Bitcoins Are Now Available for Anyone to Buy, by G.S.

I saw an article today announcing PayPal will be accepting Bitcoins (BC) in the future through a BC payment platform called Coinbase. I am using Ebay sales to fund my preparations and supplement my income, so I already have a significant online signature. (I know, I know.) Many of you may be using Ebay and PayPal as well, so you may be interested in how you would also accept Bitcoins for your sales or purchases. Others out there might be interested in investing in Bitcoins, and Coinbase makes that possible for all on a limited scale.

You may be interested to read the article entitled PayPal to Accept Virtual Currency.

Coinbase allows you to buy small amounts of BC to make purchases online, and I am assuming if PayPal starts letting me accept BC payments for my Ebay auctions, BC payments would be deposited to my Coinbase account. Coinbase has made it possible to only buy a limited number of BC per day to keep high rolling investors from using their service (more below). They are interested in catering to the average Joe who is buying and selling on the Internet.

I thought some people might have questions about how the sign up and purchasing process works, and since I did not know for sure either, I decided to document the process as I went through it. Below you will find what is required of you, if you decide to give it a try.

A basic explanation is in order for those who do not know anything about BCs. Bitcoins are virtual currency existing only online. In the past it has been very difficult to buy and sell them with the money you have in the bank, and honestly most of the companies claiming to allow you to do this were unproven and a little sketchy. Before now, you typically had to “mine” the coins through a complicated process, requiring a high end computer. When I looked into this, it seemed many days of mining resulted in very little reward. You can read the basics about it in the article “How to Mine Bitcoins on Your Own”.

Coinbase is a virtual wallet for you to hold your Bitcoins or portions of coins, just like a bank account or PayPal. It lets you buy and sell Bitcoins from your real bank account after you have linked the two. Currently, Coinbase requires linked bank accounts to exchange Bitcoins for dollars, but I would bet in the future they will also accept PayPal account links. There is no fee for exchanging BCs with others or for paying merchants using BCs. There is a 1% fee for buying and selling actual Bitcoins from your personal bank account. The service is available in many, but not all, countries. A list of countries can be found online.

Not everything I have read online has been positive about Coinbase. At the end of last year, there were quite a few negative comments from people saying there were long lags between when orders were placed and when they were filled. Also, many people were denied, when trying to connect to their bank accounts for various reasons. I get the feeling Coinbase was simply not good about letting people know why they were denied or delayed, and this led to a lot of frustration. This lack of communication was probably due to the huge number of people trying to get a piece of the Bitcoin pie when it exploded in value last year. It does not appear Coinbase was staffed at the time to handle the number of customers trying to sign up.

In addition to accepting Ebay payments in Bitcoins, I decided to sign up now because Coinbase is going to need to be legitimate and responsive to customer needs if they are going to be working with PayPal. Their customer service seems to have improved. I am seeing a lot less complaining from customers in 2014, in addition to many people who are happy with their accounts. They are now more highly recommended than any other similar service within the Bitcoin crowd.

When I first clicked the Sign Up link in the top right corner of their welcome screen, it required my email and a password. A verification email was sent within seconds and allowed me to continue, once I clicked the link.

Next, it required my phone mumber and immediately sent a text with a confirmation number to my phone. Once I entered this number, I was able to continue with the sign up process. Coinbase will text you with a new number every time you log in and require you to enter it, unless you click on the “30 Day” box when you are entering the site. This is a nice security feature, since you have to have your phone to log into your account.

At this point I was surprised when they deposited my first $1 in Bitcoins into my account. I did not know this was going to happen, but I am now the semi-proud owner of .002659 Bitcoins. They also provided me with my unique personal Bitcoin Address, which I can send and receive Bitcoin transfers to and from. If you are interested in what this looks like, for me it is… 1HPW61f5CDRhCp8oANy4CN8ZAnVqc9nvLN

You will see a similar address on the Support page for SurvivalBlog. This site will happily accept Bitcoin for subscriptions and donations. Bitcoin has the advantage of being free of the entanglements of the Federal Reserve and the Central Banks, and it has been a favored alternative for SuvivalBlog support for a while now.

Next, it asked for my bank routing and account numbers. Two small deposits under $0.99 (99 cents) were sent to my account the next day. Once I verified the amounts, my account setup was complete. PayPal, and other similar online services, require the same information to connect a bank account to the wallet on their site.

This put my account on Coinbase at Level 1, which gives me the ability to purchase or sell up to $3,000 in BC per day. It also will allow me to set up my account to automatically buy up to $100 in BC each week from the account. To move up to a Level 2 account requires some additional information, such as my address, as well as making a purchase of BC and waiting 30 days. Level 2 will allow me to purchase and sell up to $50,000 per day and automatically buy up to $1,000 per week. I will never have a reason to buy or sell that much that I can think of, so I will not be providing the additional information.

I am ready to buy my first Bitcoin. The price at this moment is $367.67 per coin. The current price is easy to find on Coinbase. Even if you are not logged in, the price is available at the top of the screen.

The value has been falling steadily since the end of last year, when the Bitcoin price exploded to over $1,100. On July 1st of this year, the price was $635. On August 1st, it was $581, and on September 1st, $478. Just like buying and selling other investments, there is a difference between the buy and sell price, but the difference is more pronounced than you might be used to with Bitcoin. When you submit a Buy Order, your BC has to be purchased by Coinbase through one of the BC exchanges, which is not as in-synch as the Nasdaq or DOW, so buy and sell prices can fluctuate more than a stock buyer would be used to. It currently costs about $1.50 more to buy than to sell, which is about 0.4% of the BC value. The Coinbase fee for buying and selling is 1%, so I would pay Coinbase $3.67 for a 1 Bitcoin purchase of $367.

As you can see above, the value of Bitcoin is getting killed, so if you are opening this account to invest some money in Bitcoin, you are going to want to do some research and make a decision on when is a good time for you to buy. If you are opening the account to be able to accept Bitcoin payments, there is really no reason to wait. There is not a fee for having an account. You would not even need to synch up your bank account until you were ready to withdraw your Bitcoin payments, and by then you may be able to transfer them to PayPal instead or have a check sent in the mail.

If you choose to buy Bitcoins, a basic purchase takes about four days to be completed from the time you place the order. Coinbase uses these four days to insure the money arrives from your bank before they credit your wallet with the BC. If you want to receive your coins faster, you have the option of entering a credit card number, which will let you instantly buy coins. If the bank account does not have the funds required, they will charge your CC for the remainder you owe on your purchase.