
The need for KYC/AML protocols has long been raised by cryptocurrency proponents, especially in reference to initial coin offerings (ICOs). In response, the blockchain community has come together to create the Simple Agreement for Future Tokens (SAFT). The SAFT is both an instrument and open-source framework for token sales that vets accredited investors.
SAFT activity is quickly gaining traction, with the likes of Gizer recently issuing a presale of its ICO through SAFTLaunch.
SAFT was officially created by Protocol Labs in close collaboration with AngelList and Cooley.
China’s Stance Looms Large for Cryptocurrency Market
Although digital assets have recovered from the China-induced flash crash of September, favorable regulations on the mainland could mean big business for bitcoin exchanges. Prior to the ban on ICOs and bitcoin brokers, Chinese investors were responsible for a quarter of all BTC trades.
According to Xinhua, China is likely to pursue a licensing program similar to Japan, a country that recently approved 11 cryptocurrency exchanges. CnLedger, a leading source of cryptocurrency news in China, recently had this to say:
“Xinhua News, official press agency of CN: Virtual currencies have become the top choices of underground economies. We shall adopt ‘0-tolerance policies’ towards crimes hidden underneath and take measures such as record-keeping, licensing, AML processes, real-name, limiting large transactions.”
Is China’s cryptocurrency ban temporary? It certainly looks that way. Regulators must already know that the ban hasn’t stopped mainland investors from buying cryptocurrencies next door in Hong Kong or Singapore. A saner approach to an all-out blanket ban is a tighter regulatory framework that will stamp out money laundering and other underground activities.
«Featured image from Shutterstock.»
Tim Draper Has Made Over $110 Million Since 2014 With his Bitcoin Investment
Tim Draper, the billionaire technology investor and prominent venture capitalist who has invested in some of the most successful technology startups in the likes of Coinbase, Patreon, SpaceX, Tesla, Box, FourSquare, has profited over $110 million from his investment in bitcoin less than three years ago.
In 2014, Draper participated in the auction of 144,336 bitcoins by the US government and the US Justice Department, which were seized during the investigation into Silk Road, a dark web marketplace. Draper was granted the permission to purchase a batch of 30,000 at around $600 from the US government.
Upon securing 30,000 bitcoins, Draper told Fox Business:
“[I’m] very excited about bitcoin and what it can do for the world. Bitcoin is as big a transformation to the finance and commerce industry as the internet was for information and communications. If bitcoin were here in 2008, it would be a stability source for our world economy. Everybody should go out there and buy a bitcoin. Every investor who’s a fiduciary should at least be partially involved in bitcoin because it’s a hedge against all the other currencies. There’s a whole ecosystem being built that’s going to make commerce much easier with much less friction and safer.”
Today, Draper’s 30,000 bitcoins are worth $129.9 million. Considering that Draper had spent $19 million purchasing the batch of 30,000 bitcoins in 2014, Draper has recorded a profit of over $110 million in less than three years.
While Draper held onto his investment in bitcoin, the US Justice Department was quick all of the 144,336 bitcoins seized during the Silk Road operation. According to various sources, the US government sold the majority of its 144,336 bitcoins at a price of $336, at $48 million. If the US government had sold its bitcoins in 2017, it would have generated an additional profit of around $573 million, as 144,336 bitcoins at today’s bitcoin price of $4,330 are worth $624.9 million.
Since 2014, in addition to purchasing tens of thousands of bitcoins, Draper has funded some of the most successful bitcoin companies in the cryptocurrency market including Coinbase and Korbit. Earlier this year, Coinbase secured a $100 million investment at a $1.6 billion valuation, while Korbit was acquired by the parent company of a $10 billion gaming company in Nexon at a $140 million valuation.
Furthermore, Draper has not sold his stake in Coinbase and earlier this year, Brian Armstrong, the CEO of Coinbase, revealed that Coinbase is still at an early stage in terms of developing and scaling. Armstrong noted that it will evolve into the safest and most trusted exchange in the global market.
“Digital currencies are having their ‘Netscape’ moment. The pace of innovation has been accelerating and we are now seeing exciting projects and companies being built on top of digital currencies. We’re beginning to transition into phase three of our secret master plan. Our goal is to be the safest, most trusted and compliant, and easiest to use. Not the first to market with new assets. Especially at scale, it takes time to ensure any new asset we add is well tested and secure,” said Armstrong.
Coinbase is also one of the two exchanges in the US market apart from Gemini that is targeting institutional and retail investors by providing sufficient liquidity. As Coinbase and its flagship cryptocurrency trading platform GDAX continue evolve, Draper will position himself at the forefront of cryptocurrency innovation and disruption.
- Asian Market Update – Monday: Bitcoin flirts with $8,000; Asian stocks in red November 20, 2017
- AirToken (AIR) – Extremely Undervalued Long-Term Investment November 20, 2017
- Bitcoin’s Record-Breaking Rally Continues as Prices Cross $8,100 November 20, 2017
- A New Marijuana ETF Is Coming to the New York Stock Exchange November 19, 2017
- Is Ethereum Ready to Play Catch Up With Bitcoin? November 19, 2017
- Trade Recommendation: Siacoin November 19, 2017
- Trade Recommendation: GBPJPY November 19, 2017
- ICO Analysis: Experty November 19, 2017
- Trade Recommendation: Enjin (ENJ) November 19, 2017
- Bitcoin IRA: How to Save for Retirement Using Cryptocurrency November 19, 2017
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