Bitcoin Basic Usage Writeup

[tgrusso78]

As the writer and copyright holder of this, I release it to be modified, shared, and especially improved upon. I'd say I'm placing it under the GPLv3, but I don't know that that applies to works of a non-software nature.

This document will assume you already know what Bitcoin is. It is more about how to setup a wallet and possibly start trading bitcoin for fiat(US dollars and the like). Security of the machine you setup your wallet on is of the utmost importance. I personally go so far as to make it on a clean operating system install that has never connected to the internet. At least I don't connect until my wallet is encrypted.

The first step is to download a wallet software. bitcoin-qt from bitcoin.org is what I use. While I would recommend a Linux machine for a wallet, if Windows is the only choice, it can work just as well. I will assume Windows as it has a wider installed base. Download the Download for Windows (exe) from here: Download - Bitcoin
As always, feel free to verify the URL is actually the same for security's sake.
Download and run the executable file, it will setup the client and create a wallet for you. It will also start to download the blockchain – the data that contains all past and incoming/ongoing transactions. This data is quite large and may take a day or more to download, depending on your internet connection.

As soon as you have created the wallet, you want to encrypt it to secure it. Anyone who was your wallet.dat file in an unencrypted form, or knows your password, can send your funds to their wallet.
Select Settings->Encrypt Wallet to encrypt the wallet. You will need your password any time you send funds or if you want to create a new address for receiving funds. More on multiple addresses later.

For receiving coins, you would of course click on the appropriate button. In that section you will see an address(or more if you create more). I keep several to allow me to know what source the funds came from, but one is all that is required. To give someone the address, you highight it, right click and copy address. You can also get a QR code for someone to use a mobile device to scan and send you funds that way.

Once sent(and once you've downloaded the whole blockchain) the funds appear as “incoming” very quickly. The network is verifying that these funds have been sent from a wallet that does in fact have the funds to send so they won't appear in the balance until confirmed. Your level of trust in the individual will determine when you want to credit them with the funds, on incoming or once confirmed.

Now that the funds are in your balance, you can in turn send them to someone in a very similar process. Under the send coins button. The first text block is for their address, which you will likely copy and paste from an email they send you. Next you can add a description so you can remember who this address belongs to if you'd like. The last block is the amount you want to send. There is a dropdown box that will let you select BTC, mBTC or micro BTC. Do not change that unless you know you are sending a very small amount of bitcoins. It is mainly for future increases in the value of bitcoins. Ie in 5 years 0.0001 bitcoins may be worth 500 US dollars. In that case, you may only want to send 0.1 mBTC
which would equal 0.0001 BTC.

The transactions tab is for looking at all past transactions. You can see the incoming labels depending on which address was used to send it to you and if you labeled the addresses as you sent them out, you can see at a glance who they were sent to and when. This should get you started to send and receive bitcoins. Keep in mind, bitcoin does not provide anonymity, it actually keeps a log of every transaction ever sent and received. Anonymity is another matter entirely.

 

[tgrusso78]

I've attached an image showing the location of the wallet.dat file if for whatever reason you might need to know where it is. ie to back it up after you've encrypted it.

 

[zkt]

You have reinvented and improved Paypal?
Could you elaborate upon all this a bit?
What language is the source code in?

 

[tgrusso78]

You have reinvented and improved Paypal?
Could you elaborate upon all this a bit?
What language is the source code in?

I've invented nada. Satoshi Nakamoto was the creator of Bitcoin. I'm not sure what language the source for the client is. C or C++ I'd guess. It uses Qt for graphics, I do know that.

Not touched on in this brief a write up are the miners, people who actually do the work that allows the network to confirm and transmit the values. There are various software clients and some FPGA and ASIC hardware that generate bitcoins as well.

The source code is available on the same site I linked in the text above if you want to peruse it.

 

[thinkanabolic2]

The amount of value the BTC is making recently is insane.

I had a few BTC back when they were around 12 dollars per coin. I spent them foolishly on a few things...if I held on to them I'd have a 500-1000 dollars, from nothing.

The people who were mining these coins and hoarding them when they were cents per coin must be millionaires at this point.

 

[tgrusso78]

The amount of value the BTC is making recently is insane.

I had a few BTC back when they were around 12 dollars per coin. I spent them foolishly on a few things...if I held on to them I'd have a 500-1000 dollars, from nothing.

The people who were mining these coins and hoarding them when they were cents per coin must be millionaires at this point.

Well, I mined early and often, I got in right as CPU mining was unprofitable and have been using top end AMD card since then. I also game so the cost was easily justified. Any bitcoin I mined was icing, as before mining I'd done folding@home, so electric use was near the same.

Like you, I've spent them on various things. Tea(yes, regular sinensis black tea), candies, and a few other items. I did that to support vendors who chose to accept BTC. What I have now I'll hold on to for the next several years.

 

[Popeye.]

I will have to look into this I hate paypal.
I still don't understand how if i have say 8 coins now, why it would be worth more later on.

but i have seen some places and sources mention bit coin. seems like it might be worth looking into.

 

[tgrusso78]

I will have to look into this I hate paypal.
I still don't understand how if i have say 8 coins now, why it would be worth more later on.

but i have seen some places and sources mention bit coin. seems like it might be worth looking into.

Bitcoin only has the value people are willing to give it. More like 8 ounces of gold, the value in fiat currency will change over time.

 

[Popeye.]

Bitcoin only has the value people are willing to give it. More like 8 ounces of gold, the value in fiat currency will change over time.

interesting.. like a stock
I was thinking it more like a set 1 coin is 4$ (more like paypal or straight cc money) was not thinking of it as a (gold or silver) type thing, very interesting!
*yes i know inflation, but its not as extreme as this one seems and worth is growing not shrinking like with money.

Thanks for the thread!
Will be doing more research on this.
so this would mean sellers would have to fix up their prices or one year 10ml test could be - 80$ then the next year it be = $240 if they do not update the site amounts for products...
interesting...

 

[Popeye.]

do you think investing say 300$ in bit coin and waiting a year or two is risky to make some back?

also can you connect the site right to your bank account to withdraw worth from?

thanks



ps; I have been thinking of buying gold, but the prices have been all messed up lately and dropping... now I am unsure of gold is a good idea or not.