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Step-by-step guide to buy and sell bitcoin

Set up a bitcoin wallet
Set up a bitcoin wallet | Woman with hat: © Macrovector/Shutterstock.com

Set up a bitcoin wallet

My first stop was Coinbase, a platform for buying and selling bitcoin. It's backed by several big names in Silicon Valley, including Silicon Valley-based venture capital firm Andreessen Horowitz, and is considered one of the more reputable and easy-to-use bitcoin sites.

I signed up for a bitcoin wallet with Coinbase, handing the company my email address and creating a password.

Similar to a physical wallet, a bitcoin wallet holds the private keys that allow you to spend or exchange bitcoin.

Using bitcoin may feel similar to online banking, but there are no government-backed guarantees like your money has in a bank. If your bitcoin gets stolen or the exchange or company holding your wallet goes under, there is not much you can do. (See: Mt. Gox. )

After signing up and accepting the user agreement that warned that holding or transacting in bitcoin was risky, it was time to buy some bitcoin.

Coinbase asks for personal details from prospective buyers and sellers of bitcoin, which takes some of the pseudonymity away from the cryptocurrency.

I handed over my bank account information and my phone number, but opted to wait for a deposit verification rather than give Coinbase my online banking login. For verification, Coinbase deposits small amounts of money into your bank account to ensure it's a real account.

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