Recently, I became curious about bitcoin and blockchains. This curiosity was mostly sparked by reading Deloitte’s paper on blockchain, which inspired me to learn more. The dream is to create a smart contract using block chain. However, before I started building this blockchain I thought it would be a useful exercise to first start using a blockchain- bitcoin!
It has taken me over a month to go from being bitcoin curious to becoming a bitcoin user. Security was a big issue for me, and I wanted to go with a company that has been around the proverbial block.
I chose Coinbase for the ease and convenience of storing and buying bitcoins. I wanted to be treated like a noob and have my hand held. Signing up for Coinbase was very much like registering for any online banking service. The process was familiar and didn’t differ all that much to when I signed up for the online bank Simple.
The only part that was different was verifying my identification using netverify. I used the web cam to take a picture of my learner’s permit (I don’t yet have a driver’s license) and waited for Netverify to give me the green light and continued the registration process.
Buying coins was very easy. When I first signed up I was told I got a daily increase. I think the daily amount of bitcoins one can buy varies from person to person. For me, with a debit or credit card I was allowed to buy up to $40 dollars worth of bitcoins, and $3000 worth of bitcoins if I connected Coinbase to my checking account. Not sure why there was such a discrepancy of purchase limits between the debit card and checking account.
Who Holds the Keys
I knew bitcoin was the most mainstream crytocurrency out there, but I really didn’t expect the buying experience to be so user-friendly. The UX was intuitive and navigating Coinbase’s interface was easier than some other financial websites- here’s looking at you Bank of America. However, I couldn’t help but wonder if I was trading anonymity for convenience. Many people are drawn to bitcoin because of the promise of anonymous peer-to-peer transaction. Coinbase fell far short on this account. Bitcoin wallets are tied to bank accounts thus making it possible to track an identity to a bitcoin address.
Also, by default Coinbase manages users’ keys. In order to have control over keys, one has to sign up for a multisig vault. In this scenario, Coinbase and the account owner would both have an encrypted key, but only the user has the password. This is more in line with the way bitcoin was envisioned to be used, but if the user loses the passphrase and their personal key they completely lose access to their bitcoins.
As a noob, for now I am fine with trading anonymity for convenience. I found Coinbase to be extremely user-friendly, I was up and running in no time. That being said, in the future I would like to assume more control over my bitcoins. I think the next step is to create and host my own wallet. It would be pretty cool to realize the dream of being my own bank and wean myself from consumer-facing services like Coinbase.