Think of Bitcoins (BTC) as a foreign currency for the land of the Internet; like Canadian dollars for Canada or pesos for the Philippines. As I write this, the current Bitcoin exchange rate from BTC to USD is 1 BTC = $581.35 USD. That rate can change in 5 minutes. Look up how much the exchange rate is before you get started. Google has a handy tool for that built right in.
After you’ve determined how many Bitcoins you’d like to exchange, you must find an online exchanger for you. Think of these guys like online banks.
What happens when you exchange money in the real world? You get charged a rate for the exchange, which means when you exchange $10 for a certain currency, you’ll really only get about $9.75 back in that currency (hypothetical situation used to illustrate a point – not actual numbers). Keep this in mind when exchanging your money.
How can I get Bitcoins?
I recommend creating an account with localbitcoins.com if you’d like to purchase Bitcoins with cash, GreenDot MoneyPak, Western Union, Vanilla, Paypal, or anything else. Each seller has a different exchange rate, and when you look at the page itself, you’ll see a list of exchange rates in green for different sellers listed from low to high. There’s a handy orange bar at the top that allows you to find local sellers if you’d like to pay in-person with cash or online sellers willing to exchange Bitcoins for direct cash deposits.
In my experience, the direct cash deposit method is one of the easiest and cheapest methods to get your BTC efficiently and instantaneously (depending on your seller). Usually, the seller will provide instructions on which account to deposit cash into. Once you get that information, you essentially just walk up to the teller with a deposit slip, and deposit the cash into the account that has been provided for you. Don’t worry about looking sketchy, but I also recommend not mentioning Bitcoin to the teller. If they ask, just tell them you are depositing money into someone else’s account. If they press even further, don’t feel obligated to answer. They’re tellers, not psychiatrists.
Sellers will usually give you specific instructions for them to receive payment, so if you’d like to pay someone cash in-person, look at the listing for further instructions.
It’s up to you to look up each seller’s rating and determine which exchange rate works best for you. Make sure to type in the BTC amount that you’d like to purchase instead of the USD amount. Instead of typing that you want $95 USD, type in that you’d like .16000 BTC and the computer should do the exchange rate work for you. That way you can determine how much you’ll have to pay in order to get the exact amount of BTC that you’d like to purchase. Greendot Moneypak and similar prepaid cash cards tend to have much higher exchange rates on localbitcoins.com.
Once you’ve completed the exchange with a reputable seller, he/she will release the BTC to you and you will be able to use them as you wish.
How do I send the vendor my money?
When you sign on for a service like localbitcoins.com, you will automatically get a virtual “wallet.” This is where you will send and receive your BTC.
If the vendor is using Bitcoins as a method of payment, he/she should provide you with a Bitcoin wallet address (it will look like a long, random string of numbers) that you can send your BTC to once you have acquired them.
On localbitcoins.com, you can send your Bitcoins by following these steps:
1) Click on the “Wallet” link
2) Copy and paste the address your vendor provided for you
3) Type how many BTC you’d like to send to your vendor
4) Click “send”
It’s that easy!