How to Buy and Store Bitcoin

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Following my previous post on investing in Bitcoin, here are a few pointers on how to go about actually buying it if you have decided to do so. Obviously this is not investment advice, it’s meant as a practical guide:

Firstly, beware! Cryptocurrency is still relatively new and it is not well regulated. Scams abound and many people have seen their hard-earned money disappear simply from choosing the wrong place to buy and store it. Make sure you do your research!

Buying Bitcoin

The easiest way to purchase Bitcoin is to open an account with a reputable Bitcoin exchange. If you are expecting to be able to do this nearly anonymously and with a minimum of ID documentation, I’m sorry to disappoint you. You will need to submit a copy of your ID, passport is the usual but other government issued ID’s will work, and a copy of a utility bill or bank statement to prove your residential address. If you live in Japan and are using an exchange outside Japan, then this document will need to be in English. Although paper statements are a little old fashioned, I recommend having your bank at home send you one every quarter so you have an English proof of address available. You will need it for pretty much any international financial transaction these days.

If you are looking for an exchange in Japan, Bitflier seems to be the largest.

If you prefer to buy your coins overseas, then some of the well known exchanges that will accept residents in Japan and other parts of Asia are Kraken, Gemini, and Xapo. I was recommended Bitstamp as a popular European exchange but they took two weeks to “review” my application and then came back and said they hadn’t received the documents I had uploaded…

Buy Bitcoin Worldwide is a useful resource for finding exchanges in your country, along with a list of pros and cons for each exchange.

If you are looking to invest over $20,000 then Genesis Trading has a well connected OTC desk.

Storing Bitcoin Securely

It is not advisable to leave your Bitcoins sitting on the exchange after purchasing them. Although security is improving, almost none of them are insured against theft and hacks still happen fairly regularly. Online wallets are convenient for shopping with Bitcoin but they are also not a safe place to store your coins.

I stored mine with Xapo, whose vault service is currently free of charge. They store their private keys in multi-signature form in vaults in Asia, the United States and South America.

Hardcore Bitcoin enthusiasts will tell you to keep your private keys completely offline. Probably the most popular hardware wallet is the Trezor device. With this device a pin code gives you access to your coins, and if you lose it you can regenerate your wallet using the 24 word recovery code.

If you don’t trust any storage solution that can be plugged into a computer, or are looking for a near indestructible back up for your hardware wallet then take a look at Cryptosteel.

I hope this is useful. The prospects for Bitcoin going forward are certainly exciting, but as I’m sure you are aware, the potential upside comes with significant risk. Don’t invest more than you can afford to lose is still the number one rule.

 

 

 

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