We bought and sold bitcoin — here's how it works (2024)

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Chris Weller

2017-01-05T19:54:10Z

We bought and sold bitcoin — here's how it works (1)

A year and a half ago, the idea of buying the virtual currency bitcoin was laughable. After a rapid rise in value in 2013, the cryptocurrency's value more than halved by mid-2015.

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At its lowest point, one bitcoin was equal to about $230.

These days, bitcoin has made a comeback — it recently rallied to over $1,000 before fluctuating wildly.

But given the currency's covert nature, the average person still may not understand how buying and selling actually works.

Using the app Coinbase, which lets anyone trade bitcoins for a small fee, we decided to find out.

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A brief warning: If you're going to do this, tell your bank you're about to buy bitcoin. More on that later.

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This is what the Coinbase app looks like on an iPhone.

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When you first open the app, you're presented with the latest price of bitcoin and its change within a certain period. You can see in the chart below how wild the latest moves have been.

We bought and sold bitcoin — here's how it works (3)

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I happen to be one of the many who have never traded bitcoin before. There's a certain level of wariness in buying into the cryptocurrency world.

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However, Coinbase's interface makes it simple to enter the basic personal information it needs to create your account.

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User-friendliness quickly hit a snag. When I put in my address, the app didn't recognize I had already selected it from the autofill menu. I couldn't proceed unless I switched to the desktop app.

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So switch I did. From the desktop portal I could easily enter more identifying info.

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The final step before entering my financial information was two-step verification for security, which Coinbase quickly sent to my phone.

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I decided to give the app another try and opted to use my debit card to buy the bitcoin.

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Entering all my information was just as straightforward as everything else. The problem was that I couldn't exit this screen. Neither the "buy" nor "not now" option registered. I had to press the X and start all over.

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Ultimately, and frustratingly, it was back to the desktop. So far, the actual process of buying bitcoin was simple — the app itself was my only nemesis. My $50 ended up buying 0.0524 of one bitcoin.

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No looking back! (Until I sell, of course.)

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Oh. It appeared the price was falling pretty fast the morning I decided to buy. I went back to try again, doing my best to outrun the falling price.

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I own bitcoin! Well, a small fraction of a bitcoin. But now this means I could sit on my hypothetical tiny pile of cryptocurrency and hope it amasses value.

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Instead, I decide to sell off immediately. (But not before shedding a single tear for the 12 cents I've already had to part with.)

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To sell the bitcoin, Coinbase only allows users to pair their bank account with the app; a credit or debit card won't suffice.

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So I scrolled through the options to pick my bank.

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And we're back to the desktop. When I tried to sell the bitcoin, the app told me either the amount was invalid or I couldn't pay with the given method. I didn't understand what that meant and didn't want to enter a wrong number.

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Luckily, the online experience is much smoother. My bank account showed up right where it should have, and I sold the bitcoin just like I bought it.

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Since Coinbase wasn't linked to my bank account, the transaction needs a few days to process before the money is transferred.

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A small hiccup: When I went to sell the bitcoin, I had to estimate the amount. The numbers were inconsistent in certain places depending on the bitcoin value or the dollar value. I ended up with one penny left over.

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When I tried to close the account, that penny proved to be an issue. As much as I tried to send the lone cent with addresses I found around the internet, Coinbase didn't let me. Here's to hoping bitcoin skyrockets and my investment quadruples in value.

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Oh, and a final thing: When I tried to buy lunch after all this, my card got declined. My bank had blocked the card after the initial purchase.

Apparently, I wasn't the only one who was wary about going into all this.

Check out: Personal Finance Insider's picks for best cryptocurrency exchanges