Introduction

Bunty is a typical non-technical user who recently learned about Bitcoin from his friend Bably. Enthusiastic about the new digital currency, Bunty decides to dive in and see what Bitcoin is all about. This guide outlines Bunty's journey, offering a comprehensive overview of how new users in India can get started with Bitcoin, from setting up a wallet to making their first transactions.

Setting Up a Bitcoin Wallet

Choosing a Wallet

Bably recommends that Bunty starts with a mobile wallet, which is user-friendly and perfect for beginners. She suggests a few trusted options, such as BlueWallet and Electrum, and Bunty downloads one of them. Upon installing the wallet on his phone, Bunty is prompted to create a new Bitcoin wallet.

Understanding Noncustodial Wallets

Bunty's chosen wallet is a noncustodial one, meaning he has complete control over his private keys. This ensures that only Bunty can access his bitcoins, but it also means he bears full responsibility for backing up his keys. Losing the keys would result in losing access to his funds.

Recovery Codes

When Bunty sets up his wallet, it generates a recovery code, also known as a "mnemonic" or "seed phrase." This code is crucial for restoring his wallet if he ever loses access to his phone or wallet application. Typically, a recovery code is a sequence of words or letters that Bunty must write down and store securely.

For example, a recovery code from BlueWallet might look like this:

• media
• suspect
• effort
• dish
• album
• shaft
• price
• junk
• pizza
• situate
• oyster
• rib

Bunty writes down his recovery code on paper and keeps it in a safe place, ensuring that he can restore his wallet if needed.

Backing Up Metadata

While the recovery code restores Bunty’s on-chain transaction history, it doesn’t recover additional data like labels or notes attached to transactions. To avoid losing this metadata, Bunty’s wallet offers an extra backup feature. This is particularly important as many Bitcoin payments are now made using off-chain technology, which isn’t stored on the public blockchain. Bunty should make regular backups of his wallet database to ensure all his transaction data is safe.

Ensuring Security

Re-entering Recovery Codes

When Bunty receives funds for the first time, his wallet prompts him to re-enter his recovery code to verify that it’s securely backed up. This step ranges from a simple prompt to manually re-entering the code, depending on the wallet’s security protocols.

Beware of Phishing

Bunty learns that some malicious applications mimic legitimate wallets and ask for recovery codes to steal funds. Genuine wallets only ask for the recovery code during initial setup or recovery. If prompted for the code at any other time, Bunty should consult an expert to avoid phishing scams.

Generating Bitcoin Addresses

Bunty's wallet generates a private key that creates his Bitcoin addresses. These addresses are unique numbers tied to his private key, allowing him to receive bitcoins. Importantly, Bitcoin addresses do not need to be registered with any service or the Bitcoin network. They are created independently by the wallet.

Sharing Addresses

Bunty can share his Bitcoin address with others to receive payments. However, sharing the same address with multiple people could compromise his privacy, as they would be able to see each other’s transactions. To protect his privacy, Bunty generates a new address for each payment request.

Receiving Bitcoin

To receive bitcoins, Bunty uses the Receive button in his wallet, which displays a QR code containing his Bitcoin address. This QR code can be scanned by anyone sending him bitcoins, making the process simple and secure.

Warning

Bunty should never use the sample addresses provided in any instructional book or article, as any funds sent to those addresses will be lost. Instead, he should always use his unique address generated by his wallet.

Acquiring Bitcoin

Methods to Get Bitcoin

Bunty has several options to acquire his first bitcoins:

1. Buying from Friends: The simplest way is to buy bitcoins directly from friends who already own some.
2. Earning Bitcoins: Bunty could offer goods or services in exchange for bitcoins. For instance, a hairdresser might accept bitcoins for haircuts.
3. Using a Bitcoin ATM: These machines accept cash and send bitcoins to Bunty’s wallet. Check CoinATMRadar for Bitcoin ATMs in India.
4. Bitcoin Exchanges: Bunty can link his bank account to a Bitcoin exchange, allowing him to buy bitcoins. However, this often requires identity verification and may take some time. Some popular Indian exchanges include WazirX, CoinDCX, and ZebPay.

Privacy Considerations

Bitcoin provides more privacy compared to traditional payment systems. However, when converting bitcoins to national currency, Bunty might need to provide personal information due to regulatory requirements. This can link his Bitcoin transactions to his identity, which is why some users maintain separate accounts for exchanges.

Finding the Current Price of Bitcoin

Before Bunty buys bitcoin from Bably, they need to agree on the exchange rate. Bitcoin’s price fluctuates based on supply and demand in various markets. Bunty can use websites and apps like BitcoinAverage, CoinCap, and the Chicago Mercantile Exchange Bitcoin Reference Rate to find the current market rate.

Making Transactions

Buying Bitcoin

Bunty decides to buy 0.001 bitcoins from Bably. After agreeing on the exchange rate and giving Bably the equivalent amount in cash, Bunty opens his wallet app and selects Receive. This displays a QR code with his Bitcoin address.

Sending Bitcoin

Bably uses her wallet to scan Bunty’s QR code and sets 0.001 BTC as the amount to send. After entering a label for the transaction and possibly adjusting the transaction fee, Bably carefully reviews the details and presses Send. Her wallet constructs and signs the transaction, broadcasting it to the Bitcoin network.

Confirmation Process

Initially, Bunty’s wallet shows the transaction as "Unconfirmed." A transaction is confirmed when it’s included in a block and added to the blockchain, which takes about 10 minutes on average. Once confirmed, Bunty can use his 0.001 BTC for other transactions.

Conclusion

Bunty’s journey from hearing about Bitcoin to owning and using it illustrates the essential steps for any new user in India. By setting up a wallet, securing recovery codes, acquiring bitcoins, and making transactions, Bunty has become part of the Bitcoin network. With a basic understanding of these processes, anyone can confidently start using Bitcoin and explore the possibilities of this revolutionary digital currency.

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