Expert Reviewed
How to Send Bitcoins
Bitcoins are a type of digital currency used in a peer-to-peer payment system. They are created as users record and verify payments for a transaction fee. However, bitcoins are not backed by gold or paper currency, and are therefore valueless unless you sell them, convert them to normal currency, or use them to buy a product or service.[1] Before you can conduct a transaction and send bitcoins to someone else, you'll need to choose and set up a Bitcoin wallet and accrue bitcoins by either receiving them from someone else, buying them, or mining for new bitcoins.
Part One of Three:
Sending Bitcoins to Another User
1
Send money with a software wallet. Though the process of sending money with a software wallet may vary from one platform to another, the steps should follow the same basic procedure. It will generally be very similar to sending money through an online checking account.[2]
Open your software wallet and click on the "Send" tab, or use the "Trade|Send Bitcoin" option under your wallet's menu.
Type in the destination address for your intended recipient's wallet. You can type it by hand, copy and paste it from your system clipboard, or drag and drop the recipient's QR code.
Choose a label so that you can track your bitcoin transaction.
Type in the value you want transferred in the "BTC" box.
Review the details to ensure that you have entered the correct information.
Click "Send" to complete the transfer.
Once completed, the transfer is not reversible. It can take around one hour for the transaction to be confirmed by the Bitcoin network, but you and the recipient will instantly be able to see that the transaction was completed.[3]
2
Use a paper wallet to send bitcoins. If you're using a paper wallet, you'll need to access the physical wallet and transfer them to your software wallet. Once your bitcoins are in your software wallet, you can then proceed with the transaction like you would for any other software wallet transaction.[4]
Scan the QR code on your paper wallet, or type the unique series of letters and numbers into your software wallet.
Check the balance on your paper wallet to ensure that you have sufficient funds.
Next, you'll need to either import your private key or sweep it.
Importing simply loads the bitcoins in the private key of your paper wallet into your software wallet. Your bitcoins will be accessible through both the paper and software wallets, much like a checkbook and a debit card, so it's important to protect your paper wallet if you import.
Sweeping does the same thing as importing, but it uses a new unique Bitcoin address to protect your bitcoins. When sweeping, no bitcoins remain in your paper wallet.[5]
Perform the bitcoin transaction as you would with a regular software wallet.
3
Facilitate a bitcoin transfer through a hosted wallet. Sending someone bitcoins using a hosted wallet is essentially the same as using a software wallet.[6] Many hosted wallets depict their services as an online bank, but it's important to be careful when conducting transactions through hosted wallets, as these services generally lack the insurance/security of an actual online bank.[7]
If the website or service that hosts your wallet disappears, you can lose all of the bitcoins you had stored in that hosted wallet.
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Part Two of Three:
Setting Up Your Bitcoin Wallet
1
Learn what a wallet is. A Bitcoin wallet works similar to the real wallet in your pocket: it allows you to spend and receive currency (in this case, that currency is bitcoins). In order to conduct transactions, you'll need your own Bitcoin wallet, which you can get for free online.[8]
A Bitcoin wallet can take the form of computer software, computer hardware, or a physical piece of paper.
Your Bitcoin wallet is where you will store, receive, and distribute bitcoins.
Each Bitcoin wallet is composed of unique private keys, which you use to spend or transfer bitcoins.[9]
2
Set up a wallet. In order to make bitcoin transactions, you'll need to choose and set up a Bitcoin wallet. There are three primary types of Bitcoin wallets:
Software wallets - this Bitcoin wallet is effectively a digital wallet. It is convenient because it stores bitcoins on your device, which simplifies the spending/receiving processes, but the downside is that software wallets are more susceptible to hackers.
Hosted wallets - these digital Bitcoin wallets are operated by a third party company. They offer the same advantages as a software wallet, but you'll need to be sure that you trust the particular third party company and their platform before using a hosted wallet.
Physical wallets - a physical wallet is essentially a physical paper ledger used to keep funds safe offline. You can easily receive bitcoins from others into your physical wallet, but you'll need to import your bitcoins into a software or hosted wallet online in order to spend them.[10]
3
Evaluate your wallet options. There are three main types of Bitcoin wallets, but there are many variations on those primary categories. Which type of wallet you choose will depend on your needs and experience/proficiency with using bitcoins.
If you're new to Bitcoin, it may be best to use a software wallet that won't require huge downloads or commitments (called "thin client software"). Try a wallet like Electrum or Multibit.
If you'd rather let someone else handle the process of securing bitcoins, you may want to try using a hosted wallet service. These wallets can be setup and accessed on any browser or a mobile app, but do your research to be sure you can trust the host.
If you plan on storing up bitcoins with no intentions of making frequent transactions, an offline storage wallet might be best for you. You can use a physical paper wallet or an offline software wallet such as Armory.
If you have some experience and proficiency in using the Bitcoin system, you may want to use something like Bitcoin-QT or Armory instead of a third party server. You'll be able to store the entirety of each block chain on your computer, but you'll need a lot of storage space (at least 16 gigabytes).[11]
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Part Three of Three:
Collecting Bitcoins to Use In a Transaction
1
Sell products or services for bitcoins. Every new bitcoin that comes into existence is the product of a previous transaction. The only way to get bitcoins when you don't have any is by receiving them in a transaction from someone else, buying them for cash, or by mining new bitcoins.[12]
For more information on receiving bitcoins, see how to receive bitcoin.
If you know someone who currently uses Bitcoin, you may request that that person sends you a predetermined number of bitcoins.
If you do not know anyone who uses Bitcoin, you may receive bitcoins by offering some type of transaction with other Bitcoin users, and you will be paid in bitcoins.
The other option is to "mine" for bitcoins.
2
Mine for bitcoins. If you cannot get bitcoins from anyone else in the Bitcoin network, you can earn them by mining for them. Mining simply means that you solve a complex mathematical puzzle which helps verify other people's transaction histories, and in return you're awarded with free bitcoins. It's free to receive bitcoins, but you'll typically pay a fee for sending them in a transaction.[13] However, mining is an expensive and very complicated way to get bitcoins at this time and not practical for most people.
For more information on mining, see how to mine bitcoins.
3
Buy bitcoins. If you do not know anyone on Bitcoin, do not have anything to sell, and do not want to mine for new bitcoins, you can buy bitcoins through the network.[14] This can be done in one of three ways:
Buy bitcoins from a person - you can purchase bitcoins through person-to-person marketplaces and pay with cash (in person or deposit), bank transfers, money wires, PayPal, and other methods. The trick is finding someone trustworthy, so it may be worth using an escrow service (such as CoinCola or LocalBitcoins) to protect yourself against fraudulent offers. OTC platforms usually also allow you to a upload an ID proof. For added security during your trades, you may require the ID proof of your trading partner.[15]
Buy bitcoins from an exchange/outlet - exchanges and outlets is essentially on online service that either facilitates transactions between users (exchange) or sells their own accrued bitcoins directly to customers (outlet). You'll need to create an account and have your identity verified before you can use an exchange or outlet.[16]
Buy bitcoins through an ATM - you can purchase bitcoins from a physical Bitcoin ATM using cash, though many bitcoins are one-directional and only allow you to either buy bitcoins or trade them for cash. Many government regulations dictate whether an ATM can be installed and where, so finding an ATM near you may be difficult.[17]
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Tips
Bitcoins are complex to use and investments in them carry a large amount of risk. Be sure to read up on bitcoins and their proper use before investing in them.
Backup your wallet. It's generally a good idea to keep a backup of your wallet stored in a safe place. That way you'll be protected if there are any server errors. If your computer/phone is stolen, you'll also be able to protect your bitcoins from theft.[18]
When you backup your wallet, consider using multiple secure locations across different forms of media.
Encrypt your wallet and/or your smartphone. This requires you to enter a password any time you want to withdraw/transfer funds, which can help protect your bitcoins against theft. However, make sure that you never forget your password, or else your bitcoins will be permanently lost. Make it something easy for you to remember and keep it written down in a safe place.
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Expert Review By:
ML
Michael R. Lewis
Entrepreneur & Retired Financial Advisor
Co-authors: 7
Updated: December 8, 2017
Views: 48,982
Article Rating: 64% - 28 votes
Categories: Bitcoin
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