Bitcoin submitted by
is a good way to transfer money online. However, it's significantly from traditional payment processors such as PayPal in that it's decentralized. But what does this mean?
Bitcoin is not a payment processor. Bitcoin is a currency, it is a network, it is a system. There is no "bank of Bitcoin", and Bitcoins are not US Dollars. When you transfer Bitcoins, you're not transferring USD or any other fiat currency, you're transferring Bitcoins.
What are the advantages?
When compared to PayPal, Bitcoin has a number of advantages:
- Decentralized: Nobody can freeze your account (like PayPal is so prone to doing). And since it's decentralized, it's not regulated by any government. No paperwork!
- Lower fees: PayPal charges a fee of 2.9% + $0.30 for international transfers. Bitcoin's fees are much lower, usually less than $0.10. More importantly, you pick your own fees. (More on that later)
- No chargebacks! This is by far the largest advantage. When trading TF2 items via PayPal, you don't know if you've gotten scammed until 6 months later since the buyer can file a chargeback at any time.
What are the disadvantages?
There are only a couple of disadvantages:
- Slightly slower: You don't truly have the money for about an hour.
- Slightly higher barrier to entry: If you want to convert fiat to Bitcoin, you have to go through an exchange.
- You're responsible for your money: If you have money in PayPal, PayPal isn't going to lose it. If they do, you can sue them. With Bitcoin, if you somehow lose access to your wallet (computer crashes, you forget a password, etc.), your money is gone.
What is one Bitcoin worth?
A good Bitcoin conversion rate is located here
How does it work?
There's a good video at weusecoins.com
So how do I trade TF2 items for Bitcoin?
To get started, you're going to need a Bitcoin wallet
. You can either download a client application on your computer or use a web-based service. My service of choice is Blockchain.info
. If you sign up there, your wallet is encrypted with your password. They don't have access to your money, but if you forget your password, all of your money is gone forever.
Once you sign up, you should be taken to a screen that looks like this
. The important thing to note is the jumble of numbers and letters in the center of the screen. This is your address
. You'll share this address with people in order for them to send you coins. Think of it as an account number. You can create as many addresses as you want per wallet, but for the sake of simplicity, we'll stick with the one.
In order to get Bitcoins into your wallet, you can either have someone send some to you (sell something) or buy some from an exchange. Mt.Gox
is one of the most popular. I personally prefer Camp BX
Once you're ready to sell an item and you know how much BTC you want to get paid, just give the buyer your Bitcoin address. They'll send their coins to your address and you'll see the transaction on the "Transactions" tab of your wallet. This is very important:
Note the "confirmations" that should be displayed by the transaction. When a payment is fresh, it is "unconfirmed". That is, nobody in the network has picked it up yet and declared that "This is a valid transaction." While a transaction is unconfirmed, there is a very small chance that the buyer will be able to "double-spend" the money, preventing you from getting it. This is a guide of how many confirmations you should wait for before considering the money "yours":
I just made these numbers up, it's up to you to come up with your own trust plan.
|Transaction Volume (USD Equivalent) ||Confirmations |
|< $10 ||0 - 1 |
|$10 - $25 ||1 - 2 |
|$50 - $75 ||3 - 4 |
|$75 - $100 ||4 - 5 |
|$100 - $150 ||5 - 6 |
|> $150 ||6 |
The more confirmations a transaction has, the less the risk of a double-spend. 3 transactions is usually enough to ensure the funds, but 6 is the generally accepted verification number. Each confirmation takes about 10 minutes, so waiting for the full 6 confirmations will take about an hour. If a trader has large amounts of reputation, it's reasonably safe to accept lower numbers of confirmations.
When sending coins, you have the option of paying a fee. The buyer always pays the fee, but they may choose to pass it along to the seller by sending less coins (if both parties agree, of course). The fee is entirely voluntary, but highly recommended. The amount of the fee is determined by the buyer. The higher the fee, the quicker the transaction is confirmed.
The recommended fee is 0.0005 - 0.001 BTC (currently $0.05 - $0.10). For a larger transaction, you should generally pay a higher fee (but it will always be cheaper than PayPal!).
Converting to Fiat
You can convert your Bitcoins to fiat currency (traditional money) at a Bitcoin exchange. See the last paragraph of the "So how do I trade TF2 items for Bitcoin?" section.
PayPal is safer on the buyer's side, while Bitcoin is generally safer on the seller's side. However, by taking the necessary precautions, it's possible to make it safer for both sides. Standard cash trading rules apply. Those with more reputation should generally go first in a transaction. Middlemen are also highly recommended for high-volume transactions. With PayPal, the buyer has the dispute system to fall back on if they don't receive the items. This is not true with Bitcoin, so make sure that you're trading with someone who's very reputable.
Bitcoin addresses are entirely anonymous. There's no "verified" status like PayPal has. Ensure that the person you're trading with is trustworthy. Look for the traditional signs of a scammer: fresh Steam account, low number of items in their backpack (except for the high-value ones they're selling), low hours of TF2, no reputation, private backpack. These are all signs that you may be dealing with a scammer's alt. You may also wish to take into consideration the user's Steam Level. A user with a higher Steam Level has invested more into their Steam account and is therefore less likely to risk it by conducting a scam.
Additional Help & Information /Bitcoin
is there to answer any questions you may have about Bitcoin!
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