What the hell is BITCOIN (BTC)? Why should I care ?

 

Poker players and Bitcoin (BTC).

Updated 09/09 by NoodleTheRiver

btc

I am guessing you have heard of Bitcoins before, you may have even read about them recently when the price hit the second highest value in the currency’s life time causing media outlets to  scramble for stories.  Television media in the USA seem to favor presenting BTC in criminal crackdown headlines.  I do not deny that bitcoin has been used by criminals. BTC’s ability to have  anonymous transactions attract some illegal activity. You may have heard of “Silk Road”.  Outlaws using Bitcoin does not mean Bitcoin is any less safe or Bitcoin was designed for criminal activity. Actually, when compared to what financial institutions have us using now, it is much safer  Compare Bitcoin safety and Credit Card fraud

 

These latest stories have shown a majority of media writers have no idea how BITCOIN operates , how it is traded, and more importantly why the value or price of it changes. The stories confuse the “average everyday consumer ”and based on the questions I get asked they  have given the perception that BTC is  for computer hackers or “smart people”. It is not. SO THEN WHAT THE FUCK IS BTC?

 

Bitcoin is a new way of moving funds over the Internet. It is  safe, cheap, quick,for the most part anonymous,  and cost-effective. BTC has also been a gift to the online poker, casino, sports betting business for many reasons. In the USA the glaring benefit is that BTC gives all parties a loophole in the UIGA. Bitcoin is a form of “digital money”.You can exchange it any time of day or night, 7 days a week for real currency in any country- USD, Euro, or Zimbabwe RANDS. Keep in mind When using the suggested coin banks in this article your money is FDIC insured when in the form of currency in the US. It is not when in the form of BTC.  btcblue

So if you are interested in Bitcoin but have been intimidated or worry due to uneducated media stories . This guide will help you begin overcoming your fear by adding facts and knowledge. When you finish reading you should have the knowledge and confidence  to start  buying and selling bitcoins within a few minutes.

 

I need to stop here and define a couple of terms I will use. ( I like to use analogies , so I hope you get them.)

 

COIN BANK  –  Coinbase  / CIRCLE –  Just like the name suggests it holds your coins and your money. You do not physically hold your bitcoins when they are in your coin bank. This works  just like your normal checking account. The money shows to be there as a number as promised by your bank. Nobody should use a  fly-by-night bank for their checking account and I don’t suggest using a startup coin bank either. If you just don’t care about your money do whatever you want. COIN BANKS are needed to get Bitcoin converted back to currency and vise verse so you can purchase Bitcoin with a dollar or you can convert Bitcoin into dollars which in turn can be deposited into your normal checking account.  Sound difficult yet ? That was really the hardest part!

COIN WALLETBitcoin Wallet from Blockchain–  You possess the Bitcoin online or on your PC or smartphone. It is accessed through a  private key that only you and the wallet provider have access to.  You both own are responsible for key security. If the key is lost the Bitcoin is lost ! (I shouldn’t need to say this but DON’T LOSE YOUR KEY !Google the guys who believe they would be rich now if they could only find their key!).  An advantage of coin wallets is there is no counterparty risk so those who  don’t trust banks seem to prefer keeping their money in their wallet.  The downside is if you somehow screw up lose your key or get hacked  and somebody gains access to your private key, your coins could be stolen.  Think of it is as keeping your money under the mattress (or in your wallet). All kinds of stuff could go wrong so it is advised to only keep what you plan on using in the short term in your COIN WALLET.  So on  the how to slideshow crap.

 

The following is directed at poker players but it works just the same for anyone using BTC for any transaction.

I suggest using two different sites for BTC exchanges (and base the guide on such.)  (IF YOU PLAY POKER YOU MUST USE A WALLET !) .  I recommend COINBASE  or  CIRCLE for your “COIN BANK”  and Blockchain.info for your wallet.  These sites function differently and serve different purposes.  Coinbase is the easiest and most secure way to buy bitcoin using different funding methods and has the longest successful track record of keeping very sensitive information safe and secure.  Blockchain.info is used as your wallet and is an intermediary to add another level of security and anonymity. Using two of these sites in conjunction (and  I highly suggest you do !) ensures maximum security, anonymity and peace of mind in your more ok transactions.

Recommended Bitcoin Sites

Now, how do we get these Bitcoins to the poker sites? Here is a walkthrough using Coinbase.com, along with Blockchain.info, to help get  you started .

 

First thing first. You will want to sign-up at Coinbase.com,  or  Circle.Com and create your account:

After signing up, Coinbase will send you an email asking you to verify your account, which is as simple as clicking the link:

After verifying your email address, you will be given the opportunity to provide your phone number, which allows you to add two-factor authentication to your account,  I highly suggest you do this.  The extra verification allows you to safeguard your money:

For your next step, you will want to be sure you have your bank account information. Coinbase will ask for your account and routing number to the bank account you wish to use to buy and sell Bitcoin:

Once you have done this, you are ready to purchase your Bitcoin! NOTE: they also accept credit and debit cards now which provide instant funds.

Next, you will be taken to the main screen for your account, where you can buy Bitcoin. From this screen, you can either type in the amount of USD you wish to send from your bank account, which will show the amount of Bitcoin you will receive, or you can enter in the amount of Bitcoin you wish to purchase, and Coinbase will show you how much will cost. Click buy, and confirm on the following screen, and you will have your purchase.

Now on to  Blockchain.info.  ( AGAIN FOR POKER PLAYERS YOU WILL NEED TO  SEND YOUR BITCOIN TO BLOCKCHAIN AFTER PURCHASING, AND SEND FUNDS TO BLOCKCHAIN WHEN CASHING OUT!!!!) If you don’t do this and Circle or Coinbase catch it they are required by the gambling act Unlawful Internet Gambling Enforcement Act of 2006 to close your account if you live in the USA.

 

At Blockchain.info, you click “Wallet” in the upper right-hand corner:

From there, you’ll click on the green “Create My Free Wallet” button to sign up:

This next step is important. Once you have signed up with the site, you will be given mnemonic phrase. ** KEEP THIS PHRASE SOMEWHERE** If you forget your password, this phrase will be used to help recover your account. If you lose this, any Bitcoin that you may have will be no longer be accessible:

 

After hitting the continue button, you will enter password:

 

You will be taken to the main account screen. Here you can see your Blockchain Bitcoin wallet address:

  • Highlight and copy the address.
  • Open your Coinbase account.
  • Click the “Send / Request” button at the top left of the Coinbase main screen.
  • In the “Recipient” box, paste the Bitcoin address from the Blockchain wallet.
  • Put in the amount of Bitcoin or amount in $  you wish to send to your Blockchain wallet
  • Hit the blue “Send Funds” button:

 

After the “Send Funds” button you will be asked to confirm the amount of Bitcoin being sent and the address you are sending it to. If everything is correct, hit the blue “Send” button:

 

After hitting send, you will return to the main screen where your transactions page will show you have sent the Bitcoin and it is still waiting to be confirmed by the Blockchain. The transaction will read complete once it has been confirmed enough times:

AT times  the blockchain is slow moving. To check the progress and number of  confirmations for your transaction , you can go to Blockchain.info, and on the main page, paste your Bitcoin wallet address in the search bar:

And you will get a screen telling you how many confirmations your transaction has received. Confirmations will begin generally in about 15-30 minutes:

Once your transaction has been confirmed, your Bitcoin can now be sent to a poker site.

 

  • From your Blockchain account, click the “Send Money” button,
  • Paste in the address provided to you by the site you are depositing to.
  • Sites, such as Americas Cardroom ,Black Chip Poker, and InterTops will provide this address in your cashier.
  • Enter the amount of Bitcoin that you are sending and click the “Send Payment” button:

You have now successfully deposited onto a poker site!

You withdraw your money in the reverse order and for the poker sites mentioned above should take no more than 3 business days. Most will process BTC cash outs in 24 hours. !

 

Summary

Bitcoin is quickly becoming one of the most popular ways for people to transfer money from one place to another without having to hassle with credit cards or other third party sources and inflated fees.

 

State-Specific stances on BTC

(Last Updated: October 26, 2015)

Not all states regulate virtual currency (Bitcoin) activity as money. Additionally, some  states require disclosures of this fact by the states in which we a license is held .

Alaska The Alaska Division of Banking and Securities does not currently regulate virtual currency (Bitcoin) activity as money transmission (or otherwise).

California  Virtual currency (Bitcoin) activity is not currently licensable by the California Department of Business Oversight (DBO) as money transmission. While users in California can conduct Bitcoin transactions, such activity is not licensed or regulated by the California DBO.

If you have complaints with respect to any aspect of the money transmission activities conducted at a  location, you may contact the California Department of Business Oversight at its toll-free telephone number, 1-800-622-0620, by email at consumer.services@dbo.ca.gov, or by mail at the Department of Business Oversight, Consumer Services, 1515 K Street, Suite 200, Sacramento, CA 95814.

You, the customer, are entitled to a refund of the money to be transmitted as the result of this User Agreement if Circle Payments, LLC does not forward the money received from you within 10 days of the date of its receipt, or does not give instructions committing an equivalent amount of money to the person designated by you within 10 days of the date of the receipt of the funds from you unless otherwise instructed by you.

 

Colorado The Colorado Division of Banking does not license or regulate services related to virtual currency, including, but not limited to, transmission or exchange of virtual currency .

Hawaii  The Hawaii Division of Financial Institutions does not currently regulate virtual currency (Bitcoin) activity as money transmission (or otherwise).

Kentucky – does not cover virtual currency (Bitcoin) activity.

Louisiana Office of Financial Institutions does not license or regulate services related to virtual currency, including, but not limited to, transmission or exchange of virtual currency .

Maryland The Maryland Department of Labor, Licensing and Regulation does not currently regulate virtual currency (Bitcoin) activity as money transmission (or otherwise).

Minnesota The Minnesota Department of Commerce does not currently regulate virtual currency (Bitcoin) activity as money transmission (or otherwise).

New York (1) Virtual Currency (Bitcoin) is not legal tender, is not backed by the government, and accounts and value balances are not subject to Federal Deposit Insurance Corporation or Securities Investor Protection Corporation protections;

(2) legislative and regulatory changes or actions at the state, federal, or international level may adversely affect the use, transfer, exchange, and value of Virtual Currency;

(3) Transactions in Virtual Currency may be irreversible, and, accordingly, losses due to fraudulent or accidental transactions may not be recoverable;

(4) some Virtual Currency transactions shall be deemed to be made when recorded on a public ledger, which is not necessarily the date or time the customer initiates the transaction;

(5) The value of Virtual Currency may be derived from the continued willingness of market participants to exchange Fiat Currency for Virtual Currency, which may result in the potential for permanent and total loss of value of a particular Virtual Currency should the market for that Virtual Currency disappear;

(6) there is no assurances someone who accepts a Virtual Currency as payment today will continue to do so in the future;

(7) The volatility and unpredictability of the price of Virtual Currency relative to Fiat Currency may result in significant loss over a short period of time;

(8) The nature of Virtual Currency may lead to an increased risk of fraud or cyber attack;

(9) The nature of Virtual Currency means any technological difficulties experienced a Bitcoin Trader or Bank  may prevent the access or use of a customer’s Virtual Currency; and

(10) any bond or trust account maintained by a Bitcoin Trader or Bank for the benefit of its customers may not be sufficient to cover all losses incurred by customers.

Tennessee The Tennessee Department of Financial Institutions does not currently regulate virtual currency (Bitcoin) activity as money transmission (or otherwise).

Virginia  Does not cover the transmission of virtual currency (Bitcoin).

Wisconsin Does not cover virtual currency (Bitcoin) activity.

 


Also published on Medium.

Leave a Reply