INVESTING IN BITCOINS TRAINING

DAY 10

*DAY 10: BITCOIN TRANSACTIONS (LEARNING HOW BITCOIN TRANSACTIONS WORK)*

Hello members. Welcome to another day of our *INVESTING IN BITCOINS TRAINING*

This training has been brought to you by; Justine Nyachieo, Business Man & Mentor
(+254742304047) and Timothy Angwenyi, Business Consultant (+254701711058)

How do Bitcoin transactions work?

Bitcoin was created to function as peer-to-peer electronic cash. Whether you are spending or
accepting bitcoin as payment, it is prudent to understand how a transaction works.

Bitcoin transactions are messages, like email, which are digitally signed using cryptography and
sent to the entire Bitcoin network for verification. Transaction information is public and can be
found on the digital ledger known as the 'blockchain.'

The history of each and every Bitcoin transaction leads back to the point where the bitcoins
were first produced or 'mined.'

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We define a bitcoin as a chain of digital signatures. Each owner transfers bitcoin to the next by
digitally signing a hash of the previous transaction and the public key of the next owner and
adding these to the end of the coin. A payee can verify the signatures to verify the chain of
ownership.

Bitcoins do not "exist" per se. There are no physical bitcoins, nor do Bitcoin owners have an
"account." Instead, there's a 'blockchain,' which you can think of as a ledger, or a record, of all
the transactions that have ever taken place between Bitcoin addresses.

These transaction records are updated by the Bitcoin network participants (nodes) and shared
across each of its nodes as balances increase and decrease. You can use any block explorer like
https://explorer.bitcoin.com if you want to see the history, as well as current balance, of any
given Bitcoin address.

*PUBLIC AND PRIVATE KEYS*

To send Bitcoin, you must have access to the public and private keys associated with the
amount of bitcoin you want to send. When we talk of someone "owning" bitcoins, what it
actually means is that person has access to a 'key pair' comprised of:

1) A public key (an address) to which some amount bitcoin was previously sent

2) The corresponding unique private key (a password) which authorizes the bitcoin previously
sent to the above public key (address) to be sent elsewhere.

Public keys, also called bitcoin addresses, are randomly generated sequences of letters and
numbers that function similarly to an email address or a social-media site username.

As the name implies, they are public, so you are safe sharing them with others. In fact, you
must give your Bitcoin address to others when you want them to send you bitcoin.

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The private key is another sequence of letters and numbers, also generated randomly.
However, private keys, like passwords to email or other accounts, are to be kept secret. Never
share your private key with anyone that you do not 100% trust to not steal from you.

You can think of your Bitcoin address as a transparent safe. Others can see what's inside, but
only those with the private key can unlock the safe to access the funds within.

*TRANSACTION INPUTS AND OUTPUTS*

Although it would be possible to handle coins individually, it would be unwieldy to make a

separate transaction for every cent in a transfer. To allow value to be split and combined,
transactions contain multiple inputs and outputs. Normally there will be either a single input
from a larger previous transaction or multiple inputs combining smaller amounts, and at most
two outputs: one for the payment, and one returning the change, if any, back to the sender

Let's make this simple by looking at a sample transaction in practice:

Mark wants to send 1 BTC to Jessica. To do this, he uses his private key to 'sign' a message with
the transaction-specific details. This message, which must be broadcast to the network, will
contain the following:

*Inputs.* This contains information about the bitcoin previously sent to Mark's address. For
example, imagine Mark previously received 0.6 BTC from Alice and 0.6 BTC from Bob. Now, in
order to send 1 BTC to Jessica, there might be two inputs: one input of 0.6 BTC previously from
Alice and one input of 0.6 BTC previously from Bob.

*Amount.* In this case, the amount Mark wants to send is 1 BTC.

*Outputs.* There are outputs. The first is 1.2 BTC (0.6 BTC + 0.6 BTC) to Jessica’s public
address. The second is 0.2 BTC returned as 'change' to Mark.

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This might seem confusing, but it's done this way to improve efficiency - and the good news is
that knowing the behind-the-scenes details of Bitcoin transactions is not required to send or
receive bitcoin. Your Bitcoin Wallet takes care of that!

*BROADCASTING AND CONFIRMATIONS*

In the above example, Mark (via his bitcoin wallet app) will broadcast his proposed transaction
to the Bitcoin network.

A special group of participants in the network known as 'miners' verify that Mark's keys are able
to access the inputs (i.e. the address(s) from where he previously received the bitcoin he claims
to control.

Miners also gather together a list of other transactions that were broadcast to the network
around the same time as Mark's and form them into a block.

Any miner who has completed the 'Proof of Work' is permitted to propose a new block that will
be added or 'attached' to the chain and by referencing the last block.

That new block is then broadcast to the network. If other network participants (nodes) agree
it's a valid block (i.e. the transactions it contains follows all the rules of the protocol and it
properly references the previous block), they will pass it along.

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Eventually, another miner will build on top of it by referencing it as the previous block when
proposing the next block.

Any transactions that were in the previous block will now have been 'confirmed' by the next
miner.

As blocks are added to the chain, the number of confirmations of Mark's transaction increases.

*Why do some bitcoin transaction confirmations take so long?*

Each block can only contain a certain number of transactions, and that number is determined
largely by the space available in each block, or the 'block size,' which is 1MB. The limited space
gives rise to the fee market, where miners, who collect fees, choose to include in the next block
only those transactions which have included a high enough fee. Thus higher fees act as
incentive for miners to prioritize your transactions.

Note that the block size is an arbitrary limit, but the Bitcoin community has chosen to keep the
block size as small as possible in order to make it easier for people to operate Bitcoin nodes.
Bitcoin Cash, which is a fork of Bitcoin, has a larger block size and therefore requires (much)
lower fees for transactions.

*How much are bitcoin transaction fees?*

Fees for sending bitcoin could be anywhere from a few cents all the way up to $100. The reason
for the big variation is that Bitcoin fees depend on both supply and demand (i.e. how congested
the network is at a given time) and the "size" of your transaction.

Size is affected primarily by inputs, so if your transaction has many inputs, it will take up more
block space, and demand a higher fee.

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For example, if you want to send 10 BTC, there's a good chance your transaction will require
more inputs than if you want to send 1 BTC. The 10 BTC transaction might consist of 5+2+1+1+1
(so a total of 5 inputs) while the 1 BTC transaction might be just two inputs as in our
Mark/Jessica example above.

Many wallets, including the Bitcoin.com Wallet, allow users to manually set transaction fees.
This helps you to avoid overpaying. For example, if you are not in a rush, you can set the fee the
lowest such that it will be picked up by a miner when the network is less congested. You can
also ensure your transactions are processed immediately by increasing your fee.

*HOW TO BUY BITCOINS*

Get your first bitcoin in minutes!

1. Download the Bitcoin.com Wallet app.

2. Setup your payment method (credit/debit, Apple Pay, etc.).

3. Follow the instructions to buy.

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*Key points to consider*

The three key points to consider when buying bitcoin are:

*Payment method

*Platform/venue used

*Where your bitcoin goes

Payment methods range from credit card to bank transfer, payment app (PayPal, Apple Pay,
Google Pay, Samsung Pay, etc.), face-to-face with cash, and even barter. Each payment method
carries tradeoffs in terms of convenience, privacy, and associated fees.

Platforms/venues for buying bitcoin include digital wallet providers, centralized spot exchanges,
OTC desks (private 'Over-The-Counter' exchange services used primarily by high-net-worth
individuals), peer-to-peer marketplaces, and even payment apps like PayPal.

Of course, it's also possible to buy bitcoin face-to-face. For example, you could give cash to your
friend in exchange for receiving an agreed amount of bitcoin.

As for where your bitcoin goes after you buy it, the options are:

1) Into a Bitcoin wallet you control (i.e. a 'non-custodial' wallet like the Bitcoin.com Wallet)

2) Into a Bitcoin wallet someone else controls (eg. a centralized cryptocurrency exchange or a
payment app like PayPal).

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*Not your keys, not your bitcoin!*

When you hold bitcoin in a wallet you control (known as a 'non-custodial' wallet), you never
have to ask for permission to use it. This means you can receive your bitcoin without waiting for
a third party like a centralized exchange to approve the transaction. It also means you can send
your bitcoin wherever you want, whenever you want.

By contrast, many custodial Bitcoin wallets impose severe restrictions on what you can do with
your bitcoin. For example, you may be asked to register an address before sending bitcoin to it,
and you may be required to wait several days before being allowed to make a withdrawal.

In some cases (PayPal for example), withdrawals of any kind are simply not permitted. It's also
not uncommon to have your account frozen altogether. If you have been deemed a security or
fraud risk, for example, you may be locked out of your account with no recourse to action.

The best non-custodial Bitcoin wallets also enable you to customize the 'network fee' each time
you send. This means you can save money on transaction fees when you're not in a rush, or pay
more to send faster when you are.

Perhaps most importantly, non-custodial wallets are more secure. As long as you maintain key
management best practices, you will never have to worry about getting hacked, nor will you be
exposed to counter-party risks like a centralized exchange getting hacked or going bankrupt.

If you don't have a bitcoin wallet yet, check the Bitcoin.com Wallet - easy-to-use, non-custodial
Bitcoin wallet trusted by millions.

*Why do I need to verify my identity to purchase bitcoin?*

When you buy bitcoin with a government-issued currency through an exchange service, you are
interacting with a regulated business. Such businesses must comply with Know Your Customer
(KYC) and Anti-Money Laundering (AML) regulations pertaining to the transfer of money. These

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regulations require the collection and storage of customer information, including identity
documents and sometimes proof of address.

*What are the fees for buying bitcoin?*

Fees for buying bitcoin depend on the payment method and platform/venue used. For
example, if you're buying directly from a friend and settling in cash, you will only need to
consider the 'network fee' for sending the bitcoin from your friend's digital wallet to yours.

If you are paying with a credit card or bank transfer, you will of course need to factor in the fees
for using those payment methods.

Beyond that, exchange services charge additional fees for facilitating trades. These fees cover
the exchanges' operating costs plus a small margin. In general, you will pay lower overall fees
for larger purchases, so it often makes sense to avoid making many small buys.

*WAYS TO BUY BITCOIN*

Having gone through the basics of buying bitcoin, let's look in more detail at the methods and
processes.

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*Buying bitcoin with the Bitcoin.com Wallet*

Crypto wallets allow you to buy bitcoin conveniently from within the wallet app, and the
Bitcoin.com Wallet is no exception. Importantly, the Bitcoin.com Wallet is fully non-custodial.
This means you are always in complete control of your bitcoin.

Here's the process for buying bitcoin using the Bitcoin.com app:

Open the Bitcoin.com Wallet app on your device.

Select Bitcoin (BTC) and tap the "Buy" button. Note: you can also buy other digital assets.

Follow the on-screen instructions to choose your preferred wallet for depositing. The
Bitcoin.com Wallet actually consists of separate wallets for each digital asset they support (eg.
BTC, BCH, etc.). Additionally, you can make as many individual wallets as you want, a feature
that can help you to organize your funds. For example, you can make one Bitcoin wallet called
My BTC Savings and another Bitcoin wallet called Everyday BTC Spending.

If it's your first purchase, verify your identity. After your first purchase, which includes
identification verification, future purchases are completed in seconds!

Once complete, your purchase will proceed.

Of course, you can also use your Bitcoin.com Wallet to receive, hold, and use the bitcoin you
have already purchased via a different method. Other methods for buying bitcoin include:

*Buying bitcoin from the Bitcoin.com website*

You can buy bitcoin from the Bitcoin.com website using your credit/debit card or other
payment method (Apple Pay, Google Pay, etc.). When you buy bitcoin from their website, you

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will need to decide where to receive it. This means you'll need to input a Bitcoin 'address' when
prompted.

For example, a Bitcoin address looks something like this:

3J57t1XpEZ73CZmQvfksriyiWrnqLhGTLy

Here's the process for buying from their website:

Visit their Buy Bitcoin page.

Select Bitcoin (BTC). Note: you can also purchase a range of other digital assets.

Choose whether you want to pay in USD or another local currency, and enter the currency
amount.

Click the BUY button.

Enter your wallet address. Here's where you will decide where the bitcoin you are buying goes.
For example, you can send bitcoin straight to your Bitcoin.com Wallet. To do so, you just need
to know your Bitcoin address. To get the right address:

*Open the bitcoin wallet app you are using.

*Tap the receive icon

*Select Bitcoin (BTC) and choose the Bitcoin wallet you want to receive it to;

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*Tap the copy button to save the address to your clipboard. You will need to paste that address
into the Bitcoin.com Buy website. If you are accessing the website from your desktop or laptop,
you can, for example, email the address to yourself then paste it in the wallet address field on
the site.

Complete the purchase process by creating an account and providing your payment details.

*Buying bitcoin from a centralized cryptocurrency exchange*

With this method, the bitcoin you purchase will at first be held by the cryptocurrency exchange
on your behalf. If you would like to take full control of your bitcoin, you will need to withdraw it
from the exchange to a non-custodial wallet like the Bitcoin.com Wallet.

When you withdraw bitcoin from an exchange, you will be subject to the exchange's withdrawal
policy and fees. In some cases, you may not be able to withdraw for days or weeks, and the
withdrawal fee could be much higher than a Bitcoin transaction fee would normally be.

Here's the typical flow for buying bitcoin from an exchange.

Visit a cryptocurrency exchange website like Bitcoin.com, Binance, BitForex, BitMEX, Bit-Z,
BW.COM, Changelly e.t.c

Create an account and verify your identity as required.

Follow the website’s instructions to buy your bitcoin (BTC) or other digital asset.

Your bitcoin will appear in your exchange account.

If you would like to take full control of your bitcoin, send it from the exchange to your non-
custodial wallet.

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*Buying bitcoin using a peer-to-peer trading platform*

A variety of platforms facilitate the trading of bitcoin and other digital assets by offering;

1) a venue for buyers and sellers to post their buy and sell orders

2) an escrow and dispute resolution service.

Since these platforms principally help people find each other, in many jurisdictions they aren't
technically classified as exchanges or 'money transmitters,' so in some cases they don't require
you to reveal your identity in order to use them.

For privacy-conscious buyers, therefore, P2P platforms can be an effective method for
obtaining bitcoin despite being generally less convenient, and often more costly overall (it can
be hard to get the "correct" market rate using this method due to lack of liquidity).

Most peer-to-peer Bitcoin exchanges integrate a reputation system, meaning they track and
display the trading history of their users. If you're looking to buy using a P2P exchange, you'll
want to choose sellers who have a good reputation, meaning they have completed several
trades and never had a complaint.

The process for buying bitcoin using a peer-to-peer exchange is typically as follows:

Browse through listings by payment type (eg. bank transfer, PayPal, etc.), amount, location of
seller, reputation, and so on.

Initiate a trade. Doing so locks up the bitcoin in an escrow account.

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Send the agreed payment amount via the agreed payment method. Note, this could potentially
even mean meeting the seller in person and handing over cash directly.

The seller then confirms receipt of the payment via the website or app .This triggers the bitcoin
to be released from escrow to your Bitcoin wallet.

In some cases, the purchased bitcoin will be released from escrow directly to the Bitcoin wallet
of your choosing. In other cases, it will first be sent to your peer-to-peer platform account
wallet (which is typically a custodial web wallet). In that case, you would then want to withdraw
it to a Bitcoin wallet you control. Note that this final step often incurs a fee, which typically
constitutes the peer-to-peer platform's business model.

LocalBitcoins.com is a peer-to-peer marketplace for buying and selling bitcoin.

LocalBitcoins was founded in 2012 and quickly became the most established p2p bitcoin
exchange.

Purchases are usually made via an in-person meeting, but many other payment methods are
available.

Users can post trade offers and search for offers with suitable payment methods and amounts.

*Pros*

*Can be used in every country in the world

*1% Fee to seller only

*All funds held in escrow until both parties confirm the transaction

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*Cons*

*Some users post higher priced offers

*Payment methods*

Mpesa, National bank transfer, SEPA, cash, Swish, QIWI, Mobile top-up, Sberbank, Tinkoff, Alfa-
Bank, VTB Bank, Revolut, M-PESA, PayID

*RECEIVING BITCOIN*

To receive bitcoin, simply provide the sender with your address. You just need to make sure
you are providing the right one.

*How do I know what my Bitcoin address is?*

You can find out your Bitcoin address by opening your Bitcoin wallet.

Every Bitcoin wallet is a little different, but your Bitcoin address will always be displayed
somewhere within the wallet.

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Here's an example of a Bitcoin address:

3FZbgi29cpjq2GjdwV8eyHuJJnkLtktZc5

If you don't have a Bitcoin wallet yet, we recommend the Bitcoin.com Wallet. It's the easy-to-
use, fully non-custodial Bitcoin wallet trusted by millions.

*How can I let people know what my Bitcoin address is?*

Your Bitcoin wallet will allow you to copy your Bitcoin address to your clipboard. Then, you just
need to provide the sender with that address via email, messaging app, SMS, etc.

Most wallets also provide you with a QR-code version of your Bitcoin address. If you're in the
same room as the sender, they can scan your QR code to get your address.

*Can I receive bitcoin to my exchange wallet/account?*

If you're using a centralized cryptocurrency exchange, the process is the same as above (i.e. find
your Bitcoin address and provide it to the sender). When you receive Bitcoin to a centralized
exchange, however, you will have to wait for the exchange to acknowledge it has received the
bitcoin and reflect the receipt in your account. This may take quite a bit longer (up to several
hours) than if you receive your bitcoin to a wallet you control (i.e. a non-custodial wallet).

*Is it safe to give out my Bitcoin address?*

You can safely give out your Bitcoin address to friends, family, and acquaintances. No one can
steal your bitcoin using just your Bitcoin address. They need both your address and the private
key to it.

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However, you should know that, since the Bitcoin network is publicly viewable, whoever knows
your Bitcoin address can easily find out exactly how much Bitcoin you have at that address by
simply pasting the address into a Bitcoin block explorer like
https://www.blockchain.com/explorer

They can also see every transaction you have ever made using that address. If you don't want
people to see this information, you will need to use a fresh Bitcoin address. Luckily, that's easy
to do. The Bitcoin.com Wallet, for example, allows you to create an unlimited number of new
addresses, and creating a new address is done with the touch a button.

TIP: to protect your privacy, it's recommended to use a fresh bitcoin address for every
transaction.

*SENDING BITCOINS*

Sending bitcoins is as easy as choosing the amount to send and deciding where it goes.

The exact procedure for doing so will depend on the type of Bitcoin wallet you're using, but the
main thing you need to know is the 'address' of the recipient. A Bitcoin address is an
alphanumeric string that looks something like this:

3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy

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One way to send bitcoin is to simply copy the recipient's address to your clipboard, then paste
it in the send field of the Bitcoin wallet app you're using.

Bitcoin addresses can also be displayed in QR code format. If you're sending bitcoin from a
mobile wallet like the Bitcoin.com Wallet, you can use your phone's camera to scan the QR
code of the address you want to send to. This will automatically fill in the address.

As for the amount to send, most wallets allow you to toggle between showing the send amount
as bitcoin (BTC) or showing it in your local currency.

IMPORTANT: Bitcoin transactions are irreversible, so if you send to the wrong address, you'll
most likely never see that bitcoin again.

*What's the Bitcoin network fee?*

Many Bitcoin wallets (including the Bitcoin.com Wallet) allow you to customize the Bitcoin
network fees you pay when you send bitcoin.

Bitcoin transactions incur a small fee which is paid to the miners that confirm them.
Transactions with higher fees attached to them are picked up sooner by miners (who optimize
for profitability), so higher-fee transactions are more likely to be included in the next batch, or
'block,' of transactions that's added to the Bitcoin blockchain.

This means you can opt for faster transaction processing by paying a higher fee. Alternatively, if
you are not in a rush to have your transaction confirmed, you can save money by opting for a
lower fee.

However, you need to be careful because if you set the fee too low, your transaction may take
hours or get stuck for days. Don't worry though, you are never in danger of losing bitcoin by
setting the fee too low. In the worst case, you will have to wait 72 hours with your bitcoin in
limbo until the transaction is cancelled, at which point you'll again have access to it.

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*How are Bitcoin fees determined?*

Fees are measured in satoshis/byte. A satoshi is the smallest divisible unit of bitcoin, which is
0.00000001 BTC (a hundred millionth of a bitcoin).

Each transaction is made up of data, which is measured in bytes. More complicated

transactions involve more data and so are more expensive.

Generally speaking, this means higher value transactions (involving more bitcoin) consume
more data, and so require higher transaction fees.

However, it's not exactly that simple. In fact, it's entirely possible for a 1 BTC transaction to
involve more data (and therefore require higher fees) than a 0.5 BTC transaction.

To understand why, we need to look in some detail at how the Bitcoin blockchain actually
works.

The system runs on what's known as the Unspent Transaction Output (UTXO) model, which is
an efficient and privacy-enhancing way to manage the Bitcoin ledger. It works like this:

At first, coins are minted through the mining process. These new coins form what's known as
the 'coinbase.' Now imagine a miner, who has received the current 6.25 BTC block reward,
sends 1 BTC to Alice.

On the ledger, this actually appears as 6.25 BTC sent to Alice and 5.25 BTC sent back to the
miner, leaving Alice with a balance of 1 BTC and the miner with a balance of 5.25 BTC (the
miner has an unspent transaction output of 5.25 BTC).

The system is analogous to paying for something using a cash note: if the cost of the item is
Ksh.25, you don't cut a Ksh.50 note in half. Instead, you hand over the whole Ksh.50 note and
receive Ksh.25 in change.

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In our example, the miner has sent over a 6.25 BTC 'note' and received 5.25 BTC in change. As it
relates to fees, even though the amount of Bitcoin involved is significant, the fee for completing
the transaction will be relatively small because the transaction is relatively simple. That's
because there's only one output (1 BTC to Alice) and it comes from only one input or 'note' (the
6.25 BTC coinbase transaction).

If we think of notes as taking up space on the Bitcoin ledger, we can see that this transaction
takes up the least amount of space (bytes) possible.

*Why are some Bitcoin transactions more expensive than others?*

Now let's imagine Alice buys one more BTC at a later date from a different miner. Alice will then
have 2 BTC in her wallet, but each one will have originated from different 'notes.' In effect, this
means Alice has two 1-BTC notes in her wallet.

If Alice wants to send 2 BTC to Bob, she will be sending those two notes. And since more notes
means more data, and more data means higher cost, this transaction will be more expensive
than if Alice had sent a single ‘note.’ Put another way, the transaction will consume more bytes,
so Alice will have to pay more satoshis to convince a miner to include it in the next block.

For the average user, this means you'll end up paying significantly more for a transaction if it
involves moving many 'notes.' For example, imagine you've received a hundred small payments
into your wallet from different people, over a period of months, until you have accumulated
one full bitcoin.

Now, if you want to send that one bitcoin to someone else, you will actually be sending 100
'notes.' This will incur significantly more fees than if you would have sent a single 'note'

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*How do I set the BTC network fee in my Bitcoin wallet?*

This, again, depends on the wallet. In fact, many web wallets (cryptocurrency exchanges) don't
give you any control over the network fee whatsoever. Instead, they have a predetermined fee
(which is almost always set higher than the actual fees they will pay). In other words, they profit
when their customers withdraw bitcoin. This is a common revenue-generation strategy for
cryptocurrency exchanges.

Most non-custodial wallets, however, allow you to customize the fee you attach to your Bitcoin
transactions. The Bitcoin.com Wallet, for example, has three convenient fee settings, as well as
the option to set custom fees. The default speed (“Fast”) is set to have your transaction
confirmed most likely within the next three blocks (so less than 30 minutes). If you change it to
“Fastest,” you will pay a higher fee and likely have your transaction confirmed in the next two
blocks (so less than 20 minutes). Changing it to “Eco” will save you some money, but still result
in your transaction most likely getting confirmed within the next six blocks, so generally less
than 60 minutes.

For advanced users, you also have the option of setting a custom fee. You’ll want to use a tool
like Bitcoinfees to ensure you are choosing an appropriate fee given the current state of
network congestion.

*HOW TO SELL BITCOIN*

Get setup to sell bitcoin in minutes

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1. Download the Bitcoin.com Wallet app.

2. Connect your bank account.

3. Tap the sell button and follow the instructions.

*Overview of the two main options for selling bitcoin*

Your two main options for selling bitcoin into local currency are:

*Using an exchange service*

An exchange service is a regulated business that interacts with the traditional banking system.
An exchange service may take the form of a simple website with limited exchange functionality,
a digital wallet with banking connections, or a full-service cryptocurrency exchange with order
book, market makers, etc.

*Selling peer-to-peer*

When you sell peer-to-peer, you can bypass the traditional banking system to a certain extent
by, for example, taking payment in cash, using a payment app like PayPal, or settling the
transaction with goods or services.

If you know someone who wants to sell bitcoin, you can buy directly from that person.

Alternatively, there are a number of platforms that act as a matchmaking service, helping
sellers find buyers and vice versa. Buyers and sellers then negotiate trades on a peer-to-peer
basis.

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*Pros and cons*

Here's a rundown of the pros and cons for each option:

*Selling bitcoin using an exchange service*

Exchange services can be divided into two groups: 1) simple exchange, and 2) full-service
exchange.

*1. Simple exchange services (eg. the Bitcoin.com Wallet, the Bitcoin.com Sell website).*

*Advantages*

Fast, easy, and convenient

Guaranteed at or close-to market rates for sells

Can sell any amount

*Disadvantages*

Requires identity verification

Not available in all regions

Payments made to bank accounts only

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*2. Full-service cryptocurrency exchanges (eg. Bitcoin.com Exchange)*

*Advantages*

Can set 'limit' sells, thereby guaranteeing your specified rate

Can sell any amount

*Disadvantages*

Not available in all regions

Requires identity verification

Payments made to bank accounts only

Custodial (the exchange holds your bitcoin, not you)

Relatively difficult to use (for example, requires setting sell orders and understanding order
books)

*Selling bitcoin peer-to-peer (eg. your friend or a match-making service like Hodlhodl)*

*Advantages*

Identity verification is often not required

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Any payment method is possible (including cash, payment app, barter, etc.)

*Disadvantages*

Less convenient (you must manually create and negotiate sell orders)

Generally only legal to sell small amounts

*Why do I need to verify my identity to sell bitcoin?*

When you sell bitcoin through an exchange service, you're interacting with a regulated
business. Such businesses must comply with Know Your Customer (KYC) and Anti-Money
Laundering (AML) regulations. These regulations require the collection and storage of customer
information, including identity documents and sometimes proof of address.

*What are the fees for selling bitcoin?*

Fees for selling bitcoin depend on the payment method and platform/venue used. For example,
if you are selling directly to a friend and settling in cash, you will only need to consider the
'network fee' for sending the bitcoin from your digital wallet to your friend's digital wallet.

If you're receiving cash via bank transfer, you'll of course need to factor in the associated fees.

Exchange services also charge fees for facilitating trades. These fees cover the exchanges'
operating costs plus a small margin.

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*Selling bitcoin with the Bitcoin.com Wallet*

With this method, you can sell any amount of bitcoin (BTC) in your digital wallet directly to
cash, which will then be deposited in your bank account.

Here's how it works:

On the app's home screen, tap the "SELL" button.

If you haven't done so already, follow the instructions to connect your bank account.

Select the amount you would like to sell. You can input the amount in either local currency
terms or bitcoin terms.

Confirm the transaction.

Note: it typically takes between 1 to 3 working days to receive the funds in your bank account.

*Selling bitcoin on Bitcoin.com website*

With this method, you will need to create an account, verify your identity and connect your
bank account, then send the bitcoin (BTC) you would like to sell to a specified Bitcoin address.
After the sale is processed, you'll receive cash in your bank account.

Here's how it works:

Visit Bitcoin.com official Sell Bitcoin page

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Select bitcoin (BTC)

Choose the currency you would like to receive and enter the amount (either in local currency
terms or bitcoin terms)

Carefully review the order, then add your wallet address and click Continue. The wallet address
you provide will be used as the return address in the (very unlikely) event the transaction
doesn't go through

Complete the sale process by entering your bank details and sending your bitcoin to the
address they provide.

Note: it typically takes between 1 to 3 working days to receive the funds in your bank account.

*Selling bitcoin on a cryptocurrency exchange*

With this method, you will need to create an account, verify your identity, and connect your
bank account. Once you have sold your bitcoin into local currency, you can withdraw that
currency to your bank account.

The typical flow is as follows:

Visit a cryptocurrency exchange, like the Bitcoin.com Exchange, Binance, BitForex, BitMEX, Bit-
Z, BW.COM, Changelly e.t.c

Create an account and verify your identity as required.

Follow the website’s instructions to sell your bitcoin (BTC) or other digital asset.

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Withdraw the funds to your bank account.

*Selling bitcoin peer-to-peer*

A variety of platforms facilitate the trading of bitcoin and other digital assets by offering;

1) A venue for buyers and sellers to post their buy and sell orders

2) An escrow and dispute resolution service.

Since these platforms principally help people find each other, in many jurisdictions they aren't
technically classified as exchanges or 'money transmitters,' so in some cases they don't require
you to reveal your identity in order to use them.

For privacy-conscious buyers, therefore, P2P platforms can be an attractive method for
obtaining bitcoin. This means that such platforms typically have no shortage of buyers.

The process for selling bitcoin using a P2P platform is typically as follows:

Either create a listing for the amount of bitcoin you would like to sell or browse through the
listings of people looking to buy.

Initiate a trade. Doing so locks up the bitcoin you will be selling into an escrow account.

Confirm that the agreed payment amount has been received via the agreed payment method.
Note that this could potentially even mean meeting the buyer and accepting cash in person.
When you have confirmed payment, the platform will release your bitcoin to the buyer's wallet

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Localbitcoins.com is an example of a bitcoin peer-to-peer site used by most Kenyans to sell and
buy bitcoins.

https://youtu.be/gLVToLzaKlc

*END OF DAY 10 INVESTING IN BITCOINS TEACHING SESSION*

Our Whatsapp Investing in Bitcoins Training group is now open for questions and discussions on
what we have learnt today.

This Investing in Bitcoins Training has been organized and brought to you by;

Justine Nyachieo
Business Man & Mentor
+254742304047

Timothy Angwenyi
Business Consultant
+254701711058

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Feel free to Contact us on Whatsapp or on a Call.

 Let’s meet next for Day 11 of our Investing in Bitcoins Training.

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