How To Get Bitcoin | Terence Zimwara
So you might have heard about bitcoin or perhaps you probably now have a bitcoin wallet yet you do not know where to get them.
Buying bitcoin for the first time can be frustrating; there are a number of steps you need to take to complete your first buy.
In any case, there is really only 21 million bitcoins that will be created or minted. A majority of the 21 million bitcoins are already minted (mined) and are in the hands of owners that hold them as some form store of value. It means there slim possibilities of them selling their bitcoins.
Still, there are ways one can acquire bitcoins. In this article, we explore some of these avenues.
To mine or to buy
Readers should remember that when bitcoin launched in 2009, there was only one way to acquire these then. It was through mining.
Mining is carried out by powerful computers or “miners.” The miners perform tasks that secure the Bitcoin network. In return, they get rewarded in the form of bitcoins.
While mining remains one way of acquiring bitcoin, it has become less rewarding for miners with fewer and less powerful machines.
For example, before the so-called halving on May 11, the block reward was 12.5 bitcoins every ten minutes.
However, bitcoin is pre-programmed to reduce the block reward every four years. That is what happened after May 11.
Miners’ rewards are now 6.25 bitcoins for every block. In 2024 this will further reduce to 3.125 bitcoins. This halving process will continue until 2140 when the last bitcoin gets extracted.
It should be noted that this first option is now just for illustration purposes. Not many prospective holders of bitcoin would be interested in going through this process.
Cyptocurrency exchanges next best option
This leads us to the next best option—cryptocurrency exchanges. A majority of new bitcoin buyers indeed find cryptocurrency exchanges to be one of the more secure and convenient ways.
Cryptocurrency exchanges enable customers to acquire bitcoin and a host of altcoins using their fiat money.
Typically, exchanges like the peer to peer platform, Paxful enable trustless trading with a personal feel.
Some cryptocurrency exchanges offer custodial services as well while others do not. An exchange usually helps prospective bitcoin buyers to create wallets—where cryptocurrencies are stored—and purchase digital currency for the first time.
Cryptocurrencies exchanges come in two forms, decentralised and centralised.
Decentralised exchanges operate without a central authority. A decentralized cryptocurrency exchange (DEX) cuts out the middleman by creating a trustless environment.
Deals are made through smart contracts and atomic swaps so that currency never passes through the hands of an escrow service – it’s just peer-to-peer. Such exchanges allow peer to peer trading of cryptocurrencies.
With centralized exchanges, a user can store their money on the exchange. At that point,…