Trying to understand Bitcoin and how it works can be a bit overwhelming for new investors as it’s extremely complex. Thankfully, you don’t need to understand everything about how cryptocurrency works to buy and sell bitcoin.
The basics of sending and receiving bitcoin aren’t too difficult as long as you have the right tools. Once you have a cryptocurrency wallet, it’s as simple as following some basic instructions. Here’s what you need to know to learn how to send and receive bitcoin.
How to send bitcoin
Learning how to send bitcoin to someone may seem complicated to cryptocurrency beginners, but it isn’t as hard as you’d think. In fact, sending bitcoin doesn’t require much information at all. All you need to know is what Bitcoin wallet address you’re sending the cryptocurrency to and how much you want to send.
Bitcoin wallet addresses come in several forms. Typically, they’re a string of case-sensitive numbers and letters. The addresses can vary in length from 26 to as long as 35 characters. These addresses can also be represented by a QR code, which looks like a square with a bunch of dots in it. Your phone can scan the code and translate it into the alphanumeric Bitcoin wallet address.
Of course, the precise details of sending cryptocurrency take a bit more work. In order to hold cryptocurrency, you must have a crypto wallet. Each wallet may have a different method of sending cryptocurrency to another user.
In general, sending bitcoin works as follows:
- Log in to your cryptocurrency wallet.
- Select the send cryptocurrency option.
- Input the destination wallet address.
- Input the amount of bitcoin to send.
- View transaction fees for sending bitcoin.
- Confirm transaction.
You can typically send bitcoin from your computer or mobile device. Some iOS and Android apps may allow you to hold and send bitcoin without having your own wallet. Instead, your bitcoin is stored in their wallets. You may be able to transfer the bitcoin to others on the same service without using a traditional Bitcoin wallet address.
This is because the service holds custody of the bitcoin the entire time. Services like Cash App may offer this feature. However, other services, like PayPal, only allow you to hold, sell, or buy bitcoin without the ability to transfer it to others or to different addresses.
How to receive bitcoin
Learning how to accept bitcoin is even easier than sending bitcoin. All you have to do is supply your wallet address to the person sending you bitcoin.
To receive bitcoin, you generally take the following steps.
- Log in to your cryptocurrency wallet.
- Select receive.
- Copy your wallet address.
- Send your wallet address to the person sending you bitcoin.
After you follow those steps, you must wait for the bitcoin to be deposited into your wallet. The person sending you bitcoin may provide you with a transaction ID. If they do, you can check the status of the transfer by using a block explorer. This is essentially a search engine that searches the blockchain’s records for your particular transaction.
If you want to receive bitcoin and don’t already have a wallet, the best cryptocurrency exchanges typically provide this service for you. You can easily get a cryptocurrency wallet at the following websites or wallet apps:
Bitcoin transaction fees explained
Whenever you transfer bitcoin using the blockchain, the transactions must be verified. This service requires paying a fee. The fee varies depending on how busy the Bitcoin network is. The busier the network is, the more it costs to get your transaction processed quickly. Larger transactions also require more processing power to verify, so they have higher fees than smaller transactions.
Fees may also be charged by the service you use to transfer bitcoin. The sender pays fees. Although your wallet or exchange may charge a fee, recipients should not have to pay any fees to use the blockchain. Estimated costs should be disclosed prior to the final submission of a transaction.
6 tips for protecting your bitcoin
Bitcoin is a valuable asset worth protecting. Due to the way the cryptocurrency works, you can’t get it back after you send it. For that reason, properly protecting your bitcoin is essential. Here are a few tips to help protect your bitcoin:
- Use a unique password and change it regularly. Reusing passwords across multiple accounts, including your Bitcoin wallet, can leave your digital assets open to unauthorized access. Instead, use a unique password for your Bitcoin wallet and change it regularly.
- Always use two-factor authentication. Two-factor authentication requires inputting a unique security code from a device only you should have access to in order to log in to your wallet. Even if someone else gets your password, they can’t log in without the security code.
- Use a secure internet connection. Public Wi-Fi networks can be subject to unscrupulous activity. Only use secure internet networks you trust and a hardwired network, if possible.
- Consider using a cold storage wallet. Cold storage wallets physically store your bitcoin offline. While these make it more cumbersome to trade, they provide greater security against hacking as long as you protect and do not lose your physical wallet.
- Never share private keys. Crypto wallets have public and private keys. Your public key allows you to receive funds, and this is what you share with others. Your private key is how you unlock access to your transactions. Private keys are necessary to transfer your bitcoin. Never share your private key with anyone.
- Carefully choose which providers you use. When storing cryptocurrency worth large sums of money, it's essential to select providers that take your security seriously. Investigate all providers you use before trusting them with your bitcoin.
Can bitcoin be converted to cash?
Yes, you can convert bitcoin to cash by selling your bitcoin. In this case, you’re selling your bitcoin (BTC) for U.S. dollars (USD) rather than for another cryptocurrency or other form of value. Once you’ve sold your bitcoin, you can transfer it out of your wallet and deposit the cash into your bank account.
Can I send bitcoin to someone without a wallet?
For someone to receive bitcoin, they must have a way to accept it. Technically, you cannot send bitcoin to someone without a wallet because bitcoin must be held in a wallet. Plenty of services offer Bitcoin wallets even if they aren’t advertised as such. After the receiver signs up for one of these services or wallets, you should be able to send bitcoin to them.
How much does it cost to send bitcoin to someone?
The cost to send bitcoin to someone depends on several factors. Fees are higher when several transactions are occurring at once, or if the network is congested by larger transactions. Fees can also vary by the service you use. These fees have been almost as much as $60 in 2017 but recently have been much lower (around the $3 to $5 range).
Investing money in Bitcoin is becoming more popular as the cryptocurrency continues to increase in price. If you decide you want to invest in Bitcoin, you must know how to send and receive the cryptocurrency.
After you set up a crypto wallet, sending bitcoin is as easy as inputting a wallet address and the amount of bitcoin you wish to send. Receiving bitcoin is even easier as you just have to share your wallet’s public address with the sender. If you’re new to cryptocurrency and are ready to start investing, here’s our guide to help you learn how to buy cryptocurrency.
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