Buying bitcoin takes research, but transaction is not complex
Posted December 28, 2017 2:10 p.m. EST
DAYTON, Ohio -- As the price of bitcoin fluctuates and the complex cryptocurrency piques the interest of people across the world, many are left wondering: Just how do you buy bitcoin anyway?
Investors and entrepreneurs say cryptocurrency -- digital tokens, like bitcoin, that have no physical backing and can be sent electronically from one person to another -- will be the preferred payment choice of people in countries around the globe in just a matter of years.
The Dayton Daily News investigated why people think bitcoin is the future of currency and how criminals use it for illegal activities. To better understand the confusing currency, I decided to buy a bit of bitcoin myself -- and it's not as easy as one might think.
An easy way to buy bitcoin is to do it online, but it comes with a few drawbacks. Popular websites have popped up for buying and selling digital currency, including Coinbase. Jad Mubaslat, a Wright State University graduate student, founded BitQuick.co, another online buying/selling platform.
The price -- and ultimate worth -- of bitcoin fluctuates, and experts are calling the cryptocurrency extremely volatile. The price is determined by open-market bidding on bitcoin exchanges. The worth of bitcoin could be compared to the way that gold prices fluctuate -- in the sense that gold has value because people believe it does.
Mubaslat said some people prefer to buy bitcoin in person or through a bitcoin ATM because it can take days for your bitcoin to show up in your virtual wallet when you buy it on a platform like Coinbase.
"The difference is, do you want the bitcoin today or do you want to wait?" Mubaslat said.
I decided to try to buy bitcoin from someone locally. I browsed LocalBitcoins.com, a website that hooks up local people who want to trade digital currency. I found a user, named cincinnatistuff, who agreed to sell $50 worth of bitcoin to me.
I talked briefly on the phone to "cincinnatistuff," a guy named Josh, and agreed to meet in front of a Lowe's in Cincinnati. Two hours before we were expected to meet on a snowy Saturday, he canceled through an email. "The price has dropped too much and we cannot afford to sell at a loss. We are taking our ads offline," the email stated.
Still in search of bitcoin, I hopped on Craigslist and found an ad for someone selling digital currency in Fairborn, Ohio. I texted seller Cole Honeycutt, and we agreed to meet at the Starbucks on Yellow Springs-Dayton Road to trade cash and grab some coffee.
Honeycutt, a 24-year-old from Yellow Springs, Ohio, buys and sells cryptocurrency both in person and online. The blonde-haired entrepreneur got into bitcoin as a hobby through gaming. He accumulated "quite a bit" of bitcoin in 2013, and maintained his day job working for a military contractor.
"It was easier to pay for game credits," he said.
Now he mines and trades cryptocurrency as his sole income. He's busy throughout the day with interested buyers -- trading crypto for cash online and in person. He meets buyers mostly through his Facebook page and paxful.com, a virtual kiosk.
After chatting for a while, he showed me how you trade bitcoin. First, a user has to download a virtual wallet app on their smartphone. I chose Blockchain, an app that allows users to collect both bitcoin and etherium. To transfer bitcoin, Honeycutt scanned my phone with a QR code -- and he chose the amount of bitcoin to send, $50 worth.
Almost instantly, the bitcoin showed up in my wallet. It equaled out to be about 0.00259730 bitcoin. "It usually takes longer," Honeycutt said.
To really make a profit now, you'd have to invest thousands just to obtain one bitcoin. The price of bitcoin has dropped in recent days, but is still worth a little less than $15,000. Now, I check my app once or twice a day to see how much the price has fluctuated.
I slid $50 in cash over to Honeycutt, which felt vaguely like a drug deal. Honeycutt said it really doesn't matter how much money you invest -- as long as you educate yourself on cryptocurrency and enjoy what you're doing.
"It's pretty cool. It's fun to get someone to download a wallet and get involved. You don't need much. You can literally invest $50 and get started that way," he said.
Most transactions on the bitcoin network aren't illegal -- it's typically people buying and selling bitcoin to each other. People in countries with high inflation or unstable governments are putting their money into bitcoin to avoid losing their savings. It's also used to transfer large sums of money internationally. It is quicker to transfer bitcoin than it is to go through a bank transfer, which can take weeks.
Some businesses also accept bitcoin including Overstock.com, Wikipedia, backpage.com and Square.
Kara Driscoll writes for the Dayton Daily News. Email: Kara.Driscoll(at)coxinc.com.
Story Filed By Cox Newspapers
For Use By Clients of the New York Times News Service