bitcoin price crash

As expected, the media has gone into a frenzy over the recent bitcoin crash. As we plunge below $4,000, the familiar cries of “bitcoin is dead” are ringing again.

True, bitcoin is now down more than 80% from its all-time high in December last year.

But now is a good time to remind everyone that we’ve been here before. Twice, actually. Bitcoin has suffered larger percentage falls than this and survived.

Worried about the crash? Here are 9 strategies for surviving the crypto crash.

Of course, that doesn’t mean history will repeat itself, but it does prove that bitcoin is resilient. Let’s take a quick look back through history.

June 2011 Bitcoin Crash

Top price: $30

Bottom price: $2

Percentage drop: 93%

How long to recover? Two years

bitcoin crash 2011
Bitcoin’s price rise and crash in 2011. Source: 99 Bitcoins

What triggered the price rise?

In June 2011, bitcoin was barely two years old. It began to creep beyond the obscure cryptography forums and into some high-profile tech publications.

New exchanges cropped up, making it easier to purchase bitcoin and the Silk Road dark web marketplace attracted new bitcoin users. 

At the beginning of June 2011, Gawker published its groundbreaking article on Silk Road, drawing enormous attention to bitcoin (arguably for all the wrong reasons). By the end of the month, bitcoin topped out at $30.

And the collapse?

The world’s biggest crypto exchange at the time, Mt. Gox, was hacked, with thieves making off with 2,000 bitcoins. This wasn’t the fatal blow for Mt. Gox (that came later, in 2014). But it was the first in a series of major hacks in the crypto market.

Coupled with the negative publicity around bitcoin and its association with drugs and the Silk Road, a harsh sell-off began.

The bitcoin price fell from $30 in June to $2 in November: a 93% fall in just five months.

It wasn’t until April 2013 (almost two years after the high) that it hit $30 again.

November 2013 Bitcoin Crash

Top price: $1,026

Bottom price: $152 (on Bitstamp exchange)

Percentage fall: 85%

How long to recover? Three years

Bitcoin crash 2014
Bitcoin rise and crash 2013-2014. Source: CoinMarketCap

What triggered the price rise?

In March 2013, the government of Cyprus did something unprecedented. They confiscated the money in people’s bank.

Anyone with more than €100,000 in the bank had a percentage of their funds frozen or turned into shares of the failing bank. It caused outrage. 

To avoid the brutal policy, Cypriots turned to bitcoin.

For the first time, people realized that bitcoin could be a viable alternative to government-controlled fiat currencies. The cryptocurrency began an epic price run.

There was even positive sentiment from governments – the US Senate spoke of the promises of virtual currency and China told its citizens they were free to buy bitcoin.

And the collapse?

Unfortunately, the flurry of excitement about bitcoin overwhelmed the fledgling infrastructure.

The biggest exchanges were slammed with activity and security holes were breached. Mt. Gox was hacked with 744,000 BTC stolen (worth $350 million).

At the same time, China changed its mind on bitcoin, banning financial institutions from trading bitcoin.

The Mt. Gox. scandal and bankruptcy continued through the year. Meanwhile, governments tightened their grip. The bitcoin price bled out for over a year until it finally bottomed at $152 in January 2015 on the Bitstamp exchange.

The bitcoin price didn’t climb back to $1,000 until early 2017, three years after the previous high.

December 2017 Bitcoin Crash

Top price: $19,792

Bottom price: $3,600 (so far)

Percentage drop: 81% (so far)

Time to recover: ?

Bitcoin crash 2018
Bitcoin price rise and crash 2017-2018. Source: CoinMarketCap

What triggered the price rise?

During bitcoin’s three-year “winter,” a whole blockchain industry was being built. Ethereum gained traction as a platform for new crypto projects. Big-name players like IBM began experimenting with blockchain technology. Ripple established itself with some of the biggest banks in the world.

At the same time, ICO-fever gripped the markets – providing a new way to invest in crypto startups.

But the biggest catalyst was the launch of a bitcoin futures market. It offered the first route for institutional investors to trade the bitcoin market. This announcement sent bitcoin flying to $20,000.

And the collapse?

Again, the flurry of activity exposed a lot of problems in the crypto infrastructure. The Bitcoin network couldn’t handle so much activity. Confirmation times took days and it cost up to $50 to make a bitcoin transaction.

The much-hyped bitcoin futures market also allowed people to bet against bitcoin’s price, introducing new short-sellers to the market.

And the ICO hype fizzled out as investors realized many of the projects were useless or outright scams.

What Next?

If history tells us anything, it’s that bitcoin could fall further yet. We’ve seen bigger percentage drops in bitcoin’s short life, and long, dark “winters.”

There is light at the end of the tunnel. Potential catalysts for a price surge include Fidelity’s proposed crypto trading and custody service, the much-hyped Bakkt launch, and the expectation of a bitcoin ETF. 

One thing’s for certain, though, it’s too early to call the “bottom.” A long process of rebuilding lies ahead.

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bitcoin christmas gift guide

All I want for Christmas is crypto! You can almost imagine a glittery Mariah Carey draped in baubles singing the song accompanied by a chorus of bitcoin whales. 

We live in an exciting new financial world that is changing every facet of our lives. Even Christmas. With the infamous Black Friday upon us and Christmas peering at us from around the corner, now is the time to get all your Christmas gifts in-check.

A recent report indicated that teenagers want cryptocurrency and digital gaming currency this Christmas, not money or gift cards, so let’s see what bitcoin presents are out there.

Bitcoin Hardware Wallets

Buying a crypto hardware wallet is the perfect gift for a crypto fanatic. You can never have enough security when it comes to storing your digital assets. Plus, these devices are slick and stylish. Hardware wallets are similar to USB storage sticks but optimized to keep your crypto safe offline. Some of the best hardware storage products on the marketplace are Trezor, Ledger and Keep Key.

Block Explorer recently reviewed 12 of the best crypto wallets to help you make the right choice.

Ledger nano best hardware bitcoin wallet

Buying Cryptocurrency as a Present

Do you have friends or a younger family member who is interested in crypto but are yet to take the plunge? Why don’t you do it for them? There are all sorts of ways you can introduce your friends and family to crypto this Christmas, here are a few.

Give the Gift of Bitcoin

The easiest way to give a friend some bitcoin for Christmas is by giving them a crypto paper wallet. They are the ideal gift for those who do not have a physical bitcoin wallet or access to an exchange. The paper wallets can be customized to give a gift in the crypto of your choice.

christmas gift bitcoin paper wallet

Fortnite V-Bucks Instead of Gift Cards

Gift cards were always a solid choice when it came to giving presents to young people. But the game has changed. The game has changed to Fortnite! A recent report by the asset management company Piper Jaffray shows that American teenagers now prefer V-Bucks or crypto as opposed to money or gift cards.

V-Bucks, although not exactly crypto, is the digital currency of choice on the ultra-popular Fortnite game, which has taken the world by storm this year. 1,000 V-Bucks costs $9.99, making it a cheap yet appealing gift. Alternatively, buying PlayStation4 PSN credit cards, which can then be used to purchase V-Bucks online or PS4 products, is also an ideal gift for young gamers. 

fortnite v-bucks christmas present

Cryptocurrency Tech Geek Gifts for Christmas

If your family or friends are keen crypto users and enthusiasts, maybe you need to seek out some crypto tech geek gifts for Christmas.

HTC Exodus 1 Blockchain Smartphone

Nothing says Merry Christmas to a crypto-head like buying them the HTC Exodus blockchain smartphone. Part phone, part crypto wallet, the Exodus offers simple access to a range of Dapps and can act as its own blockchain node to trade cryptocurrencies. The phone is currently only available to buy in bitcoin or ether, and if you order now, it will be posted out in early December. 

htc-exodus-1-blockchain phone christmas present

Bitcoin Mining Hardware for Christmas

It was once possible to mine bitcoin on your computer (ah, the good old days!) Nowadays, it requires hardware equipment called an ASIC miner. Ranging from $39 at the bottom end to $3,000 + at the top end, there are options for every budget. 

However, we should point out that bitcoin mining is by no means profitable. And if you’re a parent, be aware that your “gift” will probably double the household electricity bill! 

bitcoin miner christmas gift

Crypto Novelty Gifts

What if you’re on a tighter budget? If so, a novelty crypto gift is the best way to go. Not only are they value-for-money, but can also bring a smile to the face of a friend or family member for less than $30.

Cryptocurrency Gift Coins

On Amazon and some other online marketplaces, you can buy cryptocurrency coin gift sets. They are a cool little collector’s item and come in sets with your favorite coin names such as bitcoin, monero, ethereum and so-forth. For as little as $19.95, you can’t go wrong.

crypto coins gift set

Bitcoin Mugs and Cups

A cool little novelty present you could buy a friend is a bitcoin mug or cup. Check out this Bitcoin mug that only costs $14.95 on Etsy. An ideal present for a bitcoin enthusiast.

bitcoin mug gift

Crypto T-Shirts and Clothing

What do you buy a crypto friend who already has everything? A crypto T-shirt with the words “Just Hodl” on the chest that costs only $18.99. There’s a wide range of crypto-inspired t-shirts online that offer a cheap and fun way to fill up the Christmas stocking this year.

just hodl tshirt christmas gift

Buying Digital Assets Christmas Presents

In this day and age, you can buy digital assets on the blockchain. Here are some options for you:

Cryptokitties as Collectible Digital Pets 

Cryptokitties is a blockchain-based collectible game where you can purchase virtual cats with crypto (think Pokemon on a blockchain). It’s possible to buy, sell and breed the cryptokitties. You can buy a friend a cryptokitty, which they could maybe even sell for a profit one day.

give cryptokitty as a gift

Be a Dictator with Your Own Crypto-Countries

Ever wanted to be a dictator of your own country? You can buy your friend a crypto country for Christmas. Crypto Countries gives you the chance to buy and own countries as smart contracts on the Ethereum blockchain. You can take ownership of the country, which automatically increases in price (valued in ETH). In some cases, if another user desperately wants to buy your country, they might even pay double back to you in ETH.

cryptocountries gift

Buying Virtual Land on Decentraland

You could buy virtual land as a Christmas gift on the VR Decentraland platform, which is one of the most innovative projects on the Ethereum blockchain. As with physical real estate, you can improve the price of the land and sell it on for a profit. Decentraland’s next “land auction” is launching in December, just in time for Christmas.

Decentraland-Review-The-Blockchain-Virtual-World

High-End Luxury Crypto Gifts

If you think that novelty Christmas gifts are for cheapskates and you want to throw the big bucks around, how about a luxury watch or flash sports car? 

Buying a Rolex with Crypto for Xmas

If your friend is a ‘he’, how about this stunning Rolex Yacht-Master II for 10.68 BTC? If the present is for a ‘she’, why not splash out on the jaw-dropping Rolex PearlMaster 34 that costs in the region of 38.8 BTC?

bitcoin watch

Or a Lambo?

It’s every bitcoiners favorite meme: when you make it rich in crypto, you buy a Lambo! You can buy a 2017 Lamborghini Aventador LP 750-4 for approximately 120 BTC. Or if you are looking for something more affordable, you could purchase a 2017 Ferrari 488 3.9 GTB Spider 2DR for 63 BTC. 

bitcoin lambo christmas gift

Whatever you buy this Christmas with your crypto, just remember that the thought is actually more important than the gift or its price. And if you believe that, I have an authentic Egyptian Pharaoh skull in immaculate condition for only 5 BTC. It’s a bargain. Happy hunting! 

bogdanoff-brothers-plastic-surgery-1

Every Friday, we take a light-hearted tour through the best memes, colloquialisms, and oddities from the cryptoverse. As the bitcoin price continues to fall, we look at meme-culture’s favorite cryptocurrency manipulators: the Bogdanoff Twins. Carty Sewill explains.

It hasn’t gotten any better. In the past week, bitcoin has fallen from grace. We could blame gravity but that’s no fun. In such dire times, we’re in need of a scapegoat. Well, look no further than the twins; the Bogdanoff twins. The guys manipulating the markets and dumping bitcoin right after you “buy the dip.” 

Well, according to this meme, anyway.

bogdanoff twins crypto meme
The Bogdanoff Twins

Igor and Grichka Bogdanoff are French celebrities and acclaimed science-fiction producers known for their television series Temps X. The two were also involved in an intriguing academic controversy known as ‘The Bogdanov Affair,’ and possess a penchant for plastic surgery which contributes to their iconic unearthly looks. In December 2016, users on 4chan began ironically suggesting the twins had an immense influence on French politics. A meme was born.

bogdanoff twins bitcoin meme

The OP (original poster) asks for a rundown on the Bogdanoff Twins. Replies include:

> in contact with aliens.

> rumored to possess psychic abilities.

> control France with an iron fist.

> own castles and banks all over the world.

> will bankroll the first cities on Mars.

It’s a meme that would wind its way through political, conspiratorial, and, finally, cryptocurrency subcultures to become synonymous with bitcoin and big red candles. The mythos surrounding these guys includes everything from being “in contact with aliens,” to having a “400 IQ,” or making, “the Rothchilds bow to the Bogdanoffs.” The kind of power capable of saving Europe from political disaster with a phone call. 

Or destroying bitcoin’s market capitalization.

That’s what they’ve been doing for months, if the meme is any indication. The twins prepare the bulls, make the call, and tell their minions to “dump eet.” A maxim that’s left many a bitcoin holder destitute, or ‘bogged,’ and short-sellers ecstatic.

People buy the dip and pray for green as the Bogdanoff’s scheme the next dump. The secret’s out. Now we know what’s really going on behind the blockchain, thanks to video-maker Bizonacci and memers like him. 

From YouTube videos to forum posts, there has been an all-out public awareness campaign to expose these market manipulators. Awareness is key but it does nothing in the wake of such power. The Bogdanoffs will likely continue their bearish ways and there’s little we can do but inform, educate, and hope.

A Bogdanoff “making the call”

bitcoin cover

You’ve probably heard the stories about bitcoin…

The Norwegian student who bought 5,000 bitcoins for $26 in 2009. Four years later, he was a millionaire.

Or the early adopter who bought two pizzas for 10,000 bitcoins (worth $70 million at today’s prices).

But what is bitcoin, exactly? How does it work? How do you buy bitcoin? Where should you store it? And is it safe? This guide will take you through it step-by-step (without any confusing jargon).

Contents

PART 1: What Is Bitcoin, the Digital Currency?
PART 2: What Is Blockchain, the System That Makes It All Work?
PART 3: How to Buy, Store, and Spend Bitcoin
PART 4: Should I Be Worried about Hacks and Scams?
PART 5: What’s Next for Bitcoin?

PART 1: What Is Bitcoin, the Digital Currency?

Before we dive in, you need to know that bitcoin is actually two things:

1. bitcoin (with a small b)

This is the cryptocurrency; digital tokens sent back and forth to one another (or used to buy pizza). When people talk about bitcoin, this is what they’re usually talking about.

2. Bitcoin (with a capital B)

This is the revolutionary network on which the currency runs. It’s also known as the Bitcoin blockchain.

Let’s start with the cryptocurrency.

bitcoin infographic - what is bitcoin and who invented it?

Infographic courtesy of Kriptomat

Bitcoin Basics

 peter thiel bitcoin“I do think Bitcoin is the first [encrypted money] that has the potential to do something like change the world.” Peter Thiel, Co-Founder of Paypal

 

The basic concept of bitcoin is to make payments as easy as sending an email, without a central middleman getting in the way. Here’s how it works:

No banks

Bitcoin exists outside the traditional banking system. Anyone with a digital wallet can buy bitcoin and send it to anyone else in the world (so long as they, too, have a wallet). There is no middleman.

No government control

Most currencies around the world are controlled by their respective governments. For example, the US Federal Reserve controls the dollar’s interest rate and supply. Not bitcoin. No single person, bank or government owns the bitcoin system.

This is what we mean when we say bitcoin is ‘decentralized.’ Bitcoin and all its transactions are powered by its users. We’ll explain more in the ‘blockchain’ section below.

Securely locked with cryptography

Every bitcoin transaction is encrypted with public and private key encryption. Here’s a quick video to explain how that works:

‘Pseudonymous’

You might have heard that bitcoin is anonymous, but that’s not strictly true. Every bitcoin transaction is tagged with your public key address. It’s a long number that looks something like:

1GsOmhLr0FbBpNco1NDar6sSV8tsHaKF6kd

Although this transaction doesn’t contain your name, if someone knows your wallet address, they can see the payments you’ve made or received. In other words, it’s pseudonymous.

Irreversible

Bitcoin transactions absolutely cannot be reversed. If you make a payment by accident or send it to the wrong address, it can’t be retrieved. It’s a blessing and a curse. It means payments cannot be altered making it secure against fraud, but if you get it wrong, your money is lost forever.

Prefer to Read This Guide as an eBook?

If you’d like a hard-copy of this guide (or just want to come back to it later), download the free pdf version here, no email signup required.

bitcoin ebook

Who Created Bitcoin?

Bitcoin was created by the elusive Satoshi Nakamoto. His name, however, is a pseudonym. The real creator remains a complete mystery.

In October 2008, Nakamoto published the famous bitcoin white paper on a cryptography mailing list. It outlined the vision and technology for the Bitcoin system:

satoshi nakamoto“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”

 

In January 2009, he created the first 50 bitcoins in a process called “bitcoin mining.”

Who Is Satoshi Nakamoto?

The identity of Satoshi Nakamoto is one of the tech world’s biggest secrets. Countless journalists have tried to reveal his identity by analyzing his writing style, his coding, and various other scattered clues.

He writes in British English, for example, and codes in C++.

Newsweek famously published a front-page splash outing the bitcoin founder as Dorian Satoshi Nakamoto – an elderly Japanese American. Despite his computer-engineering background, it was later revealed that Dorian Nakamoto had never even heard of the cryptocurrency. (He apparently referred to it as ‘Bitcom’ in a later interview!)

More likely theories point to the likes of Nick Szabo and Hal Finney, who were involved in Bitcoin’s development and have been active in the cryptography community for decades. Some have even pointed the finger at Elon Musk. All have denied it.

Further reading: 24 Clues About Satoshi Nakamoto’s Identity

One thing is for sure, Satoshi Nakamoto is a genius with meticulous attention to privacy and anonymity.

He’s also a billionaire.

By tracking Satoshi’s transactions, we can see that he never sold his original bitcoins (other than a few test transactions). He owns about one million coins. At the time of December’s record prices, he was the 44th richest person in the world, worth over $19 billion.

There Will Only Ever Be 21 Million Bitcoins

One of the most interesting features of bitcoin is that its supply is capped. There will only ever be 21 million coins. Unlike dollars, which are created at will by the Federal Reserve, the creation of bitcoins will steadily diminish until 2140, when it will stop entirely.

There are currently 16.7 million bitcoins out there, which leaves just 4.3 million bitcoins left to be created.

Read more: How Many Bitcoins Are There? (Hint: Not That Many)

In other words, the supply is incredibly limited.

Even the existing bitcoins are in short supply. As we’ve mentioned, Satoshi probably owns about one million. The Winklevoss Twins own roughly 1% of the bitcoins in circulation. And the FBI holds at least 144,000 bitcoins after seizing them from illegal activity.

It’s also guessed that up to 30% of bitcoins are lost forever (on broken hard drives and forgotten keys).

The 21 million bitcoin cap is partly why the price has skyrocketed. When there is a finite amount of something, the price tends to rise because everyone wants a piece (like gold or diamonds).

The finite supply is also why bitcoin is often likened to gold rather than traditional currency. There is only so much gold on the planet, just like there are only so many bitcoins.

chart depicting the bitcoin halving rate

Chart source

Luckily, each bitcoin can be split into smaller units denominations, right down to one hundred millionth of a bitcoin.

Bitcoin Price: Why Is It so Volatile?

When it was launched in 2009, the first exchange valued one bitcoin at eight-hundredths of a cent.

Flash forward to January 2018, and that price soared to $20,000.

Along the way, bitcoin has experienced some heart-stopping swings in value. Since January 2018, bitcoin has dropped 60%. Bitcoin is much more volatile than traditional investments like bonds or stocks. It’s why many investors are nervous about getting involved.

bitcoin price chart
Chart: CoinMarketCap

Why? The simple fact is that bitcoin is brand new. It’s still less than a decade old. Compare that to traditional markets like gold, oil or the stock market. It takes time for a new market to settle and find a stable price.

Bitcoin also goes through ‘hype cycles.’ Every so often, bitcoin attracts mainstream attention (usually when there’s a new technology breakthrough). Excited investors flood in, which pushes the price up. When the excitement dies down, we see big drops in price.

Investing in bitcoin means bracing yourself for big, volatile movements.

Don’t Confuse Bitcoin with ‘Bitcoin Cash’ or ‘Bitcoin Gold’

Bitcoin is altogether separate from other cryptocurrencies you might have heard of, like bitcoin cash (BCH) or bitcoin gold (BTG).

These alternative currencies were created when they split off from bitcoin (known as “forking”). This happened because there was a dispute in the bitcoin community about how to go forward.

Read more: What Is a Hard Fork in Cryptocurrency?

When users disagree about the technology or the ethos of a particular coin, they may split off and create a new cryptocurrency using different tech and ideals.

To understand why, we need to know how bitcoin works.

——————————————————————————————–



——————————————————————————————–

PART 2: What Is Blockchain, the System That Makes Bitcoin Work?

Satoshi’s most impressive feat is not actually bitcoin-the-currency. It’s the system on which it runs: blockchain.

Also known as the Bitcoin protocol, this is what makes bitcoin transactions possible.

An infographic explaining how the bitcoin blockchain works

What Is Blockchain?

In the simplest possible terms, blockchain is exactly what it sounds like: a chain of blocks.

When you make a transaction with bitcoin, it is bundled into a “block.” That block is processed, verified, and approved before being added to the long chain of blocks that came before it.

That’s the short version. In practice, it’s more complex than that.

Imagine an Excel spreadsheet that everyone in the world can access.

Every bitcoin transaction ever made is written down in this Excel spreadsheet.

Scroll right to the beginning, and you’ll see Satoshi’s very first entry (the ‘genesis block’), preserved forever. You can also see the most recent transactions, logged in real-time, and everything in between.

In simple terms, blockchain is a completely public, transparent way of logging payments and transactions.

This is why you often see blockchain referred to as a ‘digital ledger.’

Of course, it’s not really a spreadsheet; it’s a chain. Every time a bitcoin transaction is made, it’s logged in a 1MB ‘block’ of data. The block is then added to the one that came before it.

Hence, blockchain.

(FYI, you can look for transactions on the bitcoin blockchain using our block explorer).

Blockchain Is Not Stored in One Place

No single person or entity owns the blockchain. It exists on a network of millions of computers all at once.

Using the spreadsheet analogy again, it’s almost like a Google doc. With Google docs, anyone can log in and make edits to the same spreadsheet. The changes are public and everyone with access can see (and approve) those changes in real-time.

This is a huge change in the way we do things. In the past, for example, you’d write a spreadsheet in private, then send it to someone via email. The other person would save it to their computer, make their changes in private before sending it back.

Using this old method, there are two different spreadsheets on different servers. One person can claim theirs is the superior document or make fraudulent changes.

Or a hacker can steal one of the documents.

Now think about it in terms of banks. Banks keep their own private spreadsheets and log their own transactions, all stored in one central location. It’s less transparent, not to mention easier to hack.

With blockchain, everything is transparent. Bitcoin transactions are 100% visible, traceable and accountable.

(Note: the Google docs analogy isn’t 100% accurate since the Google document is still stored on Google’s servers. The bitcoin blockchain is not hosted by any one central server. Thousands of copies are stored on servers all around the world, all at once).

What Is Bitcoin Mining?

Bitcoin mining is how we create bitcoins.

It’s also how we keep the blockchain running.

In very simple terms, miners are rewarded in bitcoins for creating the blocks and validating the transactions.

It a self-regulating system. Miners maintain the blockchain. In return, they get bitcoins.

Anyone can mine bitcoins. However, due to the competition, it now requires an immense amount of computing power. To illustrate the point, giant bitcoin mining facilities are located in Iceland just to keep the temperatures of their hardware down.

In the past, Satoshi mined the very first block with his reportedly modest home computer. He was rewarded with 50 bitcoins for doing so.

How Exactly Does Bitcoin Mining Work?

Bitcoin miners are responsible for producing the 1MB ‘blocks’ that become part of the blockchain.

To create this block, they must solve a mathematical puzzle. This is not literal. The miner is not solving puzzles on a piece of paper. Instead, their computer is trying to ‘guess’ a pre-set 64-digit number, or “hash.”

The first miner to get ‘less than or equal to’ the hash, mines the block and is rewarded with bitcoin.

The current reward is 12.5 BTC per block.

The Bitcoin Halving

Remember we explained that bitcoin supply is capped at 21 million? That’s because the reward for mining is halved every four years.

The mining reward has been halved twice so far. The reward began at 50 BTC per block. It is now 12.5 BTC.

At this rate, we’ll hit the 21 million supply cap in 2140, after 64 halvings.

PART 3: How to Buy, Store, and Spend Bitcoin

How to Buy Bitcoin

Bitcoin is typically bought and sold on an ‘exchange.’

There are hundreds of bitcoin exchanges out there so it’s important to choose wisely. Many exchanges have been hacked over the years, and investors have lost their money, so do your due diligence to find a reputable exchange in your country.

Among the largest and most reputable exchanges are Coinbase and Gemini in the US. (Others are available and this should not be considered a recommendation).

To set up an account at these exchanges, you’re often required to upload a picture of your photo ID and proof of address. This is to ensure they comply with anti-money laundering (AML) laws and know-your-client (KYC) laws.

Can you buy bitcoin anonymously? Yes, some exchanges don’t require ID or proof-of-address. BitMEX is one example where you only need an email address. You can also buy in cash (see below).

Once registered with an exchange, you can link a bank account, or – occasionally for smaller amounts – a credit card or PayPal account.

Now, you can buy bitcoin with USD or your local currency.

Buying bitcoin on the coinbase exchange screenshot

Whichever exchange you choose, your bitcoins are stored in a wallet on their platform. We highly recommend you now transfer your bitcoin to a private wallet where you control the encryption keys (this is not as complicated as it sounds, and we’ll look at this in the next section).

How to Buy Bitcoin with Cash

If you’d rather not link your bank account to a bitcoin exchange, you can pay cash. Localbitcoins connects you with local cryptocurrency sellers who accept cash for bitcoin.

To make this transaction, however, you will definitely need a private wallet and address. We’ll look at how to set this up in our next section:

How to Store Bitcoin

You store your bitcoin and all cryptocurrencies in a ‘wallet.’

However, choosing the right wallet is perhaps the most important part of this entire guide.

You’ve probably heard that bitcoin is vulnerable to hacks and thieves. There are countless scare stories of people losing thousands.

But it’s important to know that these hacks are not related to the bitcoin system itself (or blockchain). Instead, the hacks usually target exchanges and poorly-maintained wallets.

Storing bitcoin can be safe and secure, but only if you do it correctly.

Recommended reading: 8 Cryptocurrency Best Practices (Keep Your Crypto Safe!)

infographic explaining bitcoin wallets - cold storage and hot wallets

Explaining Bitcoin Wallets and Encryption Keys

As we explained earlier, there are two aspects to storing and transferring bitcoin:

Public key – your wallet address that everyone can see (people need your public key to send you bitcoins)

Private key – a second key that only you have access to. This allows you to unlock the wallet.

When you keep your bitcoins on an exchange (like Coinbase), they hold the private key for you. This is called an ‘online wallet.’ While they are convenient and user-friendly, they are less secure.

Why? Because if the private key is on their servers, it can be stolen by hackers, who are more likely to target a large exchange.

So it’s important to make sure you hold the private key. That means moving your bitcoin off the exchange and into a private wallet.

Hardware Wallets (Cold Storage)

Hardware wallets are your most secure option. Think of them like an external hard drive or USB stick for bitcoin. For the vast majority of time they are offline, so cannot be hacked (except for the short periods when you connect to transfer bitcoin). This is known as “cold storage.”

Read More: What is Cold Storage for Bitcoin?

Of course, there is the risk of losing the hardware wallet, which is why some people keep them locked in secure bank vaults.

The most popular hardware wallets are Ledger and Trezor.

ledger nano cold storage bitcoin wallet plugged into a laptop

Desktop Wallet

With a desktop wallet, your private key is stored as a file on your computer.

The main advantage here is that you control the private key. They are usually free and easy-to-use, too.

However, your bitcoins are lost forever if your computer is lost, stolen or destroyed (unless you backed them up elsewhere). A hacker can also access your computer and take them.

In the past, using a desktop wallet meant downloading the entire bitcoin blockchain. Nowadays, light wallets are available which makes it a little easier. Some of the most popular wallets include Exodus and Electrum.

Paper Wallet

A paper wallet is simply a piece of paper with your private and public key written on them.

They are incredibly secure since they are never connected to the internet. You cannot hack a piece of paper.

However, you can lose a piece of paper very easily. So make sure you keep it somewhere safe.

Just don’t be this guy who showed his paper wallet to everyone watching Bloomberg TV. Within seconds, his account was empty (although the culprit offered to give it back after proving their point).

a man accidentally reveals his bitcoin paper wallet on Bloomberg TV and has his bitcoins stolen

‘Cold’ Software Storage

Some electronic and software wallets now facilitate offline or ‘cold’ storage options. This is a best-of-both-worlds option. Like electric wallets, they are easy to use, but they are also stored offline for additional security. Electrum, mentioned previously, offers this functionality.

Mobile Wallets

lastly, you can choose a mobile wallet. These are handy if you plan to store small amounts of bitcoin and spend them from time-to-time. Some are designed with spending in mind, such as Samourai for Android and Edge for iPhone.

None of the wallets mentioned here should be considered recommendations and many other options are out there. Do you own research and due diligence before using any of the services listed here.

Where Can I Spend Bitcoin?

The number of shops and businesses accepting bitcoin is increasing rapidly. Here are just some of the things you can buy with bitcoin:

Even if you can’t pay directly with bitcoin, there is often a workaround.

You can buy gift cards using bitcoin from eGifter or Gyft, which you can then spend at Nike, Starbucks, Whole Foods, eBay, and Wal-Mart, among others.

A new platform called Bakkt, powered by the New York Stock Exchange and Microsoft, aims to provide a system to convert bitcoin to dollars. So you could theoretically buy a coffee at Starbucks.

You can even pay for tuition at Lucerne University in Switzerland.

And, in the bitcoin tradition, you can buy pizza through pizzaforcoins.com.

PART 4: Should I Be Worried about Scams and Hacks?

Bitcoin has a reputation for its connection to hacking and scams.

There is, of course, some truth to this.

In 2014, hackers successfully targetted the world’s largest bitcoin exchange, Mt. Gox . The hackers stole 850,000 bitcoins from the exchange (worth about $473 million at the time).

Even in 2018, hackers stole $35 million worth of bitcoin from the South Korean exchange Coinrail.

Again, however, this reaffirms the importance of storing bitcoins safely in a hard wallet and not on an exchange.

Bitcoin has also been connected to numerous scams and Ponzi schemes.

Fake exchanges, fakes bitcoins, and fake crowdfunding campaigns (known as ICOs – initial coin offerings) are still out there.

Until bitcoin exchanges are regulated by government authorities, more will pop up. Here are some of the worst offenders to look out for:

1. Scam wallets – these are the most common scams. They’ll look like a legitimate online wallet, but you’ll know they’re nefarious because they ask how much you’re depositing. They’ll  set up an address for you, but it will link to their wallets, not yours

2. Dodgy miners – these scammers claim to mine bitcoin for you. You pay them money and never see it again.

3. Exchange scams – these exchanges look like legitimate bitcoin exchange websites. The giveaway is that they accept  credit card payments for large amounts of crypto, or offer better-than-usual exchange rates.

The best way to avoid these dodgy schemes is to do your due diligence. Research every exchange before you sign up. Make sure they are trusted and make sure you are on the correct website.

Ignore anything that seems too good to be true. It probably is.

PART 5: The Future of Bitcoin

Although bitcoin is less than a decade old, we are just at the beginning.

Bitcoin, and its revolutionary blockchain technology, has opened the floodgates.

There are now almost 2,000 cryptocurrencies out there. Some aim to compete directly with bitcoin. Others are expanding on the idea and branching out into new territories (see ethereum).

Bitcoin itself is constantly evolving.

Right now, its biggest hurdle is scalability. Without getting too technical, Bitcoin is slow compared to many of its peers.

a chart comparing the transaction speeds of bitcoin vs ethereum, ripple, litecoin, paypal and visa

Source

Bitcoin can currently handle seven transactions per second. Compare that to Visa which handles 24,000.

It also takes ten minutes to confirm a bitcoin transaction. At peak times, like during the ‘gold rush’ in December 2017, it takes days to process bitcoin payments.

If bitcoin aims to become a day-to-day cash system, it needs to be faster.

However, there’s a huge disagreement in the community about how to do this. In fact, this is why bitcoin cash ‘forked’ (but that’s a whole other story. Read about bitcoin cash here.)

Bitcoin developers are now working on the Lightning Network, which will help settle small amounts fast on the bitcoin blockchain.

Is Bitcoin the Future of Money?

It’s perhaps too early to call bitcoin the future. It has some big hurdles to overcome including speed, reputation, and mainstream adoption.

One thing’s for sure, however. Bitcoin triggered a revolution. Cryptocurrencies and blockchain are here to stay. Countries like Venezuela and Iran are even copying the idea by creating their own national cryptocurrencies.

As for blockchain, a huge 84% of companies are now experimenting with the technology.

The future of money might not be bitcoin, but it will be cryptocurrency. Get ready for it.

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Where to Go Next?

  1. Ethereum – Loved this bitcoin guide? Learn about the second-biggest cryptocurrency
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  5. Block Explorers – Our block explorers let you dive into the blockchain and find any bitcoin transaction.

Note: This list of bitcoin wallets was updated on January 11th, 2019 to include crypto wallet upgrades.

In this article, we look at the best bitcoin (BTC) wallets in 2019. Storing your bitcoin in a safe and secure wallet is the most important decision you’ll make in your crypto journey.

We can’t stress enough how dangerous it can be to leave your coins on an exchange after you’ve bought them. Crypto exchanges are often the first target for hackers, so you need a safe and secure place for your bitcoin: a personal crypto wallet.

Before we dive into which wallets you should consider using, it’s important to define the various categories of wallets as well as their potential advantages and disadvantages.

Step 1: Choose the Right Type of Wallet For You

Hardware wallets 

Pro: Most secure option.

Con: Expensive, your crypto is less accessible day-to-day.

ledger nano cold storage bitcoin wallet plugged into a laptop

Hardware wallets are a bit like an external hard-drive for your bitcoin but highly optimized for crypto storage. From a security standpoint, they are the best option. Hardware wallets are known as “cold storage” because they are rarely connected the internet, making them difficult to hack. You also have complete control over your private keys.

Still, there are a few potential disadvantages of hardware wallets. For someone that has a limited budget, hardware wallets can be expensive. Since they are separate, physical objects, hardware wallets don’t necessarily offer the mobility that many people wish to have and they’re not ideal for day-to-day crypto transactions or trading. 

Desktop wallets 

Pro: Easy to use, accessible, and relatively safe.

Cons: If your computer connects to the internet, it can be hacked while online.

Desktop wallets have quickly emerged as a popular way to store BTC and other cryptos. It involves downloading the wallet software onto your desktop. One of the reasons why people choose desktop wallets is because they typically have more features than other wallets. With most desktop wallets, users have full control over their own funds via public/private keys and seed phrases.

Mobile wallets

Pro: Easy to use and extremely convenient to make bitcoin transactions on the go. 

Con: Less secure because they’re often online (known as a “hot wallet”) and you may not control the private keys.

As the name suggests, mobile wallets allow users to store funds on their mobile devices. This mobility means that users not only have the ability to easily store funds but also use them to pay for everyday items in places that accept crypto. 

One potential disadvantage is that a mobile wallet could rely more upon continued updates from the app creator than other wallet types. In some cases, users don’t own their own private keys, meaning that each individual doesn’t have custody over funds. While this is the case with some mobile wallets, others are non-custodial.

Online wallets

Pro: Easy to access, intuitive design.

Con: Least secure option, you may not control your private key.

Best online wallet blockchain bitcoin

Online wallets have a few main advantages, namely accessibility. While other categories of wallets mostly depend on your own electronic device working properly, online wallets can be accessed easily from any device or internet browser. 

However, like some mobile wallets, online wallets typically do not allow each user to control private keys, meaning that they could be considered less secure in some situations.

Paper wallets

Pro: Ultra secure (you can’t hack a piece of paper!)

Con: Easy to lose, your crypto isn’t easily accessible day-to-day. 

best bitcoin paper wallet

Paper wallets probably offer the most secure crypto storage option of any wallet type. Essentially, ‘paper wallet’ is a general term for writing down public/private keys, seed phrases, and other relevant information on a physical document. Unlike other wallets, paper wallets cannot be hacked. 

Unless a user loses a paper wallet or it’s stolen, account information should remain safe. The downside is that, for some people, it might be more difficult to keep up with this type of wallet vs. a mobile phone that offers access to a mobile wallet.

Now that we know the different types of bitcoin wallet available, let’s look at the best in each category.

Best Hardware Wallets

1. Trezor 

Trezor best bitcoin hardware wallet 2018

Best feature: Ultra secure offline storage and backups.

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Trezor is known to be one of, if not the best, manufacturers of hardware wallets on the market. In terms of cryptocurrency support, it allows you to store over 500 different coins including bitcoin, ethereum, litecoin, and bitcoin cash (although not XRP as of November 2018). There are two different Trezor models worth considering. 

The Trezor One is USB-compatible and enables users to easily access funds on Windows, OS X, and Linux devices. The more expensive Trezor Model T includes a better CPU, a sleeker profile, and improved security features like simple seed recovery. With Trezor wallets, you even have the option of syncing wallet information with a Dropbox account.

2. Ledger

Ledger nano best hardware bitcoin wallet

Best feature: Super secure offline storage and slick design.

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Ledger provides another popular option for those looking to buy a hardware wallet. In terms of functionality, it is comparable with Trezor. The Ledger Nano S is the company’s premiere hardware wallet for 2018. One of the biggest things that sets Ledger apart is the ability to recover a wallet without having to connect the device to a computer. This is very helpful if a Ledger wallet has been lost or stolen.

Besides BTC, Ledger supports more than 700 coins (as of November 2018), which is considerably more than Trezor. However, Leger wallet firmware and integrated wallet software aren’t considered to be quite as good as what Trezor offers. Looking at various head-to-head competitions, it’s hard to go wrong with either Ledger or Trezor.

Update: Ledger recently launched the new Ledger Nano X – a Bluetooth-enabled, mobile-friendly version with significantly larger coin support. 

3. KeepKey

KeepKey best bitcoin hardware wallet

Best feature: Super secure offline storage and large screen.

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KeepKey is yet another BTC hardware wallet option that is gaining in popularity. It comes with a larger screen than both Trezor and Ledger devices. Some might see this as a disadvantage for carrying the device around, but this is actually a positive for one reason. With KeepKey, you don’t have to go from app to app within the dongle to see how much funds you have.

Still, KeepKey does lack some basic features like countervalue, which is your crypto worth equivalent shown in USD (or other fiat currencies) in real-time.

Best Desktop Wallets

4. Electrum

Electrum wallet best desktop bitcoin wallet

Best feature: Open source code for extra security.

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Electrum offers users an open-source desktop wallet that delivers on features. For newer users, it might take some time to learn the interface as it’s not the prettiest or most intuitive (check out Exodus below if you want slick design). 

Since its code is open source, Electrum is highly secure because there is no single point of failure. Your private key is encrypted and never leaves your computer.

Another innovative feature of Electrum is fee management. While most BTC wallets don’t allow you to decide whether or not you want to pay for a sudden increase in fees once a transaction has been broadcast to the network, Electrum does. It even gives you an option to replace the fee after starting a transaction.

Electrum also offers features like address tagging and signing/verifying messages. It works across all desktop devices: Windows, OS X, and Linux. Electrum is free to download, but there is a flat rate fee of 0.2 mBTC (0.0002 BTC) per transaction sent. This rate could possibly be 0.1 mBTC (0.0001 BTC) or less in some instances.

5. Exodus

Exodus best bitcoin wallet online

Best feature: Intuitive and easy-to-use compared to other desktop wallets.

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Exodus has continued to enhance its innovation since its initial release in 2016. This desktop wallet, though not open source, shows just how simple and sleek a wallet user interface can be. Compared to Electrum, Exodus is easier for newer users to learn how to use. 

Another cool thing about Exodus is its accessibility. Unlike some wallets, it doesn’t require any advanced registration process or KYC (know your customer) check to get started using it. 

Another potential reason to use Exodus over Electrum is crypto availability. While Electrum only supports BTC, Exodus supports BTC as well as ETH, LTC, DASH, and other cryptos. 

Exodus is free to download and charges a per-transaction fee. According to the project website, Exodus “tracks changes in the Bitcoin network and adjusts the fees accordingly using the dynamic pricing model from https://bitcoinfees.earn.com.” Exodus prioritizes faster transaction completion speeds over lower fees.

6. Copay

copay best bitcoin online wallet

Best feature: Use with family and friends; multi-signature technology for added security.

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Copay, an HD multi-signature wallet for desktop, provides another innovative choice. This wallet is developed and maintained by BitPay. Because it relies upon multi-signature technologies, many people consider it to be more secure than other wallets. 

For example, you can manage shared funds with friends, family, and/or coworkers. To be able to send money, enough people in a group must confirm/approve of each transaction. 

One cool feature that Copay includes is the ability to send crypto via testnet. For developers, this is a good way to easily test applications without having to send real funds. Copay is open source with dozens of bitcoin developers having already contributed to the project. One potential downside is that it does utilize central verification. It supports both BTC and BCH. Copay also offers mobile wallet versions.

Best Mobile Wallets

7. Mycelium

Best bitcoin mobile wallet mycelium

Best feature: Easy access to your crypto, integrated support with Trezor and Ledger hardware wallets.

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Mycelium is widely recognized as a top BTC mobile wallet app. According to the wallet website, Mycelium users can expect a massive upgrade coming soon. Some future features will include fiat accounts (fully-fledged, blockchain based), convenient handling of bills and invoices, escrow-protected business transactions and bets, and much more. 

From a security standpoint, Mycelium utilizes an “old school” type of account that allows you to delete the private key from your device and import it back when needed. 

Most importantly, Mycelium has already established some significant integrations, including support for Trezor and Ledger hardware wallets (mentioned above). Currently, Mycelium only supports BTC. The app is free to download and available on Android and iOS. Mycelium does have miner fees for transactions. Fees range from 0.08 mBTC/kb* for lower priority transactions to 1 mBTC/kb* for ones that need to be processed quicker.

8. GreenAddress 

GreenAddress best bitcoin mobile wallet

Best feature: “Watch only” mode means you don’t have to go online and risk security to check your balance.

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GreenAddress shows just how versatile a mobile wallet can be. If you decide to go with this choice, you’ll have full control over your public/private keys. With GreenAddress, you can expect instant confirmations, improved privacy, and improved security.  

Using watch-only mode, you can quickly check your balance or receive funds without needing to have full access to your wallet. This means that accessing the app is secure, even when using public Wi-Fi networks. Each user also has the option to enable two-factor authentication for transactions. Additionally, GreenAddress provides a desktop client to go along with its mobile wallet.

Best Online Wallets

9. Blockchain Wallet

Best online wallet blockchain bitcoin

Best feature: Intuitive and easy to use, long-term reputation.

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Blockchain Wallet claims to be the #1 Bitcoin wallet. Its user adoption is impressive with 30 million wallets and $200 billion in transactions. In terms of security, you have full custody over your own funds. You can also enable two-factor authentication via SMS code, Yubikey, or Google Authenticator to further protect your wallet from unauthorized access. For mining fees, the wallet recommends an amount based on the current network conditions and the size of your transaction.

As of November 2018, Blockchain Wallet supports 22 currencies (including bitcoin, bitcoin cash, and ethereum). It also supports 25 different languages, making it easy for people around the globe to use. It even has an exchange feature where users can trade crypto-to-crypto in 36 countries. In addition to the online wallet, the company also offers apps for iOS and Android and has just launched a hardware option in conjunction with Ledger.

10. SpectroCoin 

Spectrocoin best mobile wallet bitcoin

Best feature: 99% of crypto is stored in offline storage.

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SpectroCoin offers both a bitcoin exchange and crypto debit card as well as its blockchain wallet. One cool fact about the blockchain wallet is that 99% of digital currency is stored in protected SpectroCoin offline storage (deep cold wallets). This makes it much more secure than hot wallets, which store funds online. 

With SpectroCoin wallet, you can store cryptocurrencies like bitcoin, ethereum, NEM, and dash. For developers, the SpectroCoin Wallet API can help to integrate with various applications. Some uses include the ability to make mass payments, exchange cryptocurrencies, check balances, and more. Similar to Blockchain Wallet, SpectroCoin has both an online wallet and mobile applications.

Best Paper Wallets

11. Bitcoinpaperwallet.com

best bitcoin paper wallet

Best feature: includes tamper-proof holographic stickers and serial numbers.

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Bitcoinpaperwallet.com gives you all the information and supplies needed to make a paper wallet. While you could certainly make a paper wallet without supplies, it can be difficult to make a high-quality one just by writing info on a piece of paper. 

This site offers tamper-evident holographic stickers with serial numbers, zip-sealing bags made specifically for this folding wallet design, and more. 

Prices vary depending on the number of items you want to buy. Supplies are typically mailed within four days within the US, and 10 days to Europe and Australia. Other locations could take longer. 

With this site’s paper wallets, you can even send BTC via mail to someone who isn’t tech-savvy. For shipments, a sealed-shut folded design helps to ensure that private keys remain secure. 

12. WalletGenerator.net

best paper wallet for bitcoin 2018

Best feature: Easy-to-print PDF with everything you need.

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WalletGenerator.net gives you the resources to make your own paper wallet for free. WalletGenerator.net does accept donations to pay its hosting service provider and the owners also plan to use funds to upgrade the site. As the name suggests, this site automatically generates a wallet address.

It also puts on the information you need on a PDF file for you to print out. By following the steps on this site, you can ensure that your paper wallet design is something you can be proud of and isn’t just a crumpled piece of paper. 

Conclusion

After reading this article, we hope that you have a better understanding of the differences between various types of Bitcoin (BTC) wallets and can determine for yourself which wallet type is best for you.

These are just a few of the many options currently available on the market in 2018. If you’re interested in a particular wallet for storing Bitcoin, make sure to do your research on fees, customer reviews, accessibility, and other factors that are important to you.

Further reading:  8 Cryptocurrency Best Practices: (Keep Your Crypto Safe)

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