There are several of these web-based Bitcoin wallets to choose from, and they have different features, costs, and reputations to review and consider. Do you need business tools? Do you need currency exchange services? Do you need “cold” vault storage? Do you want multi-factor authentication? Whatever you need, there is someone who offers to provide it.
Once you have created an account and wallet, how do you get Bitcoins? There are two obvious answers. First, if you already had money in one currency and you wanted to convert it into a different currency, you could change it. Second, in the same way that you sell goods or labor for your local currency, you can sell goods or labor for Bitcoin. I explored both options.
Bitcoin exchanges work in a similar way to traditional currency exchanges. There are competing companies with different appetites for various currencies and they adjust their exchange rates accordingly. There are some with counters that you can visit in person, and there are even automated ones, such as ATMs, that accept currency, credit cards, or Bitcoin, and dispense currency or Bitcoin. I prefer to transact online, so I researched the various exchanges online. In each one, to buy Bitcoin, you have to establish and fund an account and then place an order to buy or sell Bitcoin, and there is a margin, just like the securities. In this sense, it is similar to a traditional brokerage account, but without the SIPC insurance. If the exchange is hacked, closed, or compromised in some other way, your deposits could be temporarily inaccessible or permanently lost. This has already happened to a couple of Bitcoin exchanges, reinforcing my earlier mental note of re-evaluating my risks if my balances become significant.
Next, I updated my company websites to indicate that we accept Bitcoin. I thought I could avoid fees and bid-ask spread if I could get someone to pay for my goods or services at the cash price. Years later, without earning a single Bitcoin, I went back to studying exchanges.
If you are unfamiliar with Level II stock quotes or “depth” charts, these are basically two lists. A list counts and sorts in price order all pending “buy” orders for a specific security, showing the number demanded at various price levels; the other classifies “sell” orders similarly. When someone places a “market” order to buy ABC, the pending “sell” orders for ABC are matched in order of price. So if someone sells 100 shares of ABC for $ 30 and someone else sells 500 shares for $ 31, the 100 shares of $ 30 will be consumed before a single share of $ 31 is sold on that exchange. Bitcoin exchanges work the same.
