Video - Bitcoin 101 - Glorious Coinbase - The Best Place to Buy Your First Bitcoins
Bigest problem with Coinbase? Well for us, who enjoy learning how bitcoin works, Coinbase keeps us too far removed from the mechanics and the technology. If you're the type who needs to be in full control of your money (you keep your gold in a hole in your back yard) well again, Coinbase isn't for you.
TRANSCRIPT
Hello! This is James D'Angelo. And welcome to the Bitcoin 101 Blackboard Series. On this show, clearly we spend a lot of time talking about things that are difficult to understand or difficult to do. So, we spend a lot of time creating and making difficult wallets. So, brain storage, paper wallets, cold storage. We're going to talk about BIP 0038 Wallets. These are sort of technical things that require some instruction. As a result, we don't spend that much time talking about things that are super easy but today we're going to do that.
We're going to talk about the easiest way to use Bitcoin and it's so ridiculously easy that anyone will be familiar with it. And a way to do it is to use Coin base, Coinbase.com and what we're going to do before we talk about sort of this entire list of things that I want to talk about is we're going to jump right in and start using it. So, here's one of my Coinbase accounts and just like any on line banking account you might have you'll see that you've got your total right here, your current balance. I've got 4.1 Bitcoin and then they translate it approximately to the current US dollar amount.
Now remember that price is changing all the time so they won't give you an equal sign but every time you refresh it, it might change a little. With Bitcoin, it might even change a lot but right now I've got about $2800 in here. And just like most people who are big on Bitcoin. They're not going to pour all their Bitcoins into any one place especially if that place is an online wallet service. Coinbase is built, its reputation and because they're in San Francisco and we actually know who started it and where their offices are they tend to get more trust than many of the other wallets.
So right now, I've got $2800 in there and just like any online banking account you'll see your transactions. So today, I sent some Bitcoin to an external account and that's still pending. I did it about 20 minutes ago. A lot of these websites including Coinbase tend to be very cautious so they're going to wait three, four and five confirmations until they take it out of pending and say that that transaction is final. That takes about forty minutes. And this might even update while we're talking. And we also get tips from people who enjoy our show and so yesterday received two really nice tips from people and then to sort of set up and think about how I was going to do this video I ran a test by sending some Bitcoins through this Coinbase account to my other Coinbase account, the World Bitcoin Network.
So let's get started and we're going to look at something you probably don't have on your online banking account which is a send money button. And you press that and you can enter in either an email or a Bitcoin address to send your money to. It's really, really handy. Really, really simple. So I'm going to paste in this email address that I've just found online. This is [email protected]. So Andreas Antonopoulos is one big Bitcoin spokesman. I found his email address on there. So this might end up going to him and if you send it to an email address and no one claims it Coinbase will reclaim that amount after 30 days.
So let's send him two bucks. And I can even put it in the message. We're making a video here at WBN to send money to. And boom! Done. That's how easy it is. And what we're going to do is we're going to do a number of these transactions just to really have fun with Coinbase and what I'm going to do now is I'm going to send it to an email address that I set up called howlinduck@yahoo. That's a brand new account. Then we'll actually open up the Coinbase account from there. So I'm going to send money to this email address up there, [email protected]. I'm going to send myself this new address $3. Now we're going to say hey! Howlin, and this is one of the ways you can send Bitcoins to any person who got an email in the world. And it will secure the funds there for 30 days until they retrieve them. So let's say send money. And Coinbase will now send an email to howlinduck saying that they've received funds. So let's go over there and take a look at that. Boom! Coinbase, Sputknick just sent you to 2.95 in Bitcoin. There might be a transaction fee or possibly the rate of Bitcoin went up or down. So five cents had been lost in the process. Sputknick just sent you to 2.95 in Bitcoin so here I am in my Yahoo account and I received this email from Coinbase and it says who sent it from who.
So let's open that up. Boom! Coinbase to me, Hi! Howlinduck, Sputknick just sent you blah blah bitcoins worth 2.95 using Coin base. Click here to sign in and claim this amount. Since Howlinduck has never used Coinbase before I'm going to get an introduction page we'll have to sign on. So let's do that. See how easy this is. Choose a password. Okay. We'll use a password I use a lot. Access my wallet. No, I don't want you to -- please review our user agreement. I can read through that if you want. It goes all the way down here, except and continue. So I'm now opening a new Coinbase account boom. I have the money in my account. Now what's interesting is I didn't have to put in personal information. I didn't have to put in a bank account or anything like that.
You can actually use Coinbase without putting your banking information in there. It's a myth that a lot of people say if I actually wanted to buy a Bitcoin through Coinbase then I'd have to put my bank account information but to receive and play around with Bitcoin I can get a Coinbase account just like this. Boom! I've already got a full account and I can actually start using this and because it's Coin base to Coin base, so I just sent one minute ago funds to this account I can actually start sending this money right away. It doesn't need any confirmation for any internal Coinbased transactions and in fact it should be free for any internal Coinbase transactions. And so what I'm going to do is I'm going to send money from here and I can once again send money to Andreas. So I can put 50 cents in there, 0.50 and usually for smaller amounts they might ask you for sort of a transaction fee. Hey! Again, still sending. And we're going to send the money. Please enter a valid email Bitcoin address.
So I messed up so just like with your Bitcoin addresses your emails Coinbase will actually check to make sure they're valid. So if you've mistyped your Bitcoin address in here it will actually let you know. You can't by the way send Bitcoins to an address that's been mistyped. There's internal checking scheme. So let's press sent again. So just during this video I've opened up a brand new Coinbase account and I've already sent some Bitcoin out. So now I'm going to send money to my websites donation Bitcoin address. So like I said you can enter an email or a Bitcoin address. So I'm going to past that in and I'm going to say send them 50 cents, 0.50 and I could put in a message if I want and I'm going to say send money.
So my new account howlinduck never attaching to a bank account, never doing anything special has now run three Bitcoin transactions. We've received Bitcoin and we've sent it out to an email and now to a Bitcoin address. This is how easy this is. If you want to start buying Bitcoins and Coinbase is easily one of the best places to buy Bitcoins.
Well, you have to go over here to the buy and sell. And if you go over here to buy and sell you're going to have to start doing all the things that you've heard about with Coin base. You going to have to verify a bank account. Okay, if I click that it's going to ask me to insert some banking information. And I'm going to have to put in a billing address and I'm going to have to put in my telephone number. And it turns out this process isn't so difficult but it will require you three days to wait until you receive your Bitcoins, three or more days, sometimes four or five days. And you just follow this and this is pretty standard to anyone who use PayPal. You have to do the same thing. If you want to deal with credit cards you can have to go down to your bank and set up your credit cards. It's okay. These are standard things.
So you're going to include your routing number, your account number, your full name as shown in here. And then you're going to set up your bank account. But the good news is you can start using Coinbase right away and you can start buying Bitcoin if you start to put in your personal information. So, so, so easy. Now let's go back to the main page send and request. Again, I could send money to any email address. I can even request money from any email address and it's not going to demand that they send money. It's going to say please sent to this address and what's great about that is you can actually run sort of a billing service out of it. And there's a number of other features in Bitcoin, right. You can set up merchant payments, you can do sort of the PayPal buttons so it will be receiving Bitcoins buttons for a merchant. You can do recurring payments. It's a lot of things in here but simple Bitcoin is right here already done.
So what if I wanted to have a Bitcoin address so I could receive Bitcoin from someone at this particular Howlinduck account. Well, Coinbase doesn't love giving you all that information but it's all there. If you go over here to account settings and you go up here to Bitcoin addresses you'll start to see the addresses that have been used on your account. And so I've received Bitcoins under this address and this is officially now my address. I could send someone that account right there and they can send me Bitcoin. I can also create as many addresses as I want inside Coin base. So let's do that. Let's create a brand new address to receive money to.
So here's a brand new address and I can click this as much as I want. It will give me as many addresses as I want and now let's receive money to this new address I just created, 1GITXZ. And I can do this from a non-Coinbase system. So let's go to my blockchain.info wallet. Type in my password. I've got $2 and 96 cents in here and I'm going to send money. Now your blockchain.info wallet doesn't let you put in an email address but it lets you put in your Bitcoin address. So I copied the one from my Coinbase that I just generated seconds ago and I'm going to send Howlinduck one dollar. Done. I love the little sound of blockchain.info. It just sounds so great. All right.
Now Coinbase is a little slow sometimes in updating but usually you'll get those updates as quick as the rest of the network but not always. So we'll see if I've received this already. Let's dismiss this I know how to use Coin base. I've sent Bitcoin to an external account. I've sent and I received. I still haven't seen the confirmation that I've received from the other. That might take a couple minutes with Coin base. So we'll leave that while we talk about some of this other stuff. But the beauty is I now have that address and I can always go back and find it in my account settings right and I can put that online and start receiving Bitcoins immediately. I can copy that in an email. I can send it to anyone in fact. All of these addresses are my addresses. I can receive to them and no one else on earth will get those Bitcoins but me. So now that you've got an idea of how simple Coinbase is it's ridiculously simple. Let's just talk about some of the more specific stuff about it.
So just like we've mentioned Bloomberg agrees Coinbase is the easiest on-ramp to the Bitcoin world. If you're American, okay, unfortunately, Coinbase doesn't work outside of the US. A lot of regulatory problems and all that. The beauty is that more companies are jumping into the space. You're likely to see this company out of Boston right here called Circle develop something similar to Coin base. And we'll see if they get even more bank capabilities than Coinbase has. Bitpay hasn't done it yet. But it seems that they might move into this space and what you're going to see is a lot of people sort of offering Coinbase type services and that would be great. The competition free market for all that would be really nice. And like we said one of the drawbacks of using Coinbase that some people find is that you have to insert your bank details. Well, as we've seen that's not true. To buy bitcoins you'll have to insert your bank details, if you want to take Bitcoins and swap them in dollars through Coinbase again you'll have to insert your bank details. You do it once and it's done forever.
So I did it months and months ago and now it's just click, transfer. So let's do that really quickly. So I'm going to go to my Coinbase Bitcoin accounts and I'm going to sell Bitcoin to myself. So I'm going to withdraw Bitcoin and get cash. So we want to click on the sell button over here and the current price is $676. I'm going to say 0.1. And you'll see they've got some fees. Coinbase fee is one percent so they get 68 cents. The bank fee is 15 cents. That's the ACH bank transaction fee. And I click here. You are about to sell 0.1 Bitcoin from your Coinbase account. This will be credited to your bank account in two business days on February 20th, 2014. Confirmed. Bip! Done. That's how easy that part is as well. So that's selling.
The same is true if I'm buying. But just to show you how easy it is to buy and sell Bitcoins I'm going to buy 0.1 right now. And you'll notice that the rate has gone down because Bitcoins been flying all over the place lately right. So I've lost, I'll loose like 10 or 15 dollars by doing this whole transaction. I've lost some money here. But I'm going to show you how quick it is to buy. Type in 0.1 Bitcoin, in fact let's buy less. Buy 0.05 Bitcoins right. So I don't get as burned by the exchange. I can even buy 0.03 Bitcoins. And so now I'm buying $20 worth, my Coinbase fee is 20 cents, my bank fee is 15 cents but remember that I'm losing a little bit on the spread and the exchange so things going down to $669 since I've been doing this. And I'm going to buy those Bitcoins and you'll see how fast it is to buy. And each day I can buy up to $50,000 with the way I've got it set up. You're about to withdraw $20 and 30 cents arrive in four business days. We will send you an email confirmation when it arrives. Buy. Share this. I just bought, well, I'm sharing with you guys. So that's how easy it is to buy as well. So now we'll go back into some of the ideas that make Coinbase unique and why it's such an important service for the Bitcoin community right now. So we've already mentioned that to do the things I just did, to sell or even buy you're going to have to insert your bank details. And they'll set up two-factor authentication. This is not a negative. This is a very, very good thing.
Two-factor authentication means that when you're going to do large amounts they'll actually send a code to your phone. In this way, we can avoid any problems with malware. It's very, very hard for malware or even a thief to get access to both your phone and to your computer. So you'll set up two-factor authentication and they'll recommend you do it on a mobile phone but you can do it on a landline and you can have to wait three days for your first Bitcoins to arrive and even when you're selling everything takes a few days. If you hook your Coinbase account up with a Visa credit card, not a Visa debit card you can do instant buys and sells. I don't have a Visa credit card so I can't tell you how that works.
Now again this is somewhat like PayPal and what they're doing is they're really trying to brand security so that you'll feel confident using their system and they're really trying to make things easy as pie. The whole idea of Coinbase is just take away sort of the technical aspects of Bitcoin, for a lot of people it's very daunting so it's a really beautiful service. And in fact the way that I got started with Bitcoin was with Coinbase. And I felt very lucky to have started that way. So easiest way to buy Bitcoins only in the USA, you can't do this from Egypt. It's not free as we talked about, right. They charge a 1% fee and that's not their biggest fee. They also do a thing that most exchanges do called the spread, which is if you buy Bitcoins you'll see one price and if you sell Bitcoins you'll see another price. And the difference of that spread could end up making Coinbase even up to four and five percent off of every transaction. So these guys are doing pretty well with themselves. But if you're going to buy Bitcoin almost anywhere else so if you got a local bitcoins.com which is a great way to buy Bitcoin you're going to see markups of even up to 20%.
So almost any time you exchange currencies around the world you're going to end up paying somehow. And the beauty is Coinbase is the only one I know where you can send email addresses. I can send Bitcoins email addresses as we saw I sent to Howlinduck and from there I was able to receive right away or you can send a Bitcoin accounts. Coinbase is not officially an exchange because it does not officially keep dollars. So when you're calling for money from your bank account it asked for an ACH transfer. The standard sort of checking transfer that banks use to either send or receive dollars from your bank account. Coinbase never holds your money as dollars. It holds it as Bitcoin only. So it's not kind of a true exchange though in the US it's the best we've got.
So talking about USA exchanges, it's really the best right now. Now this might change as regulation becomes more defined. In the United States as strange as it may seem people think the United States is this evil guy. The United States regulation has actually been some of the softest around the world so they're kind of leading the way with trying to understand and incorporate digital currencies. We'll see what happens but right now they seem to be leading the way. The thing with Coinbase and this some people will consider a negative is that they hold your Bitcoins private keys. And some people think well I would never let anyone hold the private keys to my Bitcoins because that really means that they own up much in the way that PayPal hold your dollars, the bank account hold your dollars Coinbase holds the private keys which is the real ownership of that money. If something happens to Coinbase, if they get hacked, if the owner decides to clear everything out and run to Argentina where he used to live, right, well, then he's gone, right. You're money's been stolen. So it really is like keeping your money in a vault in a bank or leaving your money with PayPal or something like that.
So having ownership of the private keys is the real ownership. Competitive wallet or blockchain.info is the opposite. They don't want your private he's ever. They will make sure that your private keys stay with you and you only. They have no database with your private key. So it's the opposite system of many other wallets. And Coinbase won't give you the private keys to your account. If you take your private keys they will say you've withdrawn that money from your account so if they do and I think they actually will give you a private keys they'll associate the funds with that private key and just hand them over to you and wash their hands if you, okay.
So it's a different system and it's a system based on trust. It's a system based on a different form of security. Coinbase claims to hold all their private keys or 95% or 97% of their private keys in cold storage. That's good to hear. You really want all the private keys as many as possible offline because the real thieves in this world are malware, computer viruses, botnet's all that stuff attacking, trying to find private keys and sweeping the funds out of those Bitcoin accounts. So if you're actually putting these private keys into a vault, well, it's probably safer than any sort of online computer system and that's what Coinbase claims to do. I believe them that they do it. I haven't seen that they do it but it seems to me that that's what they're doing. So that's it.
I hope you enjoy the video. Now you can buy and sell with Coin base. You don't need to set up with a bank account to even use Coinbase and you can send to email addresses or Bitcoin addresses. Super, super easy stuff. Hope you enjoyed. Please remember to like, comment, subscribe, do whatever else you want to do and we'll check out at our next video.