Artwork courtesy of coindesk.com
The Cryptocurrency Stigma
I was honestly worried, the moment I downloaded my first Bitcoin wallet application on my phone. I'd heard the stories in the media: Bitcoin is used by criminals, it proliferates outside the law, and he FBI hunts people that utilize it. I expected a knock at my door as soon as the app was installed on my phone; men in dark suits were going to stuff me in the back of a van and I would never be heard from again.
There were no knocks on my door. There was no elaborate plan to snatch this humble hacktivist. Nothing.
What I did learn from the simple process of installing my Bitcoin wallet was an education in the usefulness and astonishingly simple user interface, yet stunning complexity of the world's most popular cryptocurrency. All of the frightening things I'd heard equated to hot air from law enforcement, and an intriguing smear campaign that had run rampant in the media.
The most famous use of Bitcoin, and the story most Americans heard, was related to the fall of the Silk Road. The Silk Road was an underground marketplace that took root in the Deep Web, the basement of the modern Internet. It was designed as an experiment in Internet consumer freedom, flourished into the most sophisticated trade network of the Information Age, then was shattered into hundreds of independent shards with the conviction of Ross Ulbricht, also know as the Dread Pirate Roberts.
The trial and conviction of the Dread Pirate Roberts was equally as secretive and convoluted as the Silk Road itself. The proceedings of Mr. Ulbricht's trial raise serious questions about due process in the United States, constitutional 4th Amendment rights that are supposed to protect citizens from illegal search and seizure, Bitcoin's value as a currency, and bring into sharp focus the extent the media will venture to discredit and slander citizens as long as it's in their best interest.(1)
Whenever I mention Bitcoin I've had reactions that range from curiosity, disdain, the currency being referred to as "Hacker Money," me being labeled as a drug dealer or human trafficker (lol), to the loss of close friends simply because of its mention. What makes the perception of a currency so powerful? All of the things mentioned can be just as easily purchased with government regulated currencies. I have never been questioned, detained, or arrested for using Bitcoin exchanges or wallet applications.
The negative perception of Bitcoin was born from the obscene amount of American tax dollars spent to demonize new technology the aging leaders of the United States government haven't taken the time to attempt to understand. That, and the fact that it is an untraceable, anonymous, non-taxed, more secure form of currency.(2)
Set Up Your Bitcoin Wallet In 10 Minutes
In preparation for writing this article, I downloaded every Bitcoin phone application and computer program I could find on the subject in late 2014. The majority of them were well put together and functioned eloquently. Many of them were also buggy, but I encourage the inquisitive reader to download different types of wallets for both your phone and your computer. Caution though, many products that seem legitimate are sometimes laced with viruses, malware, and spyware (like many other types of freeware). If you are not looking to become a cryptocurrency engineer, I would suggest using Mycelium Bitcoin Wallet for a phone, and Bitcoin Core(3) for a computer. These were the easiest programs for me to use and had some of the favorable ratings.
To find the Mycelium application, use your phone to navigate to the Google Play store or Apple Store and search for the "Mycelium Bitcoin Wallet" application. It's icon looks like this:
To find the Mycelium application, use your phone to navigate to the Google Play store or Apple Store and search for the "Mycelium Bitcoin Wallet" application. It's icon looks like this:
Mycelium Bitcoin Wallet permissions include:
- Mycelium uses your camera's video and phone functions to scan QR codes to transfer funds to and from yours and others' Bitcoin wallets.
- The network-based location service will not be enabled if your WiFi connection is turned off. It is my recommendation that Wifi be turned off any time you are making financial transactions on your phone unless it is necessary to complete the transaction. If you had your WiFi router configured by your cable guy out of convenience or necessity, leave your WiFi turned off while making any kind of financial transaction on your smart phone.
- Many common financial applications receive this blanket permission to utilize the "control Near Field Communication, full network access, receive data from Internet, and view network connections." Similar to WiFi connections, keep Near Field Communication (NFC) as well as Bluetooth shut off during financial transactions unless they are the primary means of completing your transaction. The last three components under the communications icon should be obvious: your phone will need to utilize these to be a phone instead of a doorstop anyway.
- Vibration is utilized for haptic feedback while using the application. If you have unique power conservation settings on your phone that alter the strength of your signal when the device sleeps, the last permission prevents your phone from erroneously cancelling a transaction by disconnecting the application when the phone sleeps.
- If you are concerned with any of these permissions, please look them up and further educate yourself on their features as well as compare them to banking applications on your phone. The more you know, the more educated your decisions will be about how you choose to manage your strong digital security posture.
After you have downloaded, scanned (usually automatically through your phone's factory default application), and installed the application, touch the Mycelium icon to open the app. You will see the following splash screen:
The first time you install Mycelium, you will be asked a few basic questions about your currency and language preferences. To write the article, I chose to use English and the United States Dollar (USD). For easy reading and reference, I have used a bold font on menu navigation items and italicized portions of the text that are interesting, but not absolutely required for the most basic operations in Mycelium.
Your Bitcoin wallet's Balance screen will load, and should look similar to the next image. At this point your Bitcoin Wallet is already fully functional (hopefully that took you less than 10 minutes), but I have highlighted (and occluded) some areas on the next picture so you can start learning about your new financial tool, as well as Bitcoin itself:
2 - On top, block 2 shows how much Bitcoin (BTC) is currently in your wallet. On bottom, Mycelium displays the conversion value of the BTC contained in my wallet, displayed in my currency of choice (USD). The bottom number in block 2 is directly related to the values contained in block 3.
- If there was any emotional reaction to the balance in my account, I would like to use the opportunity to bring up a valid point: I have several Bitcoin wallets, "for reasons." As long as you can keep your seeds straight, I would highly encourage you to keep your fattest cryptocurrency wallet on the most permanent device you own for reasons I'll explain in a moment.
3 - Block 3 shows the Bitcoin-to-currency of your choice's exchange rate based off of a Bitcoin market rating (in this case, Bitstamp). Similar to a stock exchange, as the demand increases for Bitcoin, the price for one BTC will fluctuate upward. When Bitcoin is perceived to be less useful and its demand is diminished, it value withers downward. This supply and demand cycle is reflected by how much one BTC is seen as worth, collectively.(5) There are also smart phone applications that will do Bitcoin currency conversions.(6)
The first time you install Mycelium, you will be asked a few basic questions about your currency and language preferences. To write the article, I chose to use English and the United States Dollar (USD). For easy reading and reference, I have used a bold font on menu navigation items and italicized portions of the text that are interesting, but not absolutely required for the most basic operations in Mycelium.
Your Bitcoin wallet's Balance screen will load, and should look similar to the next image. At this point your Bitcoin Wallet is already fully functional (hopefully that took you less than 10 minutes), but I have highlighted (and occluded) some areas on the next picture so you can start learning about your new financial tool, as well as Bitcoin itself:
1 - Your CryptoAccount sequence, or Bitcoin address, is similar to a bank account number. They are a unique identifier that is (currently) between 26 and 35 alphanumeric characters that begins with either a 1 or a 3. You don't need to write this particular type of CryptoAccount number down though; the kind of account we're working in right now changes this number every time you complete a transaction, or when you ask it to. Your account number is encoded into the Quick Response (QR) code located to the right of your CryptoAccount number. QR codes are a type of machine-readable matrix barcodes that can be scanned to input information into a computer, eliminating the need to type your account number.(4)
- The type of Bitcoin address currently displayed is known as an HD (hierarchnial deterministic) wallet account. A deterministic CryptoAccount uses a textual reference point, known as a "seed" to mathematically forge a new CryptoAccount number during the processing of each transaction. Even though the CryptoAccount number changes, the seed does not, which enables the continuity of your account and funds as you transact using your Bitcoin wallet. Don't worry, when your Mycelium wallet was created, your seed was created automatically. We will talk more about seeds (and how important they are) later in the article, as well as single address Bitcoin addresses.
2 - On top, block 2 shows how much Bitcoin (BTC) is currently in your wallet. On bottom, Mycelium displays the conversion value of the BTC contained in my wallet, displayed in my currency of choice (USD). The bottom number in block 2 is directly related to the values contained in block 3.
- If there was any emotional reaction to the balance in my account, I would like to use the opportunity to bring up a valid point: I have several Bitcoin wallets, "for reasons." As long as you can keep your seeds straight, I would highly encourage you to keep your fattest cryptocurrency wallet on the most permanent device you own for reasons I'll explain in a moment.
3 - Block 3 shows the Bitcoin-to-currency of your choice's exchange rate based off of a Bitcoin market rating (in this case, Bitstamp). Similar to a stock exchange, as the demand increases for Bitcoin, the price for one BTC will fluctuate upward. When Bitcoin is perceived to be less useful and its demand is diminished, it value withers downward. This supply and demand cycle is reflected by how much one BTC is seen as worth, collectively.(5) There are also smart phone applications that will do Bitcoin currency conversions.(6)
How To Make Bitcoin Wallet Deposits
This portion of the article will give us a break from the Mycelium Bitcoin Wallet application for a moment while we discuss how to get currency into your CryptoAccount. The recommended way to get money into your Bitcoin wallet is to deposit cash into a Bitcoin ATM.
Bitcoin ATM (CoinOutlet) located at the Overstock.com headquarters building at
6350 South 3000 East in Salt Lake City, Utah.
Most Bitcoin ATM's I have used require deposits in increments of $20.00. You do not need to buy a whole Bitcoin at a time. To add funds to your Bitcoin wallet, there is usually a fee of 0.0001BTC (the recent equivalent of $0.25 to $0.30USD). Follow the instructions on the ATM, scan your CryptoAccount's QR code when prompted, deposit bills one at a time, and collect your transaction receipt. Moments your session with the Bitcoin ATM is complete, you will see a confirmation of funds entering your account underneath your account balance in your Bitcoin wallet. You have just transferred hard currency into a Bitcoin system called the Blockchain (more information on the Blockchain and its associated jargon can be found about half way through one of my previous articles).
There are websites and applications available that will offer to transfer money from your credit card or bank account into your Bitcoin wallet. To this date, I haven't found a Bitcoin application that interacts with other electronic transaction methods that I trust.
- In fact, depositing money into a Bitcoin wallet this way negates some of Bitcoin's interesting features: its untraceable anonymity and that it can be used without a bank account. These features are preferred and can augment the overall security of your financial portfolio if used correctly.
- Many privacy-minded Bitcoin users prefer not to have Bitcoin attached to any sort of identifiable information; Bitcoin's design was constructed around this feature of anonymity. Using a bank account or credit card to transfer money into your Bitcoin wallet undermines this feature because any transaction made with your wallet could potentially be traced back to you. Con artists that prey on the naivety of inexperienced cryptocurrency adopters sometimes set up fake online exchanges they use to collect credit card and Personally Identifiable Information to steal identities. Conversely, if you own Bitcoin and find a merchant that will convert it into currency and deposit it into your bank or credit card account, the same types of PII are required. It's my advice to just stay away from Bitcoin vendors that ask for any information that could be used to electronically identify you.
Useful lists of Bitcoin ATM locations can be found at the end of this article under footnote(7). Also, a list of businesses that accept Bitcoin is listed under footnote(8).
To withdraw currency from a Bitcoin ATM, follow the instructions provided on selling Bitcoin on the ATM, scan your CryptoAccount's QR code, and collect your transaction receipt. Use the Bitcoin ATM's scanner to scan the QR code on your transaction receipt and the ATM will dispense the funds you requested. Some Bitcoin ATM companies give a customer 30 minutes from the time the receipt was printed to withdraw money from the ATM is was printed by. Bitcoin withdrawal transactions also cost 0.0001 BTC.
I thought the fees were somewhat unfair when I was new to Bitcoin, before I understood that 0.0001 BTC is the equivalent of about $0.30 cents. After I did the math (then got smart and downloaded a Bitcoin currency converter app), I realized that utilizing Bitcoin for some common transactions saves me about $2.00 per interaction.
I thought the fees were somewhat unfair when I was new to Bitcoin, before I understood that 0.0001 BTC is the equivalent of about $0.30 cents. After I did the math (then got smart and downloaded a Bitcoin currency converter app), I realized that utilizing Bitcoin for some common transactions saves me about $2.00 per interaction.
Important Bitcoin Wallet Functions
Before you continue playing around with your Mycelium wallet, probably the most important piece of advice I can give you is to backup your seed pass phrase. Seeds were mentioned toward the beginning of the article, and their importance cannot be stressed enough. If you plan on keeping any significant amount of currency in your wallet, complete the following steps:
Get a pen and paper ready, then press the menu button on your phone to bring up the Mycelium menu:
Select Backup from the menu, and you will be prompted with the following screen:
Select Yes, and be prepared to write or type your 25 word seed phrase. Once you have recorded your seed phrase, you will be asked to re-enter it into the Mycelium application before you can continue.
The importance of your wallet seed cannot be stressed enough. Do not give it to anyone, do not lose it, especially if you are planning on storing any significant amount of Bitcoin in the wallet. If your phone breaks, or your house burns down, or the laptop you save the phrase on bites the dust and you cannot recall your seed phrase, those Bitcoins are lost to the abyss of the Internet forever.
To hide your seed, I would suggest opening a safe deposit box account and storing it away. Or you can use the QR code software I mentioned earlier in the article, and carefully encode your seed phrase into a QR code, print it, and store it away in your locked filing cabinet or fireproof container you keep in your home. You can even have the phrase engraved on the inside of a metal watch band. However you decide to keep your phrase secret and secure, remember that it's the only way to retrieve your wallet if your device kicks the bucket.
A Few More Important Features
To create a permanent (non-HD) account to use in conjunction with a business or to accept charitable donations, click on the Accounts tab within your wallet, then click on the Add New Account icon in the top right corner of the screen:
The next screen will ask you what kind of account you would like to make. You are already set up with a standard HD account, so you want to select Advanced to generate a new, non-HD, single account:
You will be taken to the following screen, where you should select Generate new random key near the bottom:
A new random private key will be generated for you and displayed on the following screen. You can Shuffle the key, if for some reason that particular one doesn't fancy you. Click on Use when you are ready to proceed:
You will be asked to name your new, single Bitcoin account. I randomly named mine "Permanent Account" but you can choose whatever name you'd like:
After clicking OK, you will be taken back to your accounts tab and you will see your new account listed:
You will notice at the bottom of the new account the words "Backup missing" across the bottom of the new account. Click on the new account to highlight it, then select Create Backup in the top right hand corner of your screen:
I love economics and the human system of assigning "value" to something. Studying Bitcoin and other cryptocurrencies has given me new ways to exchange goods and services, study encryption algorithms, follow a "stock market" outside of government control, and make a bit of money on the side. It is especially interesting to watch the value of Bitcoin go up or down based on current global events, most recently the Greek and Eurozone crisis.
Now, that wasn't so bad. Federal agents still haven't Rainbow Sixed their way through my living room window while I was writing this, or while I was buying a new coffee table with Bitcoin. Enjoy your new wallet, encourage your friends to download Mycelium and try it out. The most interesting functions of Mycelium happen after you begin transferring currency back and forth, and will introduce you to the amazing complexity of the Bitcoin Blockchain.
Please reference the links listed below for more information. I wish you the best of luck in your endeavors.
SilentVector33
This will take you on a wild ride that is difficult to explain, because phones will not allow you to take screenshots of the procedure. Carefully follow the instructions, write down your password, and send yourself the encrypted PDF file.
Remember, this process is different from your master seed backup. Your master seed encompasses all your Mycelium wallet accounts; this process of creating and backing up a single account is for that account only.
Enjoy Your Bitcoin Wallet
Every other function within the wallet can be played around with, while you study its specific function. Be sure to take a look at the links below to find a Bitcoin exchange near you, watch the value of Bitcoin over time (remember to always invest while it's value is low to reap the monetary benefits when it goes up), and learn more about wallets and exchanges. Bitcoin mining, which I will probably do an article on in the future, is also an extremely interesting process that explains where your 0.0001 Bitcoins go when you complete a transaction.I love economics and the human system of assigning "value" to something. Studying Bitcoin and other cryptocurrencies has given me new ways to exchange goods and services, study encryption algorithms, follow a "stock market" outside of government control, and make a bit of money on the side. It is especially interesting to watch the value of Bitcoin go up or down based on current global events, most recently the Greek and Eurozone crisis.
Now, that wasn't so bad. Federal agents still haven't Rainbow Sixed their way through my living room window while I was writing this, or while I was buying a new coffee table with Bitcoin. Enjoy your new wallet, encourage your friends to download Mycelium and try it out. The most interesting functions of Mycelium happen after you begin transferring currency back and forth, and will introduce you to the amazing complexity of the Bitcoin Blockchain.
Please reference the links listed below for more information. I wish you the best of luck in your endeavors.
SilentVector33
References & Additional Information:
(1) Inside the Dark Web - Documentary (2014) - (please watch impartially) https://youtu.be/qXajND7BQzk
(2) Bitcoin, Wikipedia - https://en.wikipedia.org/wiki/Bitcoin
(4) To learn more about QR codes and generate your own, visit www.the-qrcode-generator.com/
(5) To observe some Bitcoin market ratings in action, visit bitcoincharts.com/markets/. My favorite simplified website I use as a Bitcoin ticker can be found at btcvert.com.
(6) The Bitcoin currency converter I like the most is the Bitcoin Converter by AM SOFT (@amsoft_apps).
- http://coinoutletatm.com/ - This company is my preferred way of exchanging US Dollars for Bitcoin because they have an outlet that can be accessed 24 hours a day, 7 days a week at Overstock's headquarters in Salt Lake City. I have spoken with their company representatives on the phone and through email, and I can tell you first hand that they are the most kind, helpful customer service branch of any company I have ever dealt with.
- https://localbitcoins.com/ - If you sift though the data, this website will list local Bitcoin currency exchanges and machines. Beware though, it also lists many "businesses" that will accept MoneyGram and Western Union funds transfers in exchange for Bitcoin; many of these may be scam contacts who are out to get your money. It also lists people (much like Mycelium does) that you can physically contact to exchange currency. I only do this with people I actually know, but if you're feeling especially adventurous feel free to indulge.
- http://www.coindesk.com/bitcoin-atm-map/ - CoinDesk.com is one of my favorite and most professional sites I have found for Bitcoin information and exchanges in my area. You can also follow them on Twitter @coindesk for updates on the latest Bitcoin news.
- https://www.reddit.com/r/Bitcoin/ - I have also found an incredible amount of information on the Bitcoin subreddit.
(8) A (non-inclusive) list of businesses that accept Bitcoin:
- OverStock - www.overstock.com
- Fiverr - www.fiverr.com
- Wordpress - www.wordpress.com
- Amazon - www.amazon.com
- Target - www.target.com
- Paypal & Ebay - www.paypal.com and www.ebay.com
- CVS - www.cvs.com
A more inclusive list can be found at http://www.bitcoinvalues.net/who-accepts-bitcoins-payment-companies-stores-take-bitcoins.html
If Bitcoin was only used to buy illegal merchandise, I doubt these companies would allow me to buy my next book or television from them with Bitcoin.
No comments:
Post a Comment