Want to make some quick and easy money with Bitcoin?
I like to try and fully understand how a new technology works and if i can i like to make a few dollars as well. Crypto-currencies are no exception.
We should all be able to understand the fundamentals of bitcoin and be able to use these fundamentals in the process of making some extra money for ourselves.
One of the biggest opportunities on the internet right now is in fact bitcoin. There is a huge hole in the understanding of it and the way it works. People are plain scared to start earning money trading and there is absolutely no reason why they should be.
In this article i will try and share some of my methods with you, so you can go out and start making money today!
Step 1: Join Coinbase.com and load some bitcoins
To begin you first need to create a coinbase account. It's quite simple and once you complete the initial setup you will be able to purchase bitcoins in no time.
Once you have verified your identity and complete a purchase, it automatically allows you to purchase bitcoin. Now the initial limit is quite low (0.1BTC), but after 30 days you'll be able to purchase 1BTC.
You can even start with a small amount (like $100>), this just gets the verification process started.
Step 2: Join LocalBitcoins.com and transfer bitcoins
LocalBitcoins is where we will create an ad and sell out bitcoins. To do so you'll first need an account (The signup process is simple).
Once you have created this account, visit the wallet page on LocalBitcoins, copy the address and then send your bitcoing from Coinbase.com to the address collected.
Step 3: Create Bitcoin Trade Advertisement
On LocalBitcoins.com, click "post trade" in the menu. The steps are quite self explanatory and we can set up a trade pretty easy. But here are a few suggestions:
- Payment method: I did my experiment using cash deposit. It’s very safe and deposits show up instantly on your account
- Premium: the easiest way to set your price automatically based on a Bitcoin exchange is to use this field. For instance if you put 5%, your price will be set at 5% more the current exchange rate on Bitstamp. If you decide to use this I suggest you to stay around 5% premium.
- Price equation: this is what I used to set my price. I experimented with a few formulas and I think the one that performed best was (mtgoxusd+bitstampusd+btceusd)/3*1.02(2% premium over the average of the exchange rate of Mt.Gox, Bitstamp and BTC-e). Your goal is to sell at least 5% more than the exchange rate on Coinbase, since by doing so you’d have a ~3% net profit (both Coinbase and LocalBitcoins have a 1% transaction fee).
- Min. amount: I’d set this at least $100 to avoid small wasting time transactions. I ended up setting my at $300 but at the beginning you’ll need those $100 transaction to build a positive history.
Step 4: Start Trading!
Assuming you have been fully verified by coinbase, you now just wait for people to contact you on LocalBitcoins.com. The way LocalBitcoins work is by escrowing the amount of BTC requested by your buyers from your LocalBitcoin wallet. As soon as you see the money deposited to your bank account you release the bitcoins by clicking the 'realease' button.
It is a good idea to contact the buyer to make sure that they are serious. This keeps everything positive. Once you receive confirmation about the buy, head over to Coinbase and buy the equivalent amount of dollars requested in bitcoins.
If you prefer to grow your stash of cash instead of bitcoins, just buy the same amount of bitcoins escrowed and keep the difference.
Since now (after initial purchase) you can buy up to 1 BTC straight away, you can trade that 0.1BTC that you invested at the start, over and over again without actually spending a single dollar more.
E.g. If you originally purchased 0.1BTC and you trade your wallet 10 times, with a 5% premium, you will be completely doubling your initial investment in 2.5 days!!
Once you double your investment you can withdraw your initial amount ($) and have fun trading care free with your "free" bitcoins!!
Final:
Now in no way will small trading like this making you hundreds of thousands of dollars, but it sure can produce a great income on the side. So we should all take the opportunity that is standing right in front of us, and grasp it with both hands!
- Sam Lucas