Payments

A Bitcoin Buying Odyssey: Part 1

  • As the architect of the blockchain hype meter, it's only appropriate that I own some Bitcoin.
  • I learned about paper wallets, was guided by Reddit, and had my phone number compromised on a Bitcoin exchange.
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A Bitcoin Buying Odyssey: Part 1

I heard that buying Bitcoin is pretty hard, but figured I could figure it out. I happen to cover blockchain, and am up to speed on some of the newest blockchain and cryptocurrency happenings, so it should be a piece of cake for me.

Boy was I wrong.

In only a few minutes, I realized how hard securely purchasing bitcoin is. Hours turned into days, and things got more unbelievable. I was shocked with how difficult it is to securely transfer fiat currency to Bitcoin. I knew I could’ve gone the soft wallet route, like storing my coins on an exchange, but I tried to avoid that at all costs. Online exchanges  lack the security I want for a substantial Bitcoin purchase. Unfortunately, I found linking an offline Bitcoin wallet to an exchange a confusing and near impossible task.

I learned about paper wallets, journeyed to the bitcoin subreddit, and had my phone number compromised on a Bitcoin exchange.

Sounds like a typical bitcoin experience to me.

Sunday

11:00 am: Off to the local mall to buy a USB stick to hold my bitcoin wallet. I’ve read and written way too much about online accounts getting hacked, so I want to avoid having my bitcoins online as much as possible. The plan is to hold my bitcoin wallet on my USB drive, taking my wallet “offline”. It’s the equivalent of a safety deposit box.

11:15 am: Back at my desk. Apparently, I bought the wrong type of USB stick. I need to buy a special encrypted USB to execute my plan.

11:20 am: Looking up a guide on how to encrypt my cute little SanDisk storage stick. It takes only 15 easy steps, including taking out my computer battery and disconnecting from the internet.

11:30 am: The more I read, the more I frustrated I get. If I want to keep my wallet on my computer or regular USB drive, I need to download the ENTIRE bitcoin blockchain before any transaction, which can take DAYS.

11:40 am: I’m a journalist covering bitcoin and blockchain and am currently using a WikiHow article with cartoons as my guide.

11:45 am: Tradestreaming editor, Zack sees my plight and suggests getting a wallet from Ripple, the well known blockchain company. I’m hopeful. My hopes are immediately squashed when I’m greeted with this beauty.

retrieve_secret_key_-_ripple_trade

11:50 am: From an article on secure wallets: “To a new bitcoin user, this information might seem daunting. You might have heard of bitcoin losses due to hacks, malware, or perhaps simply human error. We suggest keeping most of your bitcoins in either paper or hardware wallets (or if you have the space, in Bitcoin Core). If you must keep bitcoins in online bitcoins in online or mobile wallets, spread them around in a few reputable websites as recommended above.”

12:15 pm: Just spent the past 25 minutes trying to figure out what a paper wallet is. Here are two answers to the question of “what is a paper wallet,” one is made up:

  1. A piece of paper folded into an origami envelope that holds bitcoins offline.
  2. A piece of paper with a QR code that serves as a bitcoin wallet or something like that.

Give up? Here’s a picture of a paper wallet.

front-back-sample-big_jpg__jpeg_image__880-x-591_pixels_

So, one of the most secure ways to hold bitcoins is on a PIECE OF PAPER? I’m starting to see why people are a little bearish on bitcoin moving mainstream.

12:25 pm: Zack, aka the King of Google, finds that mobile wallets are pretty secure. I’m tabling the mobile wallet to tomorrow, going back to the hardware route and watching a video about a Ledger-encrypted USB.

12:25:05 pm: Oh no, the video is narrated by a generic robotic sounding voice. Is this the blockchain communicating with me?

12:30 pm: Just finished the video. I was OK with entering a 4 digit pin every time I use the device. I was even cool with the 24 randomly generated words required for account recovery. But consulting with a DECODER RING for every transaction is a little ridiculous. I just want to buy Bitcoin!

how_to_use_your_ledger_wallet_nano__tutorial__-_youtube

12:40 pm: Bitcoin.org is my new guide. Still dreaming of using my USB stick.

12:42 pm: “Reddit has the answer.” –Zack Miller

12:45 pm: First post on  r/bitcoinwallet: Still don’t understand paper wallets. You and me both.

bitcoin_wallet

12:50 pm: Reddit does have the answer: We’re back to hardware. Consensus: Mobile wallets are OK, but if you have more money than you can afford to loose, use a paper or encrypted USB stick. So if I have money I can’t afford to loose, its safer for me to “store” my coins on a piece of paper than online. Good thing its not 2016.

1:00 pm: Done. Just went to Amazon and bought my own Ledger Nano S, the device without the decoder ring. Waiting for the Prime delivery to come now.

Monday

12:58 pm: So I decided to try and use a mobile wallet. For sure I’m not putting any money in a online marketplace, but I’ll give it a go on the mobile app for the full experience.

1:00 pm: App Downloaded. Don’t judge me for not updating my apps.

img_1905

1:13 pm: After writing down my 12 word recovery phrase, I now have a wallet with a QR code. Great. I don’t know what to do next. It’s confusing.

1:15 pm: There’s nothing on this app. Just send money and a QR code. Not sure what to do next, so back to bitcoin.org.

1:20 pm: Wallets don’t have an integration into an exchange, so after trying to avoid online exchanges for so long, I have to deal with Coinbase, the highest rated exchange.

1:22 pm: There goes open borders and free trade and all that fun.

coinbase_and_tradestreaming

1:24 pm: So I’ve given up on the mobile wallet. There is no seamless integration, no website it sends you to. The wallet creators assume that you are a bitcoin genius before you download the app. Maybe that’s why people aren’t buying.

Tuesday

4:04 pm: Plugging in my new Ledger s.

img_1914

4:12 pm: So I set my Ledger up — I have a 24 word backup and a pin. Now lets see what’s next.

4:15 pm: We’re back at square 1, and I see the issue with buying bitcoin. I have a wallet and it’s set up, but now what do I do? Do I go on to an exchange and buy bitcoin? Where do I send money to? If I send money to an online gateway, is that secured or do I risk a hack on my bank account? I’m very confused. Once you have Bitcoin, it seems pretty easy to move money around. But there is not good on-ramping to convert fiat currency into cryptocurrencies. This is a huge barrier to entry.

4:20 pm: Half of me is thinking it’s crazy that Bitcoin is at $700 a coin when it’s so difficult to buy. The other part of me says that if someone ever figures this out and is able to bring it to the general public, Bitcoin is going to go through the roof. Leaning towards the latter.

4:22 pm: I still can’t figure out how to deposit cash into an exchange. Some won’t let me trade because of my location, and some are soooooooooo sketchy.

4:29 pm: So I’m on this exchange called Kraken — looks pretty legit. You have to be verified in stages to put dollars into the account.

4:33 pm: So I’m verified, but I just found out that I need to be tier 3 verified in order to put USD into my account. Sounds good, I’ll work on that next week.

Saturday

7:00 pm: Just got an email that my mobile phone number was compromised four days after registering with Kraken.  I can’t even.

search_results_-_joshliggett_gmail_com_-_gmail

Its been a week, and I’m nowhere near close to finding a secure way to buy Bitcoin. I’m starting to realize that I’m going to have to put some money in an exchange, which does not make me a happy camper. Off to do more research on how secure credit card and bank account numbers are on cryptocurrency exchanges. I’m going to keep going on my quest, so stay tuned for part two.

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