Disclaimer: I know approximately jack squat about speculative investing, and only slightly more about how Bitcoin works. Be prepared to lose.
If you decide to buy one (or some) Bitcoin as an investment, here’s my (USA-specific) advice:
- Buy Bitcoin via Coinbase. It’s easy and works with a standard USA checking account. Write down your purchase details for tax purposes.
- Don’t leave your Bitcoin at Coinbase. Create a paper wallet and send your Bitcoin to that.
- Lock the paper wallet away in a safety deposit box and forget about it.
I’m not sure how to properly pluralize “Bitcoin” so I didn’t bother ever adding an “s” in this post.
Last of all, consider actually using Bitcoin, instead of just investing! It’s complicated. It’s scary. You will be challenged. You’ll learn about some interesting subjects, and you’ll be on the forefront of what is surely a revolution in currencies.
It appears Coinbase paper wallet private keys are in a proprietary format, so my “easy” method won’t work. Here are instructions to really trade your Casascius physical Bitcoin for U.S. dollars.
- Obtain the private key. Carefully remove the hologram sticker from the back of the physical coin. A bunch of letters and numbers are printed on the back (example). Those letters and numbers comprise the “private key” for a Bitcoin wallet containing some amount of Bitcoin(s). Whomever possesses this private key may send any fraction (as little as 0.00000001) of the wallet value to another wallet.
- Create a wallet on Blockchain. https://blockchain.info/wallet/new
- Import the Bitcoin to Blockchain. In your Blockchain wallet, click “Import / Export”, then paste the mini private key from your Casascius physical Bitcoin under “Import Private Key” and click “Add Private Key”.
- Sign up on Coinbase. Use this referral link and I’ll get $5 after you exchange 1 Bitcoin.
- Send the Bitcoin to Coinbase. On Coinbase click “Send/Request”, then “Request Money”. Leave the form blank and just copy the address. In your Blockchain wallet click “Send Money” and use the address you just copied.
- Sell your Bitcoin for USD. This part is pretty straightforward. Click on Buy/Sell to sell your Bitcoin and transfer the USD to your bank account.
UPDATE: it appears Coinbase paper wallet private keys are in a proprietary format, so the procedure in this blog post doesn’t work. Try this instead–I just tested it, so I know it works!
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