Recently I have gotten a lot of questions about Bitcoin as an option for the CSGO trading community. I decided to piece together some of the points I have made to people into a little guide of sorts. Any questions just ask away, as this is an early draft.

**Introduction: What is Bitcoin (BTC)**

Bitcoin is a cryptocurrency which allows you to transfer money internationally almost instantly with no fees* and without any chargeback risk.

Aside from domestic bank transfers and Western Union, there is no other way to transfer money without any reversal or chargeback risk whatsoever. This makes Bitcoin an incredibly important tool for merchants of digital goods like CSGO items to receive payment without any concern of accounting for scammers/chargebackers.

Bitcoin is a peer-to-peer system that uses a public ledger called a "blockchain" in order to record all transactions, which are conducted by solving different puzzle-like "blocks".

In the blockchain there are addresses, each one has a corresponding private key which is used to access an address in order to send funds. All addresses can be publicly accessed to view balances and transactions. Thus, all on-blockchain activity is kept on record.

The peer to peer nature means that there is no central regulatory authority of bitcoin, so there is no way to recover lost private keys that aren't backed up anywhere, and there's a controlled mechanism... a defined algorithm for how bitcoins are created and introduced (through mining).

**Getting Started**

Because of how intimidating the technical details of BTC can be, it's best to start with a user-friendly hotwallet (an online service that lets you simply use your email and a normal password to access your different bitcoin addresses). Two popular ones are [blockchain.info](http://www.blockchain.info) and [coinbase](http://www.coinbase.com) these are Western-based services that are highly respected. Using these types of services allows you to be secure that you won't lose your money just because you have lost your private key to an address you made.  This will increase your insecurity as well, but for just getting started you should just ease into it, make a wallet, and try transferring coins around, creating new addresses, etc.

Now, in order to use Bitcoin you need to...acquire Bitcoins! Aside from selling things to get Bitcoin, this can be done using different sources of funds to buy them, here are some suggestions and options:

1. *Credit card* -- [Circle](http://www.circle.com) offers to US based consumers the opportunity to buy bitcoin using credit card. In general though, due to VISA/Mastercard monopoly allowing chargebacks, this is not a common or recommended way to acquire bitcoins.

2. *Paypal* [Localbitcoins](http://www.localbitcoins.com) offers to everyone worldwide the opportunity to buy bitcoin using paypal. Read their FAQ about how the escrow system operates. Similar to (1), there's still a chargeback issue that makes this method less than optimal.

3. *Bank transfer* this is probably the easiest, most drama-free way to do it. Sign up with one of the exchanges (Bitstamp, Coinbase, etc.) and deposit money by sending a bank transfer. Once the transfer clears (a day or two?), you will be able to buy and sell bitcoin instantly with the exchange, and this will come in handy when addressing certain downsides of bitcoin...

**Downsides of Bitcoin**

Immediately we should get out of the way the well-known issues with BTC:

1. *Volatility of value*. Bitcoin's value in dollar, euro, etc. is highly susceptible to violent fluctuations. This can be problematic for merchants who have to pay bills and taxes in fiat currency.

SOLUTION: But luckily it's not an issue because you can make an account at Coinbase or Bitstamp or other well-known exchanges which allow you to sell bitcoins into Dollar or Euro immediately. Thus, if you sell CSGO items for bitcoin into one address, you can immediately sell the BTC you got on an exchange site (either transferring bitcoin to your exchange wallet or accepting payment on the wallet directly) and periodically withdraw the money into your country's bank account.

2. *Double Spending/Transaction Confirmation Wait Time*. When making a Bitcoin transaction from one address to another, a mining fee must be included -- a tiny amount which is covered by most wallets and is used as an incentive to miners to process transactions -- and the blockchain has different nodes which have to CONFIRM the transaction. Theoretically someone can make an unconfirmed transaction with no mining fee (which would take up to a day or more to confirm...), and then you will see the pending transaction in the destination address, and the buyer can just send the money again but with a mining fee which will get the second transaction confirmed before the first.

SOLUTION: Wait 10 minutes or so for confirmations of the transaction after you initiate the payment (if you have included this mining fee which like I said most wallets already cover), or do an "offblockchain" transaction which confirms instantly on a site like Coinbase. ALL BITCOIN TRANSACTIONS SHOULD BE DONE WITH THE BASIC MINING FEE (0.0001 btc...a miniscule amount that most wallets will cover themselves) which will guarantee confirmation within minutes. The technical necessity for "double spending" is pretty high, and once there is a confirmation it will be almost impossible for a user to double-spend from their addresses and you can use tools to detect a potential doublespend attempt.

3. *No regulation, no accountability*. You can either see this as an issue or a benefit. Bitcoin is a money launderers heaven, because it's completely anonymous despite the transactions all being public.  But the same can be said of cash. Bitcoin is a tool that can be utilized for good or for bad. That being said, you can lose lots of money by misplacing or losing a private key to an address you have. While this is mitigated by using online wallets that will store the private keys to your addresses and allow you to recover them by using your email, that increases the insecurity of your funds, because sometimes wallets and exchanges get hacked.

SOLUTION: Get comfortable with bitcoin and be smart about diversifying to different addresses and being secure with how you store your keys.

**Conclusion**

Bitcoin is an excellent tool for merchants to avoid chargeback risk when selling items for real money, and for buyers to use a peer to peer system that avoids banks and government intervention to purchase digital goods. Like with any real money transactions, for full security you need a middleman to serve as escrow to verify that items do not get sent until the payment arrives.