How to trade Bitcoin with a virtual wallet

26 January, 2014

Whether you want to anonymously purchase goods, or make international payments cheaply, Bitcoins can be an ideal option to keep in mind.

Bitcoin has yet to be considered "real money". It is an online currency that isn't run by a centralized form of power (like a bank or financial institution). Since Bitcoins don't have serial numbers, it isn't possible to trace purchases back to buyers or sellers.

Acquiring Bitcoins

At the moment, there are three primary ways to acquire Bitcoins:

  • Purchasing on an Exchange: Commonly referred to as Bitcoin Exchanges, online marketplaces are providing consumers with the ability to sell Bitcoins using a variety of currencies. Mt. Gox is the largest exchange for the currency to date.
  • Transfers: The beauty behind Bitcoin is that you can quickly and easily send and receive Bitcoins using a mobile app or computer. It would be equivalent to sending cash via online banking.
  • Mining: Although quite difficult, mining is a great way to earn Bitcoins. In fact, it is how newer Bitcoins are created.

In the following sections, we are going to talk about some of the more popular Bitcoin wallets as well as discuss how you can make money trading this virtual currency.

Coin Base

Coinbase is a digital wallet available for international users who would like to securely store, accept, buy, and trade Bitcoin currency. i They are one of the more common and better options for people who are new to trading the virtual currency.


Bitcoin Armory is an open source wallet that provides you with a secure platform for managing your Bitcoins. ii It is often described as being one of the safer options for individuals who own a substantial amount of the currency.

Multi Bit

Multi Bit is also an international Bitcoin wallet that can be used for Linus, Windows, and even MacOS. iii One of the major advantages of this virtual wallet is that it is quite secure and a bit more lightweight than a lot of the others.

Earning Bitcoins through Trading

A lot of people refer to trading as another form of gambling. And while these two things do share some similarities, they are also quite different. For instance, when you gamble, there's typically an exact probability of winning and losing that you'll be faced with. When you trade assets (like Bitcoin), the calculations tend to be a little more complex.

If you want to make money in the safest way possible with Bitcoin then you should do so through something called “Arbitrage”. This means purchasing an asset for a particular price with the plan of selling it for a higher price later on down the road. In the world of Bitcoin, there are tons of arbitrage opportunities- although they may not be as simple as you might like. The best place to start is on the Bitcoin Stack Exchange Threads.

Here, you'll be able to determine whether or not trading in the virtual currency will be a good idea. If you can trade with some simple speculations, then you would be able to make money. If you are a good trader, and can recognize the patterns, then you may be able to have a better understanding about when the currency is going to shoot up in price.

While there are no set guidelines for making money by trading Bitcoin, know this: always extract your odds from the past prices, and don't listen to what others are saying about its future.

Earning Bitcoins from Interest Payments

If you've already managed to acquire some Bitcoins, then why not try to put them to work for you? Here are some ways that you can start earning interest on your Bitcoins:

  • Direct Lending: You can do this with someone that you know and thoroughly trust. The only downside is that it can be difficult to find someone who will be willing to match the amount that you'd like to invest as well as pay the interest rate you are requiring.
  • P2P Lending: Peer-to-peer lending is another great way to earn interest from your Bitcoins. Bitbond is one of the top P2P lending sites online today, iv and will allow you to diversify your investments by lending currency to many different borrowers. It would work the same as a regular loan: the borrower would repay the money with interest over a pre-specified amount of time. Just make sure that you choose a trustworthy site to do this one.
  • Bitcoin Banking: While this may feel like you are stripping away the very thing that makes Bitcoin unique, it is a great way to make money with your currency. Here, you would place your Bitcoins in a site that will pay you a fixed interest rate on your deposit. Depending on how much you deposit, this option would provide you with a steady stream of monthly income. But like any investment, just make sure that you don't place all of your Bitcoins into a single site.

To sum it up, Bitcoin provides you with the ability to make money. And while a lot of these money-making options are viable, they are also volatile. Always use caution and do proper research before investing or trading your Bitcoins anywhere.