Introduction

WELCOME!
This is the start of a journey that may take you to new and exciting places ... no really!
If you are careful and inform yourself you really have nothing to fear and will not lose any money.

This blog is for total newbies.
It will not cover the mining of bitcoins or other alt-coins.
If you want to mine bitcoins you are neither a newbie nor beginner, you already are tech-savvy and have intermediate to advanced knowledge of technology and the internet; there is nothing of interest for you here. In the pages to come I will give advice that might make some more advanced users cringe -- but remember, this is advice for the total noob and is designed to prevent the novice from getting ripped off.
Again, if you are not a newbie you don't need to be here.

NEVER Do's

Before we get started buying Bitcoins (or the alt-coin of your choice) and installing wallets or software on your computer I am going to list the "Never do's" and I want you to ingrain these in your head, repeat -- I want you to ingrain these in your head:

1. NEVER SELL BITCOINS OR OTHER ALT-COINS WITH PAYPAL!
• I repeat NEVER sell bitcoins or other coins with PayPal.
• Why? Because the PayPal scam is the first trick in the book. It goes like this:
• Newbie SELLER meets seemingly trustworthy BUYER in a forum or even an accredited established peer to peer exchange.
• Newbie sells Bitcoins to Buyer.
• One or two days later the seemingly trustworthy buyer revokes payment in PayPal with the excuse "My account was hacked!"
• PayPal, with its buyer protection policies takes back the money and you are left without your bitcoins or your payment!  
• There is no customer service in PayPal, you can open a dispute if you want, PayPal will not answer your emails but put "dispute solved" in their tool. Gee thanks PayPal!
• A buyer has 28 days to revoke payment!
• This is exactly what happened to me, despite me also being a customer they have not answered one single email asking for help.
• Happy ending: I got my bitcoin back because I only use trustworthy exchanges - more on that in the next section.
• On the contrary BUYING bitcoins, for the same reasons above is entirely OK, you as buyer are protected and can revoke payment through PayPal up to 28 days after purchase!
2. NEVER join, pay, move money, move bitcoins or other coins in a platform, forum or exchange until you have thoroughly researched it.
• I use for example SCAMADVISER.COM to check the history and status of every site/forum before even entering:
  
• Additionally I do a google search for each site like this: "trust www.websiteX.com" and check the feedback of other users.
• For example, see these results for "www.instant-e.com trustworthy"
• Instant-e.com looks like a scam doesn't it!?
3. NEVER store your bitcoins on the exchange or in your webwallet or other online wallet longer than you have to!
• When buying or selling Bitcoins, transfer the necessary amount to your chosen exchange right before/after the buy/sell.
• In other words minimize the time that your coins are 'in the internet' or on any website. All of those stories about Bitcoins getting hacked and exchanges like MtGox losing zillions of dollars all have to do with the website being hacked - NOT the Bitcoins!
4. If you jumped ahead and have experimented with paper wallets: NEVER reveal your private key to anyone or anything! This is truly the 'key' to your bitcoin. Keep it somewhere safe and NEVER store it in an email or cloud storage service like Dropbox or Google docs.
5. If you are using a wallet like Electrum which gives you a 'seed' to back-up your wallet NEVER reveal your seed to anyone or anything and NEVER store it on the web i.e. in an email or cloud service like Drobox or Google docs. etc.  
• The seed is the key to your entire bitcoin wallet and ALL bitcoin addresses in that wallet. It is therefore magnitudes higher in safety precautions!!!
6. When transfering Bitcions, i.e. making payments NEVER add messages that could reveal your identity!!!!
• YES that point is worth of four exclamation marks or more.
• TRANSPARENCY IS NOT ANONYMITY!
• Take for example the Bitcoin address of the Bitcoins that the FBI confiscated from the notorious Silk Road operators:
• http://blockchain.info/address/1F1tAaz5x1HUXrCNLbtMDqcw6o5GNn4xqX
• Here you see the heart of Bitcoin, the BLOCKCHAIN.
• Not only that but you see EVERY transaction ever made to that Bitcoin -- its address.
• Notice - you may have to scroll a lot - that people can put messages on their exchange when they send a payment to this address.
• NOW WHAT DO YOU THINK WOULD HAPPEN WHEN SOMEONE PUTS THEIR REAL NAME OR ADDRESS IN THAT MESSAGE?
• Yep -- it is there forever , and totally and completely irrevocable , forever .... really forever, or until the internet dies, take your pick.
• This is what a lot of people don't understand about Bitcoin and the blockchain. It is only anonymous until someone figures out who the address belongs to, or until some idiot actually puts an identifier in the message -'Public Note'- attached to the exchange.  This is the plus and minus of full and permanent transparency.

SUMMARY:

• NEVER sell bitcoins with PayPal.
• NEVER enter a website/exchange/forum without researching it first.
• NEVER leave your bitcoins on the exchange or web wallet longer than you must.
• NEVER reveal your PRIVATE KEYS to anyone or anything.
• NEVER reveal your SEED to anyone or anything.
• NEVER add specific information to the 'public note' or 'message' part of a Bitcoin transfer. TRANSPARENCY IS NOT ANONYMITY!

Like this post? Tip me with bitcoin!
If you enjoyed reading this post, please consider tipping me using Bitcoin.
By tipping you're not only making my continued efforts possible but telling me what you liked.

Step One - Choose Your Wallet

I recommend you install a wallet on your computer before going to the exchanges and getting your first bitcoin. If you have an incredible trust in humanity and want to skip this step ... then go right ahead to the next section.

THE SAFEST WALLETS ARE THE WALLETS YOU INSTALL ON YOUR COMPUTER WITH YOUR CHOICE OF SOFTWARE. I RECOMMEND ELECTRUM.

There are four types of wallets:

1. Web wallets
• These are the kind of wallets that only exist on a website and must be accessed through your browser or app.
• THE LEAST SAFE
2. Mobile wallets
• 'Mobile' is just another name for a web wallet on your phone or tablet or device. They are pure web wallets too.
• So what about Android wallets?
• They will not be covered here, since this blog is also about NOT getting ripped off; I do not consider them appropriate for newbies. Although if you want to use your phone to use Bitcoin then you must use an Android phone and the Android App or Electrum.  I will add this to the 'advanced' section at a later date.
• Apple has kicked the app from their store! Shame on you Apple!
• THE LEAST SAFE
3. Desktop wallets
1. Are 'native' or onboard wallets on your computer that you must install with the relative software.
• SAFEST ELECTRONIC WALLET!
4. Paper wallets or 'Physical' wallets.
• Paper wallets are wallets that consist only of the public and private keys.
• Actually you can make a wallet out of anything once you know the private and public keys!
• This is really cool and hard to understand at first but it's like this:
• A Bitcoin is really just a number or code which can only be accessed with the private key, anyone who has or knows this number can use/spend the relative Bitcoin.
• Some people actually 'store' their bitcoins in this way but since you cannot use a paper or physical wallet to send money and use it like paypal I do not recommend it for Newbies. Paper wallets are only good for storing your bitcoins - not using or sending them.
• Paper Wallet Tutorial 1
• Tutorial 2
• Paper Wallet Wiki
• Paper Wallet Generator
• My favorite paper wallet generator.
• ABSOLUTELY SAFE - HIGHEST SAFETY FACTOR OF ALL WALLETS!

Now listen to me, I am going to save you a lot of time here, instead of combing the internet and researching the various wallet providers and software, DON'T BOTHER, I already researched them for you and the best wallet for newbies as well as advanced users is ELECTRUM.

Go to their website (linked above) and download the software installer for your computer.
If you are a Linux user guess what - YOU ARE EVEN MORE AWESOME! -- because most Linuxes based on Debian already have Electrum in their package manager! So go to your APT, or Synaptic or whatever your manager is called and type in 'electrum' in the search field - boom! It's there innit? Install it. Thank you, I just saved you some serious time and headaches.  You can tip me with bitcoins please (more on that later).

Why Electrum?

Full disclosure -- NO I do not work for them and I am not getting one red cent for this. I have tested them and other wallets and have found Electrum simply the best, for the following reasons:

1. It is definitely the easiest to back-up for newbies, actually for anyone.
• This is the most magnificent part; your wallet generates a 'seed', which is a long string of words. If your computer ever breaks, you just re-install the wallet and input your seed - Voila! Everything backed up! I have tested this and it works perfectly.  This is the huge advantage of a hybrid wallet. It goes without saying NEVER reveal your seed to anyone! NEVER store it on the web or in emails, dropbox, googledocs. etc. It is the key to your entire wallet and all bitcoin addresses therein!
2. It is the fastest.
• Electrum is actually a 'hybrid' wallet, which means the block chain resides on Electrum's server, while on your computer is only your wallet and the user interface. This means your computer doesn't have to load and calculate the block chain -which is now over 15gb!  If you use the other wallets, you may find that it takes literally hours for the wallet to load and sync the blockchain if you have not used your wallet for a couple of days. And when you first install your wallet it will take HOURS to load the blockchain for the first time. This really sucks.  This means you just can't turn your computer on and start sending/receiving coins -- you have to wait for however long it takes, depending on how long it's been since you last synced.  See screenshot below of a newly installed Mintcoin wallet. 97,636 blocks remaining. Those 'blocks' are the blocks of the blockchain that all have to load before you can use your wallet. This means you should 'turn on' your wallet at least once a day, otherwise you will be waiting a long time everytime you don't use it for a couple of days. 
• This does not happen with the Electrum wallet - it's instantly on:
  
• I know what you are saying now; "That means my bitcoins are on their server like a web wallet!" Relax ... no... it doesn't. It means the Blockchain is on their server, the bitcoins and the private keys (remember that is what matters) are on your computer.
3. It is overall the most user friendly:
• I could install it and use it as a newbie with a minimal learning curve.
• More feedback from the community.
4. It has a function known as 'import private keys'.
• This is how you import a paper wallet or other wallet to your Electrum Wallet.
• Some wallets don't have this function! Or you have to google it and find out the answer in the forums. For example in the Litecoin wallet you have to open the debugging console and enter a specific scrypt -- NOT user friendly and certainly NOT newbie friendly!

Using your Electrum wallet:

1. After downloading and installing the software, start your Electrum Wallet. You should see something like this:
   
• Of course yours will not have a history like the one above but that's OK.
• You will notice the little green light in the lower right hand corner - that means you are synced to the network.
2. BACK UP YOUR WALLET:
• Go to tab Wallet » Show » Seed
• Write down your 'SEED' somewhere safe, you can get creative about this, you can store one of the twelve words in a totally different place or inscribe them under your table, or highlight them in a book in a way that only you can understand.  There is a story of one of the Bitcoin Billionaires who has his seed or private key on the inside of his wedding ring.
• But NEVER store them in a word file, email, or .txt file on the internet. If you want to store your seed this way, do so on a USB stick and put that stick in a safe -- lock the safe (duh).
3. Go to 'RECEIVE' tab. Now look at the Bitcoin address in the middle - that I have not blurred out. This is 'it' - a bitcoin address. You can send bitcoins to this address and this is what you must give to people if you want to receive bitcoins. This is the public address, so it is OK to give it out to people once you have decided they meet your safety requirements.
• ACHTUNG!
• Make sure you are in the 'RECEIVE' tab to see only your Bitcoin addresses.
• The 'HISTORY' tab shows all transactions and therefore also Bitcoin addresses not belonging to you.
4. This is a  Bitcoin address, you can click on it to see its history in Blockchain.info: 
• 13f1Y5tbzHV96jd3CNgLAWLV7MRgjXcR6t
5. You can copy and paste ANY Bitcoin address in https://blockchain.info/ and see its entire history.
6. Explore this website a bit, you can do no wrong. As mentioned in the 'NEVER' section, you can see that all Bitcoin Addresses are public, and hyperlinked! All you have to do is click on them and you will see ALL transactions of this address forever in the Blockchain.info website. This is full transparency, and it is called the 'Public Ledger'.
7. Sending Bitcoins:
• Simply go to tab 'SEND'.
• Input a bitcoin address.
• Enter amount.
• Enter a 'DESCRIPTION' if you want - REMEMBER - never put personal details in this note - it will appear in the blockchain forever and eternity +1.
• Hit the Send button.
• See example screenshot below:

8. Receiving Bitcoins:
• So what about those QR codes?
• The QR codes are those funny boxes that you can scan - for example with your celphone - to input or read the bitcoin address.
• In your electrum wallet go to 'Receive' tab and right click on one of your Bitcoin addresses, you get the QR code for that bitcoin address:

This is a very handy tool that you can integrate into your website or shop window, or even a T-shirt!

• It is just as easy to add your Bitcoin address and hyperlink it, the QR code is mainly for celphone users and their respective apps.
• You can read a QR code with a web based app and there are many of them, my favorite is ZXing.
• The QR code is also easier to read from a distance, for example if you have a poster or T-shirt. Check this out; a kid made 24,000 dollars just by waving his QR code at the right place at the right time! Now that's the magic of Bitcoin!
• Here is one example of how you could display your Bitcoin address to receive funds: 1JXMPrDYvs3WmBsHpKrnV1Q5Lkc2tgLoY5

• But that's not very 'sleek' is it? A less obtrusive way is with the handy widget below from coinwidget.com. It will even open your bitcoin wallet on your computer if the wallet is installed correctly.

Summary:

• The best wallet is Electrum.
• In order to receive Bitcoins, just go to tab 'Receive', right click on one of your addresses and you can copy the address to your clipboard and send it to the person you want to receive Bitcoins from.
• Alternatively right click and show QR code - make a screenshot of it. Send it, paste it in a website, make a T-shirt or poster of it, make it visible!
• Giving out your Bitcoin address is entirely 'SAFE', there is absolutely no way someone can 'reverse engineer' and crack your wallet with it or find out your private keys or seed.
• The only risk you run when giving out your Bitcoin address is that ANYONE can see its history in Blockchain.info.  This is the nature of Bitcoin and the public ledger. You have to get used to it and learn the proper etiquette, think of it like a public Facebook profile. It is only anonymous as long as nobody makes a comment on your post with specific information.
• To send Bitcoins just copy and paste a Bitcoin address in the 'Send to' field.
• Paper wallets are considered the safest, however you cannot send BTC from a paper wallet, you can only store or receive BTC.

Step Two - Get your Coins! But which exchange?

At this point you have read the ‘NEVER’ section first!

Buying your first bitcoin can be a scary experience for the first time buyer. Confronted with the number of exchanges, and the different kind of exchanges, and the different forms of payment combined with the many different escrow services available, a newbie might just give up at this step already!

There are basically three ways to buy Bitcoins:

1. From a friend, in person, with cash. 
2. On a peer to peer exchange. 
3. On a 'traditional' or generic exchange.

There are of course advantages and disadvantages to each method.
I will cover option 2 and 3 above, if you have a friend who you trust and can sell you bitcoins - you don't need this blog.



Buying through a peer to peer exchange - my recommended method:

1. Create an account at LocalBitcoins.com. 
2. Buy with ‘SEPA’ or from bank account to bank account method. 
3. Once you input the number of BTC you want to buy the ESCROW service is automatically started. 
4. You will receive information from the seller to complete the bank to bank transfer. 
5. Mark payment as PAID 
6. Once the user receives the payment he releases the bitcoins from the Escrow. 
7. Transfer you bitcoins to your wallet on your computer immediately!

There are several advantages to this method:

• There are no fees with this method.
• LocalBitcoins NEVER know your bank account numbers. Only the person you do the trade with knows.
• If anything does happen, you have a real name and a real bank to give to your lawyer or local police for a criminal investigation. 

The second easiest and most trustworthy method is to buy Bitcoins with Paypal in LocalBitcoins.com.
The process is exactly the same as above except you choose the ‘buy with PayPal’ option. Escrow is also exactly the same.
So why don’t I like this method?
Because PayPal takes a cut every time you use this method, and that’s not the point in trading with digital currencies!

REMEMBER - NEVER SELL BITCOINS WITH PAYPAL!

See ‘NEVER’ section and ‘My Close Shave’ below.

Advantages of LocalBitcoins.com:

• Your bank account is never known to their server/website
• You do not have to fund your account with dollars
• only the chosen seller/buyer knows your bank account
• buy/sell per bank transfer
• buy with PayPal (never SELL with PayPal)
• Price flexibility - The prices of Bitcoins on peer to peer platforms are quite fequently better than on exchanges.

Disadvantages of LocalBitcoins.com:

• slow turnaround times - it may take a while to sell or post a trade as seller.
• You have to build up positive reviews - just like in Ebay - and earn peoples trust.

The third easiest way to buy Bitcoins is through an exchange:

1. Create user account 
2. Fund account with $ from your bank account 
3. Buy Bitcoins 
4. Transfer BTC to your wallet on your computer immediately. 
• Once the trade is done IMMEDIATELY send the bitcoins from your wallet on the exchange to your wallet on your computer. This minimizes the time that your coins are ‘on the net’ and subject to attacks on the exchange’s website.

Actually most people would say it is the easiest method since you don't use an escrow service in most exchanges.  However, most exchanges require you to have a bank account and add it for exchange purposes and cashing out.
If you don't mind giving an exchange your bank account numbers then I agree; this method is easier than 1 and 2 above.
Coinbase.com is a good example of a trustworthy exchange.
HOWEVER — at Coinbase you must register with a real United States bank account only.

Imagine if the FBI decides for whatever reason that Coinbase is laundering money and decides to shut them down. Then not only do they have your name, but they have your bank account numbers too.  Not only that but they can confiscate your bitcoins and dollars if they want to. 

  My experience with exchanges has been very good. I just don't like them because they take so many fees and I don't want to couple my account to their website. This is your decision, everyone must choose the method he is comfortable with and the security levels that meet his requirements.

There are many accredited exchanges that I can recommend like:

• Bitstamp
• Kraken
• Justcoin

The disadvantage to all of these being that you have to give them your bank account number.

Advantages of Exchanges:

• Very quick sell and buy times 
• You don’t have to deal with the sellers/buyers 
• In some ways they are lower risk because you are not dealing directly with another person 
• You are more flexible to buy and sell and do ‘quick turnarounds’ 
• You can pay-out with dollars to your bank account.

Disadvantages of Exchanges:

• All require a bank account, Coinbase even requires a U.S. bank account.
• Security - your money and Bitcoins are on their server - maximizing exposure to hackers.
• The exchange takes a fee for every trade.
• If you want to pay-out with dollars the exchange takes a fee also.
• If there is ever a hack (á la Mt.Gox) you are highly vulnerable.

My Close Shave:
One of my beginners mistakes was selling Bitcoins with the PayPal method.
I sold my Bitcoins to one user “X”.
The user paid per PayPal very quickly — within hours.
I released the bitcoins in Localbitcoins.com for the trade.
One day later I got the message from PayPal, ‘payment cancelled’ the user’s account has been hacked.
I opened a dispute.
Paypal never answered my email, they just marked the dispute ‘settled’ and gave the justification ‘investigation complete’.
PAYPAL SUCKS!
As a seller you have no rights with PayPal.

Therefore, NEVER EVER SELL BITCOINS WITH PAYPAL.

Happy Ending:
Because LocalBitcoins.com is an accredited organization with a great track record, they kept my coins in Escrow.  The user had already been identified as untrustworthy. So when I reported the incident to LocalBitcoins.com they kicked the user and gave me my bitcoins back! That is how the Escrow process works, perfect example of why to use Escrow and how third party 'trust' services can ensure your safety online.

Summary:

• Localbitcoins.com is the best peer to peer exchange.
• Use bank transfer to pay for bitcoins.
• Use PayPal to buy bitcoins but NEVER to SELL bitcoins.
• Buying BTC in an exchange is technically easier but you must link your bank account.
• Always transfer your bitcoins from the exchange to your wallet immediately. 

Like this post? Tip me with bitcoin!
If you enjoyed reading this post, please consider tipping me using Bitcoin.
By tipping you're not only making my continued efforts possible but telling me what you liked.