Quote from: unlimited_020 on August 24, 2014, 04:41:53 PM

Okay guys,

I am interested in investing in bitcoin for the long term: I think that it has real potential to rival the likes of paypal, etc.

I am new to bitcoin and have done a lot of reading on it. But I am still slightly confused on the process of buying/selling bitcoins and need to be reassured on a few issues. I want to start off with £500 worth of investment.

I have started off by downloading a bitcoin wallet - "bitcoin Core" and it's in the process of synchronizing . Is this a good wallet?

Yes

Quote from: unlimited_020 on August 24, 2014, 04:41:53 PM

Is it safe from hackers, etc?

Its as safe as you keep your computer. Make sure you use a strong password that you do not use elsewhere and keep your machine clean from viruses and trojans. Id also make regular backups to a safe place or even better several safe places.

Quote from: unlimited_020 on August 24, 2014, 04:41:53 PM

I also want to be able to store my bitcoins offline on a harddrive - I think it is called 'cold-storage' - This stops malware/viruses taking your bitcoins. How do I do this?

You need a seperate machine that runs a wallet but has no internet connection. Electrum or bitcoin-core with armory are commonly used for cold storrage AFAIK. I plan on using an old phone as a cold storrage once I get my new phone. Technically it is possible to just use a different harddrive, but it would not be very comfortable. Any old laptop should do.

Quote from: unlimited_020 on August 24, 2014, 04:41:53 PM

Do I need a separate wallet? Can I store my bitcoins both on my laptop and offline hardrive or can I only store it on one?

You do not actually store "coins", but private keys that allow you to spend the coins. You can copy each private key as many times as you want, but be aware that everyone with access to the key can spend your coins. That is why we use wallets, they help us to manage these keys and protect them with strong encryption and passwords. Generally it is possible to use the same set of private keys on different machines, but they clients might get "confused" about your balance. It is better to use different keys for different machines. E.g. a set of keys for your phone, a set of keys for your laptop and another set of keys for your desktop machine. Keep backups for all of them.

If you want to use cold storrage you usually have an online wallet in "watch only" mode. Its a wallet without private keys, thus even if the computer gets hacked the coins are safe. It is just checking the blockchain for inputs to your addresses, so you know how much coins you actually can spend. The cold storrage has no way of knowing this without internet connection. The watch only, online (or hot) wallet is used to prepare an (unsigned) transaction (TX). Such an unsigned TX needs a signature with the corresponding private key in order to be accepted as valid. This will be done with the cold wallet and taken back to the hot wallet for broadcasting to the network.

Quote from: unlimited_020 on August 24, 2014, 04:41:53 PM

I am not going to 'mine' so I need to buy some bitcoins from somewhere else: I understand I can do this through an exchange. If I were from the US, I would use "Coinbase" because it looks easy to use and you can transfer money from your bank account. But I am from the UK so that's not possible. I have looked at a couple of exchanges and I like the look of 'Kraken'. Is this a good exchange? Is it safe?

Kraken has been around long enough to be considered safe. On the other hand, so has been MtGox. Do not store your bitcoins at an exchange unless you want to trade them on a regular basis back and forth (daytrading).

Quote from: unlimited_020 on August 24, 2014, 04:41:53 PM

Obviously, I need to deposit money onto 'Kraken' before I can buy bitcoins. The only way to do this is through an International Wire transfer or SEPA. I have never done one of these before. After I have sent the money to 'Kraken' through a wire transfer, how do they know what account to deposit it to?

You usually get some sort of code that has to be added to the transaction.

Quote from: unlimited_020 on August 24, 2014, 04:41:53 PM

Do I need to include something in the reference/instructions giving my account name/email? How long does this process normally take?

That might take a few days depending on your bank etc.

Quote from: unlimited_020 on August 24, 2014, 04:41:53 PM

Regarding verification, I have verified myself to tier 2. In order to verify myself to tier 3 I need to provide a scan of my passport and a utility bill. How long does it take them to approve this or is this instant? Do you need tier 3 verification to sell bitcoins? I think you only need tier 2 to buy?

Tier 3 only increases your limits [1]. I have not done the verification with kraken so its just an estimate based on my experiences with other exchanges: it took 5 days.

Quote from: unlimited_020 on August 24, 2014, 04:41:53 PM

Okay, so say I buy £500 worth or bitcoin on 'kraken'. How do I get these bitcoins to my wallet?

Kraken offers a withdrawal method with bitcoin.

Quote from: unlimited_020 on August 24, 2014, 04:41:53 PM

Is this even possible?

Yes, again it is not wise to keep your coins with an exchange. The only way to have full control over your coins if you personally own the private keys that allow spending them. As long as they are with some service or exchange or online wallet (there are expections) someone else controls the private keys and might one day decide that its better to run away with them.

Quote from: unlimited_020 on August 24, 2014, 04:41:53 PM

How long does this process take?

Exchanges tend to need several hours to prepare a Transaction(TX). Once the actual TX is done, signed and broadcasted to the network your client should know about it almost immidiently (as long as its fully synced). It will be confirmed with the next block mined, which on average takes 10 minutes. Keep in mind that this is an average. Sometimes miners have "bad luck" and need an hour for a new block, but this happens rarely.

Quote from: unlimited_020 on August 24, 2014, 04:41:53 PM

Although this is a long time off, if I want to sell my bitcoins, I assume I transfer them back from my wallet to 'kraken'. And then sell them for Euros. How do I then withdraw these from 'Kraken'? Is it difficult? How long does the process take?

Same as with bitcoin, you just pick SEPA or something else and enter the data required. Roughly the same time as the deposit.

Quote from: unlimited_020 on August 24, 2014, 04:41:53 PM

Sorry for asking so many questions but I would really appreciate if you guys could reassure me on my worries.

Dont be, asking questions is a healthy behaviour Wink

Please take all answers you get with a grain of salt, esp. mine regarding kraken, as I never traded there.

Quote from: unlimited_020 on August 24, 2014, 05:30:54 PM

Thank you. Feel more assured now.

When you buy from an exchange, can you transfer the bitcoins straight to your wallet? Or do the bitcoins first get stored on the exchange, then you transfer them to your wallet?

When you buy them they are still "on" your user account with the exchange. You need to withdraw them to have them on your own wallet.

[1] https://support.kraken.com/hc/en-us/articles/201352206-What-are-the-Verifications-Tiers-