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Bitcoin for beginners

  • A mock bitcoin is shown in this photo illustration from 2013.
A mock bitcoin is shown in this photo illustration from 2013.
January 30, 2014|By Mick Swasko, @swasko | RedEye

So you saw your cool, but sort of nerdy, friend cover your beer tab with Bitcoin and now you're kind of curious. It's possible to start building a virtual cash pile, but be warned, it's far from walking into a bank and opening a new account. There's a process, and quite a few things you should know before stockpiling your cash in zeros and ones.

1. Read up on the subject, and know that there are risks. BitCoin is hardly a savings account, so it's best to brush up on the subject before handing over a dime. Remember: The "Bitcoin Crash of 2013" in December saw the value of a bitcoin crash by almost half in a single day.

2. Once you're comfortable with the subject, obtain a digital wallet. Think of it like your bank account: It's what will hold bitcoins once you eventually get them. It allows you to both pay and accept bitcoin payments from other users, and Bitcoin makes recommended wallet services available on its website.

3. So you have a wallet, but it's empty. You have two options: sell a good or perform a service for someone who already has bitcoins , or use an exchange. Exchanges connect to your bank account and allow you to convert cash to BTC. Many charge a  fee for transfers to and from Bitcoin, and it's good to keep in mind that the price of bitcoins can range wildly. Government warnings, speculation and supply and demand all factor into their value.

4. Spend. Now that you have BTC in your digital wallet, you can find Chicago retailers, online shops like overstock.com or service providers that accept bitcoins as payment. Additionally, using a mobile app, bitcoins can be transferred from person to person by taking a picture of a digital code on a phone.

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