What is Bitcoin? Before investing in bitcoin it is important to understand it. This article lays out the basics: what Bitcoin is and the different ways it can be used. We have made a jargon-free summary and compiled a list of how to understand blockchain technology, buy, trade, and use bitcoin wisely.
What is blockchain technology?
What is Bitcoin?
How does Bitcoin work?
How to buy and store bitcoin?
What is bitcoin mining?
What is bitcoin hardware mining?
What is bitcoin cloud mining?
What is a bitcoin wallet?
What is a bitcoin hardware wallet?
What is a bitcoin desktop wallet?
What is a bitcoin mobile wallet?
What is an online bitcoin wallet?
What is a bitcoin paper wallet?
How to use and spend bitcoin?
What is a bitcoin debit card?
What is blockchain technology?
What is a blockchain?
The blockchain is the technology that makes cryptocurrency possible. This is the first thing anyone needs to know to understand what Bitcoin is.
In layman’s terms, a blockchain is a publicly accessible accounting book (ledger) that records all transactions made with a single currency. Blockchain technology can record transactions of any form of digital information, but its most important use to date has been enabling the movement of cryptocurrency between different people.
A good way to understand how a blockchain function is to compare it to a regular accounting book. A traditional accounting book is usually maintained and updated by a singular person or entity such as a bank. It’s the bank that acts as a central authority by keeping track of how much money people have in their accounts and any transfers they make or receive. In this way, a regular accounting book is ‘centralized’, with the bank acting as the middleman for all transactions.
A blockchain, on the other hand, is ‘decentralized’. This means that transactions are recorded on its ledger without a central authority verifying them. It might sound a little complicated, but the following analogy should help you get to grips with how it works:
Think of a 5-a-side football game that you’re playing with your friends, where there isn’t a referee (central authority) present. As players, you can keep track of the score as the game goes on, and the game only continues if everyone agrees on the score shown on the scoreboard (ledger). If one person from the ten thinks that the score is different, for instance, they insist that their team is winning 3-1 when the others know the score is 2-1, the majority’s opinion takes priority. The same democratic process takes place with each new goal scored, and the score is then adjusted to reflect which team scored the goal.
The blockchain is the football game, the score is the transaction history, and agreeing whether a goal has been scored and who scored it is the verification of a transaction. All taking place without a central authority (referee) updating the ledger (scoreboard).
Now you’ve got the basic premise, let’s look at how an actual blockchain works. Don’t worry if everything hasn’t clicked into place yet, going through the following sections will help you build a better picture of what Bitcoin is.
What is a ‘block’ within the blockchain?
Blocks are groups of transactions stored on a blockchain.
Imagine keeping a record of your finances in a new, empty accounting book. As soon as you start to record your transactions in the book, the pages within it start to get filled, and new pages will continually be added as the old ones are full. If you picked out a transaction from any individual page and changed it, the accounting book becomes useless after that point, as the balance shown on the following pages would be incorrect.
A ‘block’ within a blockchain is just like an individual page of an accounting book: it is a record of different transactions. When new transactions on the blockchain are verified, they are grouped in a single block. New blocks are then added on top of those that have been created before, updating the ledger and creating a chain of connected blocks: a blockchain.
In the same way that you cannot change one of the transactions on a previous page in your personal accounts book without invalidating all the subsequent pages, you cannot alter a block once it has been added to the blockchain.
Why you should care?
In a sentence, blockchain technology is important because it removes middlemen.
You no longer need a centralized authority (such as a bank) to have control over regular transactions, giving power back to regular people. At present, if you were to go to your local high street shop to buy a pair of shoes with your debit card, the transaction would look a little like this:
You > Your bank > The shop’s bank > The shop.
This is because banks control your money for you. They have to verify that you have enough funds to complete payment before they can transfer your funds to someone else; that ‘someone else’ will be the shop owner’s bank, which will then add the money to his/her account for them. Sounds like an overly complicated way to buy shoes, no?
Blockchain technology removes the need for an intermediary such as a bank to oversee and record transactions. Here’s how a blockchain transaction works:
You > The shop.
During this process, no centralized banks are needed as this verification process is carried out by the users of the blockchain themselves – just like how the score was maintained in the football game in section 1a. Once this transaction has occurred, it will be added to a block, which will later be added to the blockchain.
What problem does blockchain technology solve?
Blockchain technology provides a solution to what is commonly known as the ‘double-spending problem’.
Put simply, a blockchain stops people from being able to spend the same money twice, while removing the need for a central authority to oversee and verify transactions.
Take the example of cash. The double-spending problem doesn’t exist when spending cash because the exchange is physical: if you give a £10 note to someone, you no longer have that note and cannot, therefore, give it to another person. However, if you spend £10 digitally, it is more complicated to verify that you no longer have it in your possession and stop you spending it again.
With digital currencies, a system needs to be in place to stop people from spending the same money more than once. Banks have patched over this problem through centralized control: taking charge of verifying every transaction that takes place between people’s accounts. By controlling everyone’s transactions, the bank decides how much money each person has in their account and ensures that nobody can transfer the same £10 to two different people.
But there’s a catch. This also means that banks have complete control over your money. If a bank is compromised by a malicious third party or decides to act fraudulently, its account holders could lose their money because ultimately their accounts are owned and controlled by the bank.
Blockchain technology solves the double-spending problem without the need for a bank. Each transaction on a blockchain is verified by its users and then added to the public ledger of the blockchain (as explained in section 1b). Once you transfer £10 to someone else, the transfer is recorded on the blockchain, proving that you no longer have that £10 and cannot spend it again.
The crucial part of this is the decentralization of the process: you no longer have to place your trust in a central body to handle financial transactions. When banks are controlling everyone’s money, all the data is hidden away to be seen and managed by a select group of people. These people have a great deal of power, if they are corrupt or incompetent, then everyone with money in the bank is at risk. The blockchain is public and transparent, granting equal power to all of its users and taking it away from shady financial institutions.
Solving the double spending problem with blockchain technology is what made cryptocurrency a viable alternative to ‘regular’ currencies.
So, what is a cryptocurrency?
A cryptocurrency is a digital currency that uses blockchain technology to record transactions.
When you need to make a payment to someone, instead of transacting with regular fiat currency (e.g. pounds, euros, and dollars), you will need to use the cryptocurrency supported on that blockchain. For example, the bitcoin currency sits on top of the Bitcoin blockchain. You cannot have a cryptocurrency without a blockchain.
The ‘crypto’ in cryptocurrency refers to cryptography. Cryptography is the process of encrypting information so that it cannot be read by anyone other than who it is intended for. Children passing coded notes in class that the teacher can’t understand is a basic form of cryptography, the Enigma code used by Germany in World War 2 is a much more advanced example.
When something has been encrypted, third parties can see it’s there but can’t understand it. This is how cryptocurrency moves on the blockchain. When coins are transferred between people, the blockchain publicly displays how much cryptocurrency was moved, but not the identities of the people involved in the transaction.
To understand this revolutionary form of digital currency further, it’s time to move on and look at the cryptocurrency that started it all: Bitcoin.
What is Bitcoin?
What is Bitcoin?
Bitcoin is the first-ever cryptocurrency, supported by the first-ever blockchain.
It was created in 2008 by person(s) unknown named Satoshi Nakamoto, shortly after they published an academic journal article entitled ‘Bitcoin: A Peer-to-Peer Electronic Cash System’. This article not only put forward the idea of cryptocurrency but also detailed exactly how a blockchain would work. It is Nakamoto’s paper that introduced blockchain technology to the world.
Who or what created Bitcoin?
Nobody knows for certain. In 2008 an academic journal article was published called ‘Bitcoin: A Peer-to-Peer Electronic Cash System’, with the author listed as Satoshi Nakamoto. Nakamoto was also responsible for writing the code of the Bitcoin blockchain and creating its first-ever ‘block’ of transactions.
There has been an enduring mystery about who this person is, or whether it is in fact (as many believe) a pseudonym for a group of people. Despite many attempts to uncover the truth, and a few individuals coming out in public professing to be Satoshi Nakamoto, the identity of the person(s) behind Bitcoin remains a mystery.
Why was it created?
There are many potential reasons for this, but the event that certainly did most to influence the creation of Bitcoin was the 2008 financial crash. On the first block of the Bitcoin blockchain (the ‘Genesis block’), Satoshi Nakamoto cited an article from The Times titled ‘Chancellor on brink of second bailout for banks’.
It appears that Satoshi Nakamoto’s creation of the first Bitcoin block was a direct response to their unhappiness with the global financial system in the wake of the crash. Through the creation of a whole new form of decentralized currency, the immense power of ‘too big to fail’ banks could be challenged.
Who owns the Bitcoin blockchain?
No one owns the Bitcoin blockchain. The nature of a blockchain is to be decentralized, which means that no one person, group, or entity controls it.
On a technical level, the Bitcoin blockchain is a form of open-source software, meaning that it is controlled by its users, who vote on any proposed changes to the code through direct democracy (like the football game with no referee in section 1a). People can freely look at the source code of the blockchain and suggest edits to it, but updates require an ‘economic majority’ to be successfully incorporated.
Just like any app on your phone, updates are made to the blockchain to help it work more efficiently, increase security, or any other improvements it may need. However, when updating an app, it’s the company that owns it that will decide and enact the updates; with Bitcoin, only updates that the majority of users agree to are implemented.
This democratic approach to the management of Bitcoin is not only what sets it apart from the global banking system, but is also a core component of how Bitcoin works.
How does Bitcoin work?
How are bitcoins transferred?
Imagine sending someone (e.g. your friend Sarah) an email that reads ‘1 bitcoin’. You would:
- Log into your email account
- Enter Sarah’s email address
- Type ‘1 bitcoin’ into the body of the email
- Hit send
- Sarah would receive a message reading ‘1 bitcoin’
A bitcoin transfer works similarly, but instead of email accounts you and Sarah each have ‘wallets’. If you were sending 1 bitcoin to Sarah, she would receive 1 bitcoin in her wallet, rather than an email in her inbox.
From a user’s perspective, wallets function like email accounts, but they are much more secure. Each wallet has a public address used to send and receive bitcoin (like your email address), and a ‘private key’ used to access your funds (like your password).
A bitcoin wallet public address (also known as a ‘public key’ or ‘wallet address’) is comprised of a string of 26-35 letters and numbers, starting with numbers 1 or 3. Here’s an example of a bitcoin wallet address:
Users of the blockchain can transfer funds to your wallet by entering your public address, and if you transfer bitcoin to somewhere else it will be recorded on the blockchain as having been sent from your wallet address.
Private keys are comparable to your password. They are what enable you to access the bitcoin you have received, and send bitcoins to other wallets. But private keys are much, much more secure than email passwords. Private keys take the form of a 64 character long string of letters (A-F) and numbers (0-9). Here’s an example of one:
So, if you wanted to make a payment to Sarah, you would first need to have your wallet’s private key to gain access to your bitcoin wallet and the funds held within it. You can then choose to send funds from your wallet to Sarah’s through entering her wallet’s public address.
The transaction will then be publicly recorded on the blockchain as a transfer of one bitcoin from your wallet to Sarah’s.
Can you have less than one bitcoin?
Yes, you can. Bitcoins are divisible and can be broken up into fractions of up to 8 decimal places. The smallest fraction of a bitcoin that you can store on a wallet, or transfer to others is 0.00000001 BTC (one hundred millionths of a bitcoin), which is known as a ‘satoshi’.
The divisibility of bitcoin works just the same as regular currency. In the UK, the currency is pounds, but you can get 50p, 20p, 10p, 5p, 2p, and 1p pieces.
What is Bitcoin mining?
Mining is the process that verifies the legitimacy of bitcoin transactions and adds them to the Bitcoin blockchain in the form of new blocks.
Remember the football players from the game in section 1c, who kept score of the game without the need for a referee? They are the miners: the users of the blockchain who verify transactions without a central authority calling the shots.
When it comes to bitcoin, mining involves computers competing to solve mathematical equations in a process known as ‘hashing’.
To imagine how mining works, it is best to envision a situation where multiple people are working on solving 5 by 5 Rubik’s cube, where the first person to complete the cube is rewarded with £100.
With mining, instead of solving a Rubik’s cube, miners are working on verifying bitcoin transactions, grouping them into blocks, and adding them to the blockchain. Once this process is complete, instead of £100, the successful miner is awarded a set amount of bitcoins as a ‘block reward’. This reward is what encourages more people to participate in bitcoin mining, which is what keeps the blockchain decentralized.
The mathematics behind mining is complicated, and it is not necessary to understand them fully to use and spend bitcoin – just as you don’t have to be able to build a computer to use one or understand investment banking to have a debit account.
How to buy and store bitcoin?
How do I buy bitcoin?
If you are looking to buy bitcoin with the money in your bank account, the best and easiest option is to use a brokerage.
A bitcoin brokerage is essentially an online bureau de change for bitcoin. Brokerage platforms sell bitcoin at a fixed price, depending on the time and date of the transaction. Just like when exchanging pounds for euros at the airport, the price at which you can buy bitcoin from a brokerage will be set by the current exchange rate, plus whatever commission the broker charges for exchanging your money.
Because of their commission rates, brokerages are the most straightforward way to purchase bitcoin but not necessarily the cheapest. To find the best price, trading bitcoin on an exchange is your best option. This will be explained in section 4c, but first, you’ll need to know how to store any bitcoins that you buy.
How do I store my bitcoins in a wallet?
To store bitcoin, you’ll need a bitcoin wallet. In section 3a we learned what bitcoin wallets are, how they work, and their importance in the movement of bitcoin, so now let’s run through the different types of wallets that you can get.
There are 5 different types of wallets: online wallets, desktop wallets, mobile wallets, paper wallets, and hardware wallets. Each wallet type functions as an account to store your bitcoins, and enables you both to send bitcoin to, and receive it from, other wallets. The difference between the different types of the wallet is in the way they secure your private keys (essentially your password that allows you to transfer bitcoin out of your wallet).
There are pros and cons to each wallet type, which you can learn about in our ‘Wallets’ section. If you’re getting your first bitcoin wallet, then it’s easiest to get an online wallet, for which you’ll simply need to register with an email address and create a password. These wallets are commonly attached to exchanges (see 4c) or brokerages (see 4a) through which you can also buy bitcoin.
Once you have a wallet, you’re ready to buy or trade bitcoin on an exchange. Also, if you want to trade bitcoin without needing a wallet then that’s also possible with CFD platforms. Keep reading and we’ll explain your bitcoin trading options.
How do I trade bitcoin?
If you want to trade bitcoin, then your two main options are exchanges and broker platforms. These platforms are more complicated than brokerages, but provide more options for making a profit out of bitcoin. The only difference between the two is that exchanges require you to own and store the bitcoins you’re trading in a wallet, whereas CFDs do this for you.
Trading bitcoin with the above platforms is similar to regular day-trading. Users can try to profit through making trades around the price fluctuations of bitcoin, just like with any other store of value like gold or regular fiat currency (pounds, euros, dollars).
On exchanges, you’ll be trading your bitcoins directly for other cryptocurrencies, and on CFD platforms you’re making bets with the trading platform about whether the price of bitcoin will rise or fall. For this reason, you will need a wallet to use an exchange, but not to trade on a CFD platform.
As mentioned, these platforms are more complicated to use than brokerages, so it’s recommended to read our pages detailing how CFD platforms and exchanges work, which will guide you through the process and help you start trading for profit – if that’s how you want to use bitcoin.
By now you’re probably wondering if bitcoin has any uses other than trading for profit. The answer is a definite yes, and so the final stage of our bitcoin tour will take you through the different ways you can use bitcoin.
What is bitcoin mining?
Put simply, bitcoin mining is the process of verifying bitcoin transactions. It involves adding transaction records to the Bitcoin public ledger (the blockchain) to record the movement of bitcoins between wallets. The miners that do this job are rewarded for using their computer power to create new blocks on the blockchain with bitcoin.
Why is it called mining?
Because it’s a process that takes power to extract a finite resource, just like with physical mining. And the comparisons also do not end there. As a regular mine digs deeper, it becomes more difficult, requiring more energy and probably resources to extract more minerals. This is the case with Bitcoin. There is a finite amount of bitcoins (21 million), and the only way to extract this bitcoin is through ‘mining’.
How does mining work?
It all comes down to computer power. In the case of Bitcoin, the energy required for mining comes from a network of computers solving complex mathematical problems – a process called ‘hashing’. Large amounts of transactions are combined in ‘blocks’, which then require miners to solve computational problems. This verifies all the transactions, and after it’s done the block is added to the chain of previous blocks (the ‘blockchain’). All miners get paid transaction fees for their work, and one of the miners who worked on the block is rewarded at random with some newly created bitcoin each time a block is solved.
This means technically, that the first time you purchase bitcoins – they will go through this process before they can land in your ownership.
What do I need to start Bitcoin mining?
If you want to start mining bitcoin, you have two main options: setting up your mining rig, or buying a cloud mining contract. Here are what the two entail:
- Mining using your rig: You’ll need to buy specific hardware and maintain and run it specifically for mining. In the early days of Bitcoin, it was possible to mine with CPUs from your normal laptop or desktop computer. However, as the difficulty of mining increased, the PCs could not handle the job, and miners had to resort to GPUs and specialized mining rigs known as ASICs (Application-Specific Integrated Circuit) and software to do the job. We have a page to guide you through it; so make sure to check it out.
- Cloud Mining: You can earn bitcoins through mining without having to own a mining rig. All you need is to lease some hashing power from a company that has already set up mining rigs and gets a percentage of the bitcoin income.
What is a mining pool?
A mining pool is a group of bitcoin miners working together and sharing the rewards. Mining pools combine resources and share all their miners’ processing power, splitting the income according to the amount of work each miner has contributed. By miners banding together in pools, they increase the odds of being rewarded for solving a block, allowing them to have more regular returns. Think of it as a large group of people playing betting on different horses in a race and agreeing to split the resulting winnings between them. The rewards may be smaller, but there’s a far greater chance of consistent income.
Is Bitcoin mining profitable?
Honestly, this is a complicated question for many reasons. Bitcoin mining is certainly not a get-rich-quick scheme any more (early on you could generate a lot of bitcoin using just a laptop, whereas now you need to invest in a lot of technology), and any investment will take at least a few months to repay itself. But in the long run, yes bitcoin mining can be profitable as long as you go about it correctly. Issues you need to consider are:
- Electricity costs: these are one of the primary concerns if you are running your mining rig. Since bitcoin mining requires a lot of energy, the mining rigs consume a large amount of electricity, which translates to the high cost of electric bills.
- Cooling costs: The side effect of all the electrical energy used is a lot of heat, which needs to be cooled down. Achieving this is difficult and costly since you will need to set up your mining rigs in a cool area and purchase more tools such as extra fans to facilitate cooling.
- Cloud mining fees: If you choose to get involved in cloud mining, then there will be additional fees to help maintain the mining hardware, transaction. These fees are charged at various rates according to the number of hashes carried out by the system. Platforms such as Genesis charge around $0.00028 per GH/s, whereas others such as Hash flare charges $0.0035 per 10 GH/s.
- Mining pool fees: Mining pools charge fees for being a part of them, so these will impact the level of profit you will make. Generally, most of them will charge you around 1% – 3% of your profits.
- The popularity of mining: Bitcoin mining is designed to become more difficult as more people do it. As more miners join the network, the block creation rate increases and so does the mining difficulty. This means that an upsurge in miners will lower the profits of mining.
- Bitcoins released per block: As the number of bitcoins approaches the 21 million cap, mining rewards fall. The block reward is halved after every 210,000 blocks, which is roughly 4 years. In 2009, the block reward began at 50 BTC, and in 2018 it’s come down to 12.5 BTC per block. This reward will be halved again in 2020 to 6.25 BTC.
- Fluctuations in the value of bitcoin: It is hard to measure the profitability of mining because of the changing value of bitcoin itself. If the price of bitcoin rises, mining will become more profitable, but if it falls then profits will fall or be wiped out. Many people consider bitcoin mining hoping that prices will rise so that they can get considerable profits.
That’s a lot of factors, how do I figure out if it will be right for me?
There are many bitcoin mining profitability calculators around which you can use to get an idea of the venture is worth it. You can put in all the information and they will give you estimates of how much money you’ll make. You will be asked to enter your hashing power (H/s, KH/s, MH/s, GH/s, or TH/S), power consumption, and the pool fees. For a more accurate figure, there are online bitcoin mining profitability calculators that will need you to enter extra details such as hardware cost and power cost.
Should I get involved in bitcoin mining?
It’s up to you. If you’re interested in the technology behind it and/or willing to see mining as a long-term investment, it can be a lot of fun and give you a steady income of bitcoins. As Bitcoin mining difficulty is always increasing and the rewards are reducing, it’s no longer a path to making loads of bitcoin quickly, but this in no way means it’s a waste of time. Consider what you’re looking for and think if hardware or cloud mining is the right option for you.
What is bitcoin hardware mining?
Just as the name suggests: it’s hardware that is used to mine bitcoin. There are numerous different types of hardware you can use, such as GPUs, ASICs, or FPGAs, and each has its advantages and drawbacks. This page explains everything you need to know.
What are the different options?
There are various types of mining hardware. During the early days of bitcoin, mining was nothing more than a hobby for the nerdy cryptocurrency enthusiasts. Back then, the only hardware required was a regular computer. You could even use your laptop and mine bitcoins. However, things changed as mining difficulty increased. More powerful and specialized hardware was needed to do mining. The most common forms of hardware today are:
- ASICs: These are the hardware where all the action is. The ASICs (Application Specific Integrated Circuits) are specifically developed to mine bitcoins quickly with relatively low power consumption. They work at incredible speeds, generating more hashes per watt of power. The best thing about them is that they are almost ready for use when they arrive. You can just plug them in, and with a few configuration settings, they are ready to go. But because these units are specifically designed for bitcoin mining, their resale value is low. Some of the most common ASICs hardware in the market include Bitmain Antminer S5, Antminer T9, AvalonMiner 741, and Bitmain Antminer D3.
- FPGAs: The FPGAs (Field Programmable Gate Array) is the former kings in the world of bitcoin mining before the ASICs were introduced. They offer significant improvements over GPUs, and the single-chip FPGA can guarantee approximately 750 Megahashes/second. Compared to ASICs, these units are not very effective since they consume a lot of electricity to produce their power.
- GPUs: GPUs were used in the early days of bitcoin mining and are still an option today. Their effectiveness makes them good at solving the SHA-256 hashing mathematics that is necessary for verifying blocks on the bitcoin blockchain. Unfortunately, because of the increased difficulty of bitcoin mining, GPUs have become ineffective. Only those who want to do mining for fun or are interested in the technology behind it often use GPUs. But because GPUs are multi-purpose, they have high resale value if you ever wanted to stop mining. GPU manufacturers such as Nvidia and ATI are also committed to developing GPU cards that are specifically honed for bitcoin mining so there could be a resurgence in GPU mining soon.
Why can’t I just mine on my computer?
Because it isn’t nearly powerful enough; mining would likely break or damage it. The difficulty of bitcoin mining as of now is so great that it requires a very large amount of processing power and energy to solve the computational problems involved, beyond anything a regular computer could cope with. You need to use mining-specific hardware.
How do I set up my mining rig?
You mostly don’t have to. Most manufacturers will sell rigs already set up and ready to go. Sometimes you might be needed to download software or a bitcoin client, which can take hours to days depending on the speed of your machine, but usually, that’s it. If you want to enjoy the thrill of building your rig, you can set up a GPU and experience it yourself, but it’s not necessary to mine.
Can I set up a mining rig in my house?
You can, but you will have to bear the heat and noise generated by the mining rig. Because of a large amount of energy being used, mining hardware generates a lot of heat. To cool down the heat, the units have fans that rotate at incredible speeds, which ends up making a lot of noise. You can set up the units in a secure garage or away from your main house or even consider renting some space, but before setting up a mining rig give some thought to where you can put it.
Do I need to download any software?
Yes, while the actual mining is handled by the hardware itself, you will have to download the software required to run it. This software is referred to as a ‘mining client’ and connects your mining rig to the bitcoin blockchain or mining pool (if you’re part of one). Different products will require different software, with each specifically designed to be compatible with Linus, Windows, or Mac OSX. Some of the common software options include CGminer, BFGminer, BitMiner, and BTCminer.
Do I need to have a wallet before I start mining?
Yes, if you want to mine for yourself, you’ll need a wallet where all the bitcoins you mine will go. However, if you are joining a mining pool, all your proceeds will be credited in your account, which you can then move to your wallet at a later time (it is advisable to move your coins in this way as it keeps them safe).
What is a mining pool?
A mining pool is a group of bitcoin miners working together and sharing the rewards. Mining pools combine resources and share all their miners’ processing power, splitting the income according to the amount of work each miner has contributed. By miners banding together in pools, they increase the odds of being rewarded for solving a block, allowing them to have more regular returns. Think of it like a large group of people playing betting on different horses in a race and agreeing to split the resulting winnings between them. The rewards may be smaller, but there’s a far greater chance of consistent income.
Why shouldn’t I just mine on my own?
You can, but chances of making decent profits will be very minimal even with powerful hardware. Joining a mining pool will help you and other participants pull resources together to have a greater hash rate to increase your chances of solving the computation problems and earn the set block rewards.
Should I get involved in bitcoin mining?
Frankly, it’s up to you. If you are into the technology and see mining a fun, lucrative activity, then mining bitcoin can be a viable investment. Remember though that it’s unlikely to generate huge profits in a short space of time and should be seen more as a long-term investment.
What is bitcoin cloud mining?
Mining Bitcoin without having to own and manage the hardware. Also known as cloud hashing, cloud mining is a service that allows users to lease mining capacity (hashing power) of hardware in remote data centers and earn bitcoins as the miners generate them.
How does it work?
To get started with a service, you will need to take out a mining contract, which is simply an agreement with the company, whereby you pay a specific amount of money in exchange for computing power for mining coins. Once you are satisfied you’ve found a contract that offers the right hashing power for the right place, pay through the company site and they’ll confirm your contract.
Most of the services such as HashFlare usually have a 1-year contract, whereby you are required to pay around $1.20 for 10 GH/s (gigahashes per second – hashes per second are what tells you a miner’s efficiency) and a small maintenance fee of around $0.0035 per 10 GH/s every 24 hours. You are then paid based on your contribution to the hashing power of the mine (minus the fees).
Is cloud mining profitable?
Compared with the cost of mining with your rig, cloud mining is fairly profitable, especially if you have taken out a contract for a lot of hashing power. But the profits are unlikely to be huge because of just how competitive bitcoin is now. Steady money can be made over a long period, so it’s best to treat cloud mining as a low-income steady interest investment and not a get-rich-quick scheme.
Are there additional fees?
Yes, to keep up the maintenance of their hardware, cloud mining companies charge fees based on the hashing power that you have purchased/rent. Platforms such as HashFlare charge a small fee of around $0.0035 for every 10 GH/s per day to cover the upkeep costs.
How long do cloud mining contracts last?
It depends. You can take out contracts of different lengths depending on the company you choose. However, most providers usually offer contracts of between 12 and 36 months. You can also come across companies such as Genesis mining that offer lifetime contracts.
Can I sell a cloud mining contract?
It is possible, but difficult to sell a cloud mining contract. With some companies such as HashFlare, selling a contract is not allowed, but there have been cases of users selling their lifetime contract from Genesis. Many people will argue it is better to get their contract instead of purchasing one from another user, so it could be difficult to find a willing buyer.
Is cloud mining regulated?
No, cloud mining is not regulated. While several countries have shown concern when it comes to the energy consumption of bitcoin mining in general, most have been silent on regulating the industry altogether.
Can I pay for a cloud mining contract in bitcoin?
Yes, but it’s usually not a good idea. Some reputable services such as Genesis Mining allow you to pay for your contract using a credit card or bitcoin. However, because of the anonymous nature of bitcoin, some scam websites will ask you to pay only in bitcoin or other cryptocurrencies to start mining and later disappear with your funds. So, unless you are dealing with trusted sites, it’s a bad idea to pay for cloud mining services in bitcoin.
Do I need a wallet before I start cloud mining?
No, because your coins will typically be stored in your account, which is hosted by your cloud mining provider. However, it’s always a good idea to have a separate wallet where you can move all your earnings for safekeeping and not to leave them on the company’s server.
What are the main companies in bitcoin cloud mining?
There are many companies in the world of bitcoin cloud mining, but only a few have emerged as reputable and trustworthy. These include:
- Genesis Mining: Founded in 2013, Genesis Mining is one of the oldest and largest cloud mining services. Although their contracts are a bit more expensive than those from other platforms, there are very rarely complaints from Genisis’s users. Their starter packages start from $179 (lifetime contract) for 1,000 GH/s.
- Hashflare: this is one of the most popular services offering contracts for bitcoin cloud mining, with automatic payments being made in BTC. To sign up for a contract (1-year contract), you have to purchase at least 10 GH/s for $1.2.
- Eobot: Launched in 2013, Eobot is one of the cheapest cloud mining services, allowing you to pay as little as $10. It currently has more than 8 PH/s of SHA-256 mining capacity running and which has been sold to various users. The company sends mining updates to its users every minute, allowing them to track their profits easily.
- Hashnest: this provider is operated by Bitmain, which is the firm behind the Antminer line of Bitcoin miners. It offers excellent contracts, with the most popular being PACMiC V5 (payback accelerated cloud mining contract), which aims at cutting down the time frame of payback. In exchange for 1 BTC, you will be offered 6.0 TH/s of hashing power.
- Bitcoin.com Pool: This company offers two contracts: a 12-month plan and a 2-year plan. For the 12-month contract, the charges are $79 per TH/s, on top of an initial cost of $395 and a daily fee of $1.40. For the 2-year plan, the charges are $149 per TH/s, on top of an initial cost of $745 and a daily fee of $1.40. The daily fee covers electricity and maintenance costs and is deducted from the daily revenue.
- Hashing24: This service started its operations in 2012 and is said to have data centers in Georgia and Iceland. The company also claims to use modern ASIC chips manufactured by BitFury to guarantee maximum performance and efficiency. The company offers a 36-month contract in which you pay $34.90 or its equivalent in BTC or EUR to get 100 GH/s. The maintenance fee is $0.00033 per GH/s per day.
What are the risks?
There are many risks with cloud mining so you have to be careful. Because of the popularity of bitcoin mining, many scam sites often crop up claiming to offer cloud mining services at unbeatable prices. Only use reputable services that we have reviewed. Cloud mining is also no fun for tech enthusiasts. If you like building your hardware, you can’t achieve that with cloud mining. Also, if bitcoin falls in value you likely won’t get your money back and the mine may cease operations.
And what are the advantages?
For starters, you don’t have to buy expensive hardware or pay for its maintenance, since that job is done by the provider. You just need to pay a contract fee to rent computing power and a small fee for upkeep. Secondly, there’s no excess heat or noise to deal with, since the hardware is located remotely in data centers. Last and most importantly, if you find a company that generates steady profits then it can be a great investment in the long run without you having to do any extra work.
Should I use bitcoin cloud mining?
It’s up to you. Most people do better when buying and selling cryptos like Bitcoin. Compared to setting up your mining rigs, cloud mining will likely give you less control but is possibly a better choice as an investment to generate a steady income. If you want to get started, we suggest that you thoroughly research the company and the people you’re leasing power from and only use sites we recommend, because there is a large potential for scam sites in cloud mining.
What is a bitcoin wallet?
Also referred to as a digital wallet, a bitcoin wallet is a program or software where bitcoins are stored, like a bank account. The wallets come in many forms, each providing unique features. There are web-based wallets, mobile wallets, and offline based wallets such as hardware and paper wallets.
Why are they called wallets?
Because, just like regular wallets, the purpose of a bitcoin wallet is to store your money. However, a bitcoin wallet does this by recording the movement of bitcoin in and out of itself on a publicly displayed ledger (the blockchain). The wallet facilitates receiving and sending of bitcoins and gives you ownership of bitcoin balance. Although they function similar to a banking app, wallets are not only online; there are options such as hardware and paper wallets that store your bitcoins offline.
How do bitcoin wallets work?
Bitcoin wallets are made up of two ‘keys’: one public, and one private. These keys work like bank account details, as they store all relevant information necessary for carrying out transactions. The public key works like an account number: it is the address for people to send bitcoin to a wallet and is usually referred to as the wallet address. Just as the name suggests, it’s made available publicly, meaning that it can be viewed by anyone.
The private key, on the other hand, works like a PIN: it is used when you want to send bitcoins to someone else. And unlike the public key, this one is confidential and known only to the wallet’s owner.
Usually, you will not have to use the private key yourself, or even have to know it. Mobile and web wallets store the private key in an encrypted form on your behalf, and you use your wallet through a personal password. However, some options such as paper wallets and desktop wallets allow or require you to keep both private and public.
Do I need a wallet to use bitcoin?
Mostly, yes. To hold bitcoins you’ll need a wallet where they will be stored. However, it is possible to use CFD platforms without a wallet, as these platforms allow you to trade bitcoins without ever having to take ownership of them. We have a page that explains how CFD trading works, but if you’re looking to purchase, use, and store bitcoin, you need a wallet.
What kinds of a bitcoin wallets are there?
There are various types of bitcoin wallets, and each one of them offers different features. These are:
- Online wallet. This is a web-based wallet that allows you to access your bitcoins through a web browser. Usually, it is hosted by a provider that’s responsible for managing the security of your private key. Examples of online wallets include Blockchain.info, Coinbase, and Xapo.
- Mobile wallet. This is a bitcoin wallet stored on your mobile phone and accessed through an application. It is easy to access and can scan QR codes while you are on the go. Some examples of mobile wallets include BRD, Edge (formerly Airbitz), and Abra.
- Desktop wallet. This is a wallet you download and use on your computer. The private key is stored on your computer’s hard drive, meaning that you have complete control and responsibility for its security. If the file storing your private key were to become corrupted or deleted without any backup, you could lose access to your wallet and your funds. Examples of desktop wallets include Electrum, Exodus, and Jaxx.
- Hardware wallet. This is a specialized electronic device that’s designed to specifically hold bitcoins. These are the safest form of a wallet as they store your coins and private key offline. Some of the most popular manufacturers of hardware wallets include Ledger, Trezor, and KeepKey.
- Paper wallet. This is simply a piece of paper on which both the public and private keys of bitcoin addresses are printed. Since it’s not connected to a network, the bitcoins are completely secure, making it ideal for long-term storage. You can create a paper wallet with services such as BitcoinPaperWallet and WalletGenerator.
What is a ‘cold wallet’?
Also known as an offline wallet, a ‘cold wallet’ is a wallet that is not connected to the internet. This is the most secure type of wallet because it protects your funds from cyber hacks, unauthorized access, and other types of vulnerabilities that systems connected to the internet are susceptible to. These wallets are useful if you’re storing a large number of coins for a long period, but if you want to be regularly trading your coins you’ll want to be using an online wallet.
How do I choose which wallet is right for me?
It depends on what you’re looking to do with your coins. If you want to be trading or selling coins regularly, an online wallet attached to exchange is best since you can quickly access and trade your coins. If you want to hold your bitcoins and probably use them online for purchases or activities such as gambling and betting, then a mobile wallet is a good option. If you want to buy some bitcoin as an investment for a long time, transferring your coins onto a secure hardware wallet or using a paper wallet is probably the way to go because they will be stored offline until when you need to access them.
Are payments between wallets anonymous?
Yes, they are. You see, when a transfer is made to your wallet, what shows on the blockchain is the two wallet addresses (public keys), and they are not attached to the identity of the person who owns either wallet. This makes it difficult to trace the addresses back to a specific identity.
How does a wallet keep my bitcoins secure?
Simply put, wallets give you a unique address that proves ownership of your coins. If someone sends bitcoins to your address, the blockchain displays publicly that you own them. To move the bitcoins, you will need a private key, which is impossible to guess, unlike a regular password. This makes transactions between wallets incredibly secure. On top of this, different wallets will have different security features to help protect your private key and keep your coins safe.
How much do bitcoin wallets cost?
Usually, nothing. Most online, desktop, and mobile wallets are completely free. You just set one up or download an app on your smartphone and you are good to go. However, if you want to get a hardware wallet you can spend anywhere between £20 and £200 depending on the features you want. Those with more security features and extras such as a display screen are usually pricier.
Should I use a bitcoin wallet?
Yes, ultimately you have to use a wallet of some description for anything but CFD trading with bitcoin. Whether you want to buy, sell, hold or trade bitcoins on an exchange you will require a wallet for the transactions. Depending on what you intend to do with your bitcoins you might want to consider different options. If you want more convenience and your idea is to access your coins regularly, online and mobile wallets are great options. If you want to invest bitcoins for the long-term, then consider going for ‘cold wallets’ such as paper and hardware wallets.
What is a bitcoin hardware wallet?
A bitcoin hardware wallet, also known as a ‘hard wallet’, is a physical electronic device that stores your bitcoins. Hardware wallets are the most secure type of Bitcoin wallets and act like cryptocurrency safes, important for after having paid for your bitcoin.
How do bitcoin hardware wallets work?
Exactly how your hardware wallet will function depends on which model you buy – some will have display screens, some will have different security features such as PINs, and backup recovery phrases, and some can be as simple as a USB. What they all do, however, is give you a wallet address that stores your bitcoins completely offline to keep them out of reach for hackers. Think of hard wallets as miniature computers that can handle bitcoin transactions without having to be connected to the internet.
What’s the difference between hardware wallets and other wallets?
Hardware wallets are more secure, and the only type of wallet that comes in the form of a physical device rather than something you download (or make in the case of a paper wallet). Hard wallets are ‘cold wallets’ meaning that they keep all bitcoins offline. This makes hard wallets safer than mobile or desktop wallets, which are stored on devices connected to the internet, or online wallets, which are hosted directly.
The most important factors when choosing a hardware wallet
There are a variety of hardware wallets, each coming with unique security features and extras. Here are factors you need to keep in mind when choosing one:
- Security: The main purpose of hardware wallets is to secure your bitcoins. Hard wallets typically require you to set up a PIN code that you will have to use to access the wallet, so in case you lose your device nobody else can access your coins. Another feature you should look out for is the recovery seed. This feature allows you to add a custom phrase, with which you can restore your hardware wallet if it gets lost or damaged (this is very important or you could lose access to your coins forever).
- Display screen: Some hardware wallets such as Trezor and KeepKey have display screens that allow you to view details of your transactions without having to connect the devices to a computer. Others, such as Ledger HW.1 wallet don’t have this display screen, meaning that you will need to connect them to a computer when you need to use them.
- Ease of use: There are very intuitive hardware wallets out there, and more complex ones. There are those, such as Trezor, which don’t require you to have a very technical understanding of cryptocurrencies: all you need to do is turn them on and start using the device. And there are those, such as Ledger Nano S, that need to be connected to a computer and configured first. As a whole, hard wallets do not require much technical knowledge and are generally very easy to get to grips with.
- Size: Generally, all hardware wallets are small (easily fitting in your hand), but some, such as the Ledger HW.1, are tiny. Some are also shaped like cards (such as Bitlox, and BitBox) whereas others are shaped like normal flash drives (Ledger Nano S and Opendime). Depending on how/where you want to store your wallet, size, and shape could be a factor you want to consider.
Are transactions made using hardware wallets anonymous?
Yes. Like with any other wallet, transactions between bitcoin hardware wallets are completely anonymous. Only wallet IDs display on the blockchain and there’s no way of tracing them back to your identity.
Do I need to download any software?
Sometimes you may need to download the software and configure your hardware, but it all depends on the hardware wallet you’re using. Most popular hardware wallets such as Trezor and KeepKey will only require you to download a plugin/extension from Google Chrome and configure your device, which includes setting up a PIN. If you are using Ledger Nano S, you will just need to connect it to your computer’s USB port and follow the instructions.
How do I set up a hardware wallet?
Each different hardware wallet will have its steps to set up, but don’t worry because they are usually very simple and involve plugging in the device via USB and going to the company’s website. However, there are hardware wallets such as Trezor and KeepKey that will require you to download an extension on your Chrome to configure the wallet. As you set up the hardware, remember you must record the recovery seed. This is a string of words (usually 24) to help you restore your wallet in the future should the device get stolen. You can read more about recovery seeds in our FAQ section.
How do I transfer bitcoins from/to a hardware wallet?
It’s simple. Here’s how to go about it:
- To a hardware wallet: Set up your device and access your wallet (whether that’s through the in-built screen, website, or specific software will depend on the device). Generate the bitcoin address (public key) by clicking ‘Receive’ and copy it. Go to the platform/wallet you wish to transfer your bitcoins from, choose the send option, and paste/enter the wallet address (public key) you had earlier generated. Hit ‘send’ and the bitcoins will transfer to your hard wallet – usually instantly.
- From a hardware wallet: Plug in your device to a computer and launch your wallet’s official app or a compatible desktop app to unlock the wallet. Go through the security steps (password/PIN etc.) to open it. Go to the ‘Send’ option and enter the wallet address to which you would like to send bitcoin.
What if I lose or damage a bitcoin hardware wallet?
If you haven’t recorded your recovery seed, it can be a real problem because there’s no way you will be able to access your bitcoins and it’s more than likely you’ve lost those coins forever. Fortunately, if you have taken the necessary backup steps then there are steps you can take to restore your hardware wallet. Exactly where you have to go to enter your recovery phrase will depend on the wallet, but once you have done so you will regain access to your coins.
What are the main bitcoin hardware wallet manufacturers?
While there are many companies producing bitcoin hardware wallets, there are only a few of them that are well known to dominate this industry with quality hardware. The most popular brands include:
- Ledger: Ledger is run by security experts in cryptocurrencies and blockchain applications and is one of the most trusted providers around. Some of Ledger’s products include Ledger Nano S (most recent bitcoin hardware), Ledger Nano USB hardware wallet, and Ledger HW.1 USB Smartcard hardware wallet.
- TREZOR: TREZOR’s hardware wallets have a reputation for being both very secure and easy to use. Aesthetically designed and with an inbuilt screen, their signature product the TREZOR One is a very popular option for storing bitcoin and other cryptos.
- KeepKey: The KeepKey hard wallet is compatible with several digital assets, including Ethereum, Bitcoin, Bitcoin Cash, Litecoin, Dash, Dogecoin, and Namecoin. It also has an LED display and great security features.
- CoolWallet: CoolWallet S is the main hardware wallet developed by CoolBitX, a Taiwanese company founded in 2014. It aims to build a bridge that connects blockchain and widespread public use. Its hardware wallet is sleek, slim, and light (like a credit card) and can secure several cryptocurrencies (Bitcoin, Ripple, Ethereum, Litecoin and Bitcoin Cash).
- Bitlox: This is another brand that’s known for developing a hardware wallet with ample features and compatibility. One of its hardware wallets – the BitLox Advanced can store up to 100 different wallet addresses and is slim enough to fit in your regular wallet. Other products it offers are BitLox Ultimate, BitLox Advanced, and BitLox Extreme Privacy Set.
- Shift Cryptosecurity: This Company believes in a future where entrepreneurs and individuals will enjoy independence in their digital world, without worrying about cyber theft. Their flagship product is the BitBox, a very compact USB bitcoin hardware wallet.
Should I use a hardware wallet?
Well, it depends on how you want to use your bitcoins. If you’re looking to trade regularly then they can be inconvenient because you will need to keep transferring your coins from your hard wallet to an exchange. If your goal is to hold your bitcoins for the long-term, they are by far the most secure option.
What is a bitcoin desktop wallet?
A bitcoin desktop wallet is a program that you download and store on your computer. Once you have installed a desktop wallet, you’ll be able to access and transfer your coins using the app’s user-friendly interface. A wallet is usually necessary if you have already bought bitcoin.
How do bitcoin desktop wallets work?
Desktop wallets usually have intuitive interfaces that make it easy for you to send and receive bitcoin. Once you download and install the software, you can receive bitcoins by giving the sender your wallet address (which will be displayed in the desktop wallet), and you can pay them from the desktop app by entering theirs on the provided fields. Your balance will be displayed in the wallet, as will your transaction history and wallet details.
How are desktop wallets different from online wallets?
Online wallets are hosted on the internet, whereas desktop wallets are pieces of software installed on your computer. Think of it like this: a web wallet is like an online account protected by a password, whereas a desktop wallet is a program saved and stored on a computer that uses the internet only when the owner wants it to.
On the technical side, the private key (necessary to access the wallet and transfer bitcoin from it) of a bitcoin desktop wallet is stored on your computer. This gives you control of your wallet information and makes desktop wallets more secure than online wallets, which store your wallet details on remote servers. However, your desktop wallet can be at risk if your computer is hacked or gets a virus.
What are the best desktop wallet providers?
There are many providers of desktop wallets from which to choose. Here’s a shortlist of some of the best-known desktop wallets:
- Electrum: One of the most reputable desktop wallets around, Electrum has many fans. It is also known for its advanced features, such as allowing you to adjust the transaction fee after you have sent a payment to get it prioritized by miners. Electrum’s interface is not very intuitive, but once you have got used to it, it’s one of the best wallets around.
- Exodus: Exodus launched in 2016 and is already a very well-known hardware wallet. In your Exodus wallet, you can hold a variety of different coins (litecoin, dash, ethereum, etc.). Unlike Electrum, Exodus has a very easy to use interface and is great for people new to bitcoin.
- Jaxx: Launched in 2014 by one of the co-founders of Ethereum, you can get Jaxx as both a desktop and a mobile wallet. You can not only hold many different coins in Jaxx, but also take advantage of easy access to new projects and tokens – which you can hold in the wallet.
- Bitcoin Armory: Armory is halfway between a desktop and a hardware wallet. Only suitable for people very proficient with wallet technology, Bitcoin Armory stores your private key on an offline computer to make it impenetrable to hackers. It’s one of the most secure ways to store bitcoin that exists, but it a little complicated.
- Bitcoin Core: To use Bitcoin Core you will have to download the entire Bitcoin blockchain. This is a very secure desktop wallet, but probably best to be avoided unless you are already experienced with bitcoin.
- Copay: Copay, like Jaxx, is available as both a desktop and a mobile wallet. It was created by BitPay and is a multisig wallet, meaning it is controlled by two or more people who all need to approve transactions, so it is very secure.
Do I need to download any extra software to use a desktop wallet?
Usually, the only software you’ll need is the wallet itself, which you can download from the provider’s website. However, for some hardware wallets, you will also be required to download the blockchain data (the history of all transactions) for the coin(s) you’re holding in the wallet. This is done as a security feature so the wallet has less reliance on connecting to the internet to track the movement of coins.
Wallets such as Exodus and Electrum are lite/SPV (Simplified Payment Verification) wallets meaning that they don’t download the entire blockchain data to use them. However, others such as Bitcoin Core and Armory do rely on downloading the blockchain. Currently, the size of the bitcoin blockchain is about 150GB, so this can take several hours to days, depending on the speed of your internet and computer.
Are desktop wallets free?
Yes, desktop wallets are free to download. All you need to do is choose your preferred provider, download the software, and install it on your computer.
Are there any additional fees for desktop wallets?
There are no additional fees (such as subscription fees or add-ons) for having a desktop wallet. However, when sending bitcoins from your wallet you will have to pay small transaction fees. This is not to do with the wallet, it’s a fee that goes to the miners that verify transactions on the bitcoin blockchain. It is typically around 0.2mBTC (an mBTC is a thousandth of a bitcoin, so this amount translates to under £2).
Most Bitcoin wallets will also allow you to set your limits to pay higher or lower transaction fees. This is because the miner that verifies your transaction gets the fee, so a higher payment incentivizes them to process your payment sooner. The fees are paid by the person sending the coins, if you’re receiving bitcoin it costs nothing.
Can desktop wallets hold multiple cryptocurrencies?
Yes, desktop wallets such as Exodus hold multiple cryptocurrencies. However, storage by such wallets is still largely limited to the biggest cryptocurrencies such as Bitcoin, Litecoin, and Ethereum. Many desktop wallets still only support one cryptocurrency.
Can I back up a desktop wallet?
Yes, you can back up your desktop wallet by noting down your ‘recovery seed’. Simply put, a recovery seed is a mnemonic phrase that allows you to restore a wallet when you’ve lost it or forgotten the keys. If your machine happens to get damaged or lost, you can use the 12, 18, or 24 phrases issued to restore your wallet. It is important to do this as the wallet is stored on your computer, so if it gets lost/stolen or the file becomes corrupted you could lose your coins.
How to set up a bitcoin desktop wallet
The process of setting up a bitcoin desktop wallet is simple, but each wallet will have slightly different steps. Generally, this is what to expect:
- Choose the right bitcoin desktop wallet for you.
- Go to the provider’s site and click ‘download’ (make sure you’re downloading the right version for your operating system).
- Once the download is complete, open the file, choose where you would like to install the file and start the installation process.
- Open your wallet when it has finished installing.
- If not automatic, encrypt your wallet with a password.
- Set up and note down the recovery seed (see below).
- Transfer your bitcoins into the wallet.
What are the risks of using a bitcoin desktop wallet?
Desktop wallets are very secure since the private key is stored on your machine rather than by the provider. However, there are a few risks attached to this kind of wallet. Considering your computer will have an internet connection, there’s always a level of risk of hacks and viruses that could expose your private key, so make sure to take security measures such as installing antivirus software to prevent such occurrences. You should also make sure your wallet is password-protected; otherwise, anyone with access to your computer could access it and transfer your bitcoins.
And what are the advantages?
Desktop wallets offer a very good middle ground between an online wallet and a hardware wallet. Although they are considered as ‘hot wallets’, because of the machine’s connection to the internet, they usually store your bitcoins offline. They also tend to be very user-friendly, making them perfect for beginners and intermediate users. If you want to store a large collection of coins, it’s recommended that you consider other options such as hardware and paper wallets, but desktop wallets are a solid choice in most situations.
Should I get a desktop wallet?
Probably yes. If you have a fair bit of money invested in bitcoin and not looking to access it more often, then it’s advisable to have a desktop wallet instead of an online wallet. Hardware wallets are usually the most secure, but desktop wallets are very convenient and are free. Just make sure that you protect your computer from viruses and malware and choose the right wallet for you.
What is a bitcoin mobile wallet?
A mobile wallet is an app on your phone that stores and moves your bitcoin. Mobile wallets can be downloaded through Google Play or the App Store and are completely free. It’s important to note that all your wallet details are stored locally using your phone’s memory rather than online, so having a secure password on both your phone and the wallet itself is essential. Mobile wallets allow you to access your bitcoins anywhere with your phone, making them a very convenient wallet option.
How do bitcoin mobile wallets work?
It’s simple. Once you install your bitcoin mobile wallet and set up your password/PIN, you can access your bitcoins and send/receive bitcoins through the app. Mobile wallets are designed to have easily usable interfaces to make this as simple as possible.
Other people can transfer your money by entering your public key (wallet address), and you can transfer bitcoins to other people by entering theirs. In addition to this, to make transactions easier, most mobile wallets integrate QR-Code technology, where you just scan the QR-Code of the receiver’s wallet address and send payments with no need to enter the address manually.
So they’re like regular banking apps?
Yes, sort of. Bitcoin mobile wallets are similar to banking apps in that you can use them to view your bitcoin balance and transaction history and send/receive funds. The difference is that a banking app merely gives you a way to access your bank account that is stored on the bank’s servers, whereas a bitcoin mobile wallet is stored on your phone. So they work like banking apps, but your account and your bitcoins are fully controlled by you rather than a third party.
How are mobile wallets different from online wallets with mobile apps?
The principal difference is where your wallet details are stored, and is very similar to the distinction between mobile wallets and online banking apps. Online wallets are like accounts for regular online services: all your information is stored remotely and accessed through a password-protected account. Any app they provide is just another way of accessing that account. Mobile wallets, on the other hand, are applications that you install on your mobile phone, and which store all of their data (such as the wallet’s private key) in your phone’s memory. When it comes to keeping your coins safe, mobile wallets are more secure than online wallets because you’re storing your wallet information offline. However, as your device is connected to the internet it’s still not as secure as a hardware wallet. Your phone could be infected by malware or targeted by hackers, so it is important to utilize all of a wallet’s security features.
What are the best mobile wallet providers?
There are more and more mobile wallet providers emerging as bitcoin becomes more and more widely used. Here are some of the best mobile wallets to have a look at:
- Mycelium. One of the very best mobile wallets out there, Mycelium has a host of excellent security features. The wallet allows you to hold both bitcoin and fiat currency, and to trade between the two within the app.
- BRD. Originally called Bread, BRD is a highly rated mobile bitcoin wallet available on both Android and iOS. The wallet can hold bitcoin and ethereum, and also BRD tokens, which can be used for rewards.
- Edge ( formerly Airbitz). Edge is very easy to use a bitcoin wallet with a lot of long-term customers. They also focus on keeping up-to-date with all the latest developments in companies utilizing blockchain technology – making Airbitz compatible with all blockchain apps by simply scanning a barcode.
- Abra. With Abra’s mobile wallet you can buy and store over 20 different cryptocurrencies on your phone. It’s quite like an exchange based on your phone to help you invest in a variety of coins on the go.
- Copay. Copay is available as both a mobile and a desktop wallet. It has great security features and even allows you to store separate wallets within one app, much like you can have separate accounts within a banking app.
- Jaxx. Like Copay, Jaxx is also available as both a mobile and a desktop wallet. Jaxx was launched in 2014 by one of the co-founders of Ethereum and allows you to hold multiple coins and take advantage of exciting new ICOs (Initial Coin Offerings of new cryptos).
Important note: none of these can be used until you have completed your first bitcoin buy.
Are mobile wallets free?
Yes, mobile wallets are free to download. There is a wide range of options available all offering great wallets at no cost.
Are there additional fees for using bitcoin mobile wallets?
No, mobile wallets don’t have any extra fees charged by the provider. However, bitcoin wallets will charge transaction fees for sending bitcoin to another wallet. These fees are very low – typically around 0.2mBTC (an mBTC is worth a thousandth of a bitcoin, so this is under £2). These fees are used to pay the miners who verify the blockchain. Some wallets give you the option to pay higher or lower fees: higher fees will mean miners will consider your transaction as a priority and verify it sooner, whereas lower fees save you money but mean the transaction takes more time to be verified. However, in general transactions between wallets are almost instant.
Can I backup a mobile wallet?
Yes, mobile wallets will offer various ways of backing up depending on the provider. The best of these is noting down your ‘recovery seed’. This is a string of words (which can be generated or set by you) that can be used to access a wallet at a later date if you happen to lose your device or forgotten the details of your wallet. Once initiating a recovery on the same or a new device, you will be asked to enter your recovery seed and your bitcoins will be restored in your mobile wallet address.
How to set up a bitcoin mobile wallet
Each bitcoin mobile wallet will have its steps to set up, but generally, this is what to expect:
- Choose the right bitcoin mobile wallet for you.
- Go to the Google Play or App Store and download the app.
- Open the app and you’ll usually have the two options: ‘Create new wallet’ and ‘recover wallet’.
- Click ‘Create a new wallet’ and follow the steps. Usually, this will involve setting up a PIN or password and revealing your recovery seed (you must write this down as it enables you to back up your wallet).
- Note: If you don’t get asked to set up a recovery seed, then find out how to set one up manually within the app or what other features your chosen walled has to create a backup.
- Once you’ve set all of this up, you’ll be able to use your wallet. Go to your details to find out the wallet address and transfer your bitcoins into your new mobile wallet.
What are the risks of using a bitcoin mobile wallet?
Mobile wallets are safer than online wallets as your details are stored on your device, however, as your mobile is connected to the internet there is still an element of risk from attacks. Your phone could be infected with a malware or virus to collect details of your private key. There’s also the danger of losing your phone, so it’s incredibly important to have your wallet password protected and note down your recovery seed so you can gain access to the wallet on a new device. Additionally, it’s also recommended to activate 2-Factor verification to ensure only you can be able to access the account.
This does not mean that mobile wallets are unsafe necessarily – many encrypt your private keys and store them locally. But all in all, with the few risks involved, it’s not recommended to store large amounts of bitcoin in a mobile wallet. If you have sizeable investments, then look into hardware wallets or paper wallets, which store your private key completely offline.
And what are the advantages?
The most notable advantage is convenience. Being able to access your wallet on your phone like you would a regular banking app makes transferring and receiving bitcoin very easy. You can access your coins from anywhere, whether you want to make payments or send them to your exchange for trading. Also, the fact that the private key is stored on your device rather than on the provider’s servers gives you full control of your bitcoins. However, this also means you have to take responsibility for its safety to ensure it’s not compromised.
Should I use a mobile wallet?
It depends. If you’re not holding a substantial amount of bitcoin and want the most convenient way to access it, then yes. If you want to hold a large amount of bitcoin as a longer-term investment, you should consider other options such as hardware and paper wallets.
What is an online bitcoin wallet?
Also known as a web wallet, an online wallet is a way of storing your bitcoin on the internet. In other words, it’s a wallet that runs on your browser, just like a website. Online wallets are regarded as more vulnerable to hacks than other types of wallets, but they are very convenient as you can access your wallet anywhere as long as you have an internet connection.
How do online bitcoin wallets work?
Web wallets are designed to be very user-friendly. You begin by signing up with your preferred provider, which is simple and quick. You will then access your account with a username and password. Sending or receiving bitcoin is easy because all you need is your wallet address (for receiving money) and the address you want to send bitcoin to (for transferring out).
So they’re like online banking?
Yes, online wallets are very much like online banking portals for bitcoin. Like online banking, you can log on with your password and carry out transactions, see your balance, and look at your transaction history on the website of your wallet provider.
Are online wallets free?
Yes, online wallets are completely free. All you need to do is choose your preferred provider, sign up, and start using your wallet.
Are there additional fees with online bitcoin wallets?
There are no additional fees that you have to pay to the provider to use your online wallet. However, there’s a small transaction fee charged when you spend bitcoin (but not when you receive it). These transaction fees are to pay the miners who verify the movement of bitcoin on the blockchain. Typically these are very low, usually around 0.2mBTC (which means two-thousandths of a bitcoin – under £2). Most wallets will also give you the option of paying a higher amount to motivate miners to verify your transactions faster.
What are the best online bitcoin wallet providers?
There are many different web wallet services to choose from, here’s a small selection of some of the best known:
- Blockchain: One of the most widely used providers, Blockchain’s online wallet can hold bitcoin, ethereum, and bitcoin cash, and exchange between them within the wallet.
- Strongcoin: Stongcoin advertises itself as the longest-running bitcoin wallet, having launched in 2011. Their focus is on security, using what they call a ‘hybrid wallet’ as it encrypts your keys before they’re saved on Strongcoin’s servers. They also allow you to print your entire account history and information as a PDF.
- Xapo: The primary focus of Xapo’s wallet is security – so much so they call it a ‘bitcoin vault’. If you’re looking for the safest way to store your bitcoins online, then it’s worth having a look at Xapo.
- Coinbase: Probably the best-known exchange out there, Coinbase’s online wallet allows you to exchange and hold many different coins in the same place and has one of the most user-friendly interfaces around.
- Binance: Like Coinbase, Binance’s online wallet is integrated with its capabilities as an exchange, meaning you can hold and trade a wide variety of coins – even more than you can on Coinbase.
- Bittrex: Another exchange with an integrated wallet, Bittrex is a place where you can trade and store hundreds of different coins.
- Gatehub: Gatehub’s wallet is also attached to its exchange, on which you can track the value, trade, and hold almost any coin.
Can online wallets hold multiple cryptocurrencies?
Yes, you will find online wallets, such as Blockchain, that support a variety of different cryptocurrencies – including Ethereum and bitcoin cash. The widest variety of coins, however, will usually be able to be held in web wallets that have integrated exchanges, such as Coinbase.
So online wallets can be connected to exchanges?
In some cases, online wallets are exchanges. If you use an option such as Coinbase, you can not only store your coins but also buy and trade other cryptocurrencies that are then automatically held in the wallet. Other online wallets that hold multiple currencies will often allow you to transfer different currencies between each other (for instance changing bitcoin into litecoin) within the wallet.
Can I back up an online bitcoin wallet?
Yes, but exactly how will depend on your chosen platform. As a web wallet is like an online account, each company will have security features that allow you to gain access in case you forget your password. Wallets such as Blockchain allow you to set up your recovery seed and enter the 12-word recovery phrase when you lose your password to create a new wallet with your balance. Others such as Coinbase have an option for resetting your password, where you get an email with a link to set up a new password. Just to be safe, its better you write down your password somewhere and keep it safe in case you ever forget it.
How to set up an online wallet
Setting up an online bitcoin wallet is much like registering for an account on any other online service. Every provider will be slightly different, but usually, this is how it will go:
- Select the online wallet provider you want to use.
- Go to the website and click ‘sign up’ or ‘register’.
- Fill in your details (usually this will be your first name, last name, and email address) and agree to the terms and conditions.
- Set up your password. Sometimes you do this on the registration page, and sometimes it’s through a link in your confirmation email. Make sure you set your secure password as it is what will protect your bitcoin wallet.
- (Optional): Download the mobile app offered by the wallet provider so you can access your coins on the move.
- Set up any additional security features offered by your web wallet provider (e.g. a recovery seed).
- Transfer bitcoins into your wallet using the wallet address. If you don’t have any Bitcoins.
What are the risks of using an online wallet?
Web wallets are the least secure type of wallet and are not recommended for storing anything more than a small number of bitcoins. The major risks associated with them are being targeted by hackers, as their servers will hold the information of a lot of different bitcoin wallets. This isn’t to be alarmist, all online wallet providers will have strong security, but the risks are there.
And what are the advantages?
The main advantage is being able to access your bitcoin wallet anywhere and on any device, provided you have internet access. Also, the fact that many online wallets are exchanges means you can change your coins into other cryptocurrencies and react quickly to market fluctuations to cash in on the profits.
Should I use an online bitcoin wallet?
It depends. Yes, if you want to be accessing your coins quickly to make payments and exchange; no, if you are looking for a safer option to store a large number of coins. If your goal is a long-term investment, you are better off with a hardware or paper wallet. An online wallet is only recommended for holding a small amount of bitcoin.
What is a bitcoin paper wallet?
A paper wallet is an offline wallet you can make yourself and keep on a piece of paper. This may sound a little confusing, but they’re one of the most secure ways to store bitcoins if you know how to make one.
How do bitcoin paper wallets work?
Paper wallets typically involve printouts of two QR codes, one for the public key (wallet address that you get paid to), and one for the private key (what you use for paying other people – like a bitcoin PIN). The keys (strings of characters) themselves are also usually printed, the public key visibly and the private key concealed. You can scan the QR codes to transfer or receive bitcoin or type the keys into the relevant section of the bitcoin client you use (Coinbase, Mycelium, etc.).
Since you are responsible for keeping both keys, there’s no possibility of your wallet getting hacked into and funds stolen. But losing the paper (if you have no backup whatsoever) means you will lose access to your wallet.
How is a paper wallet different from other wallets?
Well, unlike other wallets that are based on hardware or software, this one is made of paper. It means that your bitcoins are stored offline (like hardware wallets). Otherwise it works very similarly to other wallets. If you want to access, send, or receive bitcoins between wallets, you will need to use the public key and private key printed on the paper to enable any transaction.
I thought bitcoin was a digital currency, how can it be stored on paper?
Because, in a physical sense, bitcoin is not ‘stored’ in a wallet. In the same way, there’s no physical money sitting in your bank account when you use a banking app, no bitcoins are sitting in your wallet. A wallet is the addresses used to pay into and from your bitcoin. The public key (wallet address) allows you to receive bitcoins and provides evidence that you own the coins, whereas the private key allows you to send them.
A paper wallet is the bitcoin equivalent of replacing your bank card with a piece of paper that has a scannable version of your account number, and which can make contactless payments.
Are bitcoin paper wallets secure?
Yes. Paper wallets are by definition ‘cold wallets’, meaning that bitcoins are stored offline. This guarantees security because there’s no chance a hacker can access the private and public keys printed on the paper; you are responsible for them. However, given the fragility of paper and the possibility of losing your wallet, how secure a paper wallet is can depend on how safe you keep it. We recommend that you lock it away in a secure place.
If I lose or damage my wallet are my bitcoins retrievable?
Only if you have made and stored a recovery seed that will help you restore your bitcoin to a new paper wallet (read more about the recovery in our FAQs section). If not, then you will have no way to access your coins.
One way to safeguard against this is to print multiple copies of your paper wallet and keep the others safely locked away. If you choose to do this make sure they’re safe and only you know where they are. If someone were to access the keys printed on the paper, they would easily send your bitcoins to their address and you may never know their identity because of the anonymous nature of bitcoin transactions.
Are payments from/to paper wallets anonymous?
Yes, they are. Just like any other transaction between wallets, the blockchain records only wallet addresses (public keys) which cannot be traced back to a specific identity.
How do I make a bitcoin paper wallet?
It’s simple. Go to a wallet generator such as WalletGenerator or BitcoinPaperWallet and they make the process easy. All you have to do is move your mouse around over the highlighted text which will generate a wallet address related to the unique movements of your mouse. Print out the details of the wallet from the results.
If you want to keep the whole process of printing the wallet offline, you can even just write the keys that are generated out by hand on a paper and keep it safe. This will mean you don’t have the scannable QR codes though.
You’ll need to own some bitcoins first.
What are the risks of using a bitcoin paper wallet?
There are a few risks associated with making a paper wallet. These include:
- Making a paper wallet from an untrustworthy site. Make sure you’re using a reliable site that’s delivering you a genuinely unique address that nobody is recording. If someone else knows your private key they can access your bitcoins and spend or steal them.
- Losing your wallet/having it stolen. While there’s no possibility of your wallet getting hacked, it’s possible to have your paper wallet stolen or lose it. Again, if someone accesses your keys, it means you lose your coins completely. Make sure you keep your paper wallet safe.
- Damaging your wallet. Paper is fragile so you have to be careful not to damage your bitcoin paper wallet. If for whatever reason you aren’t able to see the keys printed on the paper, you cannot access your coins and you’ll lose them completely if you haven’t backed up your wallet or printed extra copies.
And what are the advantages?
A paper wallet offers several advantages over other wallets. These are:
- Cold storage. Paper wallets store your bitcoins completely offline because they aren’t connected to the internet. When used correctly, they can be like hardware wallets, keeping your coins away from hackers and other online vulnerabilities.
- Cheaper than hardware wallets. Compared to hardware wallets, which are also cold wallets, paper wallets are far cheaper. Whereas as the hardware wallets cost anywhere between £20 and £200, paper wallets cost next to nothing as they’re made of paper, making them a more affordable option.
- A fun way to make your wallet. No other type of wallet is DIY in the same way as a paper wallet. You just need to generate your keys (either manually or automatically), and print out them on a paper or write them down somewhere.
Should I use a bitcoin paper wallet?
It’s up to you. Paper wallets are a cheaper option for cold storage than hardware wallets. And because they keep all your bitcoins completely offline, you can choose them if you want to hold your bitcoins for a long period.
As long as you keep your paper wallet safe – and we mean it, don’t let it fly out the window, it belongs in a vault – then your bitcoins will be secure.
How to use and spend bitcoin?
What is bitcoin used for?
It’s now a decade since bitcoin was created, and you can now use it for almost anything for which you’d usually use the ‘regular’ currency. To give examples, many Australians today pay their household bills using bitcoin, buy furniture from Overstock, and send remittance payments using your bitcoins. Bitcoin is particularly suited to the latter of these because it can be transferred anywhere in the world instantly with no conversion fees.
If you’re interested in learning more about bitcoin gambling, our ‘Gambling’ pages will take you through everything you need to know. What we’re going to do next is run you through how you can spend your bitcoins in real shops, both online and offline.
Who accepts Bitcoin?
If you want to spend your bitcoins, this is the most important question. Transactions with bitcoin can only be completed with shops/individuals that accept it as a payment option and have a wallet address to receive bitcoins. If this is the case, spending your bitcoins usually involves the simple process of scanning a QR code generated by the shop’s wallet and inputting the amount of bitcoin you wish to send.
If a shop or online platform accepts bitcoin, it will be listed in their payment options. We’ll always keep you updated with new places that allow you to shop with your bitcoins.
What about shops that don’t accept bitcoin?
It’s reasonable to think that if a shop doesn’t accept bitcoin, then you can’t pay with it. While it may seem like this would make spending your bitcoins impossible, this is not the case.
Companies have created products to encourage the adoption of bitcoin into existing payment schemes around the world, rather than just waiting for every shop to accept bitcoin directly. Bitcoin prepaid cards and bitcoin debit cards allow you to pay with your bitcoins anywhere that accepts ‘regular’ card payments.
Both varieties of bitcoin cards (prepaid and debit) are loaded with bitcoins, but allow you to pay in shops that only accept card payments. This means that it’s possible to incorporate bitcoin into your day-to-day life easier, and you can even start paying for monthly expenses such as a mobile phone contract from your bitcoin debit card.
What is a bitcoin debit card?
A bitcoin debit card is a card that is linked to a cryptocurrency account or wallet, allowing you to spend your bitcoins both online and in real shops and ATMs. When you make a purchase, the bitcoins in your account are converted to fiat currency based on the current market rates, and that currency is used for payment – just like when you spend money using your card on holiday. In other words, a Bitcoin debit card helps bridge the traditional banking and Bitcoin worlds.
There is a fundamental difference between a bitcoin ‘debit’ card and a bitcoin ‘prepaid’ card. With a bitcoin debit card, you have an account with all the functions of a ‘normal’ bank account, and your card is connected to this account. Whereas a bitcoin prepaid card is just that: a card directly loaded with coins rather than being attached to an account.
Bitcoin debit cards aren’t just cards anymore – they are more like bitcoin bank accounts. Taking on the features of traditional banking, these cards allow you to spend your bitcoins just like you’d spend your money with a regular card. Usually, they also allow you to transfer between fiat currency and bitcoin within your account, acting as both an exchange and account.
How do bitcoin cards work?
Bitcoin cards are linked to a cryptocurrency account or wallet and work much like normal credit/debit cards, which are linked to a bank account. When you make a purchase, the funds are deducted from your bitcoin balance at the current market rate. For instance, if you buy a product worth £10 (whether online or in a shop), the card exchanges £10 worth of bitcoin and transfers that £10 to the shop/person. The transaction happens in pounds, but you hold your money in bitcoin.
So, it’s like having a currency account?
Precisely. A bitcoin card is more like a currency account, only that the balance is kept in bitcoins rather than pounds. Some providers issue cards with fiat currency accounts attached, just like you can get a dollar account on a standard debit card.
Are Bitcoin debit cards accepted everywhere?
Yes, bitcoin debit cards are accepted across the world provided the ATM or merchant supports ‘normal’ cards. Bitcoin debit cards have similar restrictions to Amex, MasterCard, and Visa, depending on the sellers.
What if I lose my card?
No problem. Since bitcoin debit cards are linked to a cryptocurrency account, you can freeze or cancel a card easily if it gets lost and orders a new card. All bitcoin debit cards are linked to apps, so this process is very easy. You also don’t even need to have a physical card if you don’t want one, as you can get a purely virtual card.
What’s all this about virtual cards?
There are two different types of bitcoin debit cards that you can get. These are:
- Virtual. A bitcoin virtual debit card is one that exists only for online spending – you don’t have a physical card. Once you order your card, you receive it instantly and are expected to activate it via email. A bitcoin virtual debit card works the same way as a physical card when shopping online: all relevant details such as cardholder name, card number, CVV number, and expiry date are visible online, you just don’t have a physical plastic version to use in shops and ATMs.
- Chip + pin (plastic). This is the physical plastic card that is delivered to your residential address via mail and comes with a chip and an ATM PIN. Unlike the virtual card which is used online, the Chip + pin (plastic) card can be used both online and in real shops.
You will soon also be able to add a virtual or physical bitcoin debit card to your Apple or Samsung Pay account. Some providers such as Wirex allow you to hold multiple cards, which means that once you can integrate them with mobile wallets, you could have virtual GBP, USD, and EUR cards all stored on your phone to use in various countries and cut holiday spending fees. This would mean you would have contactless cards in three fiat currencies without needing to keep a single physical card in your wallet.
Are there fees?
Most providers will charge fees relating to the delivery and use of their bitcoin debit cards. We’ve made a list of all the possible fees here, but most providers will only charge some of these fees rather than all of them:
- Card fee. Most card providers charge a flat fee of around £5 – £30 for the production of the card.
- Monthly fee. Some providers will charge a monthly account management fee, which typically ranges between £1 and £5. It’s usually possible in these circumstances to pay the fee on an annual basis if you wish, which can work out cheaper than paying monthly.
- Online purchases. If you purchase goods or services online with your bitcoin debit card, you will usually not be charged a transaction fee. In the rare case a card charges a fee for this, it will typically be under £1.
- Retail/store purchases. The fees for using a card in a shop are typically the same as those using the card online.
- Declined transactions. If you attempt to make payments with insufficient funds, you will be charged a very small fee (around 5 pence) for the declined transaction.
- Administration/support. If you are looking to recall or trace a payment, you will be required to pay the administration/support fee for the operation. This is typically a flat fee of around £20 – £30. It’s possible to trace payments in this way because at the point of sale the card transacts in fiat currency – spending bitcoins directly is completely anonymous.
- Currency exchange rates. To facilitate the conversion of your bitcoins to fiat currency, which the card then spends, card providers charge a currency exchange rate fee. This can range anywhere from 0.7% – 5% depending on the card provider.
- Delivery fee. Usually, any delivery fee is combined with the card production fee, meaning that you only need to pay a one-time payment to have the card produced and delivered to your address. However, some service providers charge a flat fee of around £5 – £20 extra for delivery of the card, particularly if getting it delivered overseas.
- Foreign transaction fee. If you use your card internationally, you could be charged between 2% – 5% extra on transactions depending on the card.
- ATM fees (domestic/international). If you use your card to withdraw money from an ATM domestically, you will be charged a flat fee of around £2 – £3. However, if you’re using an ATM outside the country where the service provider is based, you will usually be charged a higher amount. The ATM fees for international transactions can range anywhere from £3 – £5.
What verification steps are there?
When signing up for a bitcoin debit card, you’ll usually have to register with details such as your name, date of birth, and address. After this most provider will ask for extra verification in the form of proof of address and proof of identity (a passport and a driving license are most common).
You don’t always have to verify your account in this way, but unverified accounts have lower spending limits.
Are there card limits?
Depending on the service you use and your verification status, your card may have set limits on how much you can spend at a time (although verified accounts tend to have unlimited spending). It is also common for unverified cards to have lower maximum balances than verified ones. The possible limits on bitcoin debit cards are:
- Maximum/minimum balances. Depending on the card provider, there are maximum and minimum balances that you’re allowed to hold in your account at any time. Usually, the maximum balance can range anywhere from £5,000 to £10,000, whereas the minimum can range from £1 – £10. However, some services have no such limits and can hold and spend as many bitcoins as you want.
- Spending limits (per transaction). The spending limits can also range depending on the service provider and your verification status. If your account is unverified, you might be limited to around £1000 per transaction, but if you go through the verification steps, spending limits are much higher or completely removed.
- Load amount limits. Loading your cryptocurrency account is usually unlimited, but there are a few services that have a limit of around £2,500 for unverified accounts.
- ATM withdrawal limits. The ATM withdraw limit also depends on your verification status. If you are unverified, you can usually withdraw up to £200 in a single transaction, but if you are verified this rises to around £1,000.
Should I get a bitcoin debit card?
It’s up to you. They’re a great way to start using your bitcoins in your day-to-day life, and there is now a wide range to choose from. If you’ve decided a bitcoin debit card is right for you, then our comparisons will help you find the best card out there.