Bitcoin Forum

Complete and total Newbie, here.

I *just* heard of Bitcoins on Monday, for the first time ever.
I stopped everything and have researched, read, studied and explored nearly nonstop since Monday morning.
Here I am at Friday morning - and want to be sure that the things I believe I *do* understand are correct;
...and looking for clarification in layman's terms of the things I am still confused about.

Are my concepts correct on these notes?

1. A *client* and a *wallet* are one in the same, in that I can't use Coinbase as my client, but have Electrum as a wallet for the same address... I need to pick either/or, correct?

2. I have to choose one device to download the wallet to. Anyone who hacks, steals or otherwise has access to my device would then have access to my Bitcoins, unless I take them off the device and put them in "cold storage" (which is the same thing as "paper wallet.)

3. Paper wallets/cold storage is only truly safe if every trace of "private keys" is wiped from the device they were originally created on, correct?

4. Best way to get my "feet wet" would be to choose a wallet and have someone send me a minimal fraction of Bitcoins, right?

5. My coins are vulnerable to attack/disappearance anytime I'm using a client/wallet... which is why cold storage/paper wallet is always best - if I have no intent to spend. Am I on track?

But now... here's where my heart starts thumping in frustrated confusion:

1. Clients get robbed/hacked more and more recently, and it seems likely that this will continue being an issue because there can never be 100% security when you're entrusting a client with your wallet... SO... why would anyone bother using a client, to begin with? Shouldn't I just stay on the safe side by skipping online storage and go directly to paper wallet? (side note - I'm planning to put in very minimal amounts initially, until I get the hang of the whole system.)

2. Is there a way to skip having a client and go straight to offline wallet? (sorry if I sound repetitive - I'm just trying to wrap my head around all of this via different wording.)

3. I am soooooo lost re: private keys. All the articles I've read, discussions I've followed and videos I've watched have still rendered me LOST. Say John Doe sends me a tiny fraction of a BTC to help me get started. Now my wallet generates a key for the address John sent funds to. I decide to add funds to the wallet by buying BTC from someone on eBay... would I have the seller send the funds to the exact same address? And if so - would I then get another key for that address to replace the first, or would it be two keys for the one address, or would the key remain the same no matter how many funds add up in that address? And then... why would anyone ever need more than one or two addresses? (I can see having one for saving and one for using/trading/sending/selling, etc... but why do some people have numerous addresses?)

4. If anyone/everyone can see how much BTC each address has, this means that every time you give an address out for people to send funds to, they can go look up how much BTC you already have... right? Isn't that like opening your wallet in front of the cashier and pouring your $ out on the counter for them to see?  Or... does that kinda answer the previous question (duh, think I just answered the last question on my own, right? Hence... why people have numerous addresses?!?)

5. Please, please... someone just tell me which client/wallet to get started with. The goal is to get it offline, but I really need to get a feel for the system now. I thought I read that Coinbase is very vulnerable to hacking, other issues and potential future regulation. I thought Electrum sounded like a perfect alternative, since it seems easier to go offline with. Bitcoin QT sounds good - maybe - but I'm overwhelmed with information at this point.

Any/all advice and help is welcome and wanted!
Thanks!

The wallets depend on your preferences. Read up on them and decide which one suits you the best. Are you ready? everyone has to start somewhere.

Wallet address - Everyone that pays you will use this address, you have to give it to them
Private Key - Confidential part, if anyone has them except you can they can steal your funds
Wallet - A wallet.dat stores private key + public key + wallet address

Just start with small amounts of money when you are getting things figured out and you'll be fine.

Hi, what is the smallest amount that someone could start with for bitcoin? For example, I imagine if you try to buy some bitcoin, there would be a minimum amount that you can buy. Where is the place with the lowest minimum? If you are looking to just use a small amount of money to get started, would litecoin be a better choice?

Thanks

There is a lot of slop in how these words ("client", "wallet") are used.  This can lead to some confusion.  Technically (as far as I'm concerned), something is only a "wallet" if it allows you control over private keys.  As such, Coinbase is an "account" (like a bank account), and not a "wallet".  A "client" on the other hand would be anything that connects to bitcoin peers and communicates on the bitcoin network.  Many wallets are clients (such as Bitcoin-Qt), but there are wallets (such as paper wallets) that are not clients.  It would also be possible to create a client (that simply acts as a relay) that isn't a wallet.


You can have a Coinbase account AND an Electrum wallet if you want.  It is generally a really bad idea to try to share addresses between multiple controlling entities though. Each wallet or account that you use should have its own unique set of addresses. None of these "wallets" or "accounts" are really designed to synchronize between each other.  So if you have an address in Electrum and you import that address into blockchain.info, you run a significant risk of creating a transaction in one that the other doesn't know about.  This leads to lots of confusion and angst over lost bitcoins, double-spends, and invalid balances.


Yes.  There are solutions that add inconvenience but which reduce this risk.  One such solution is Armory.  Encrypting your wallet with a password can help quite a bit, although it won't help if you end up with keylogging malware on the device that captures your password when you type it.


Paper wallet is one form of "cold storage"  You could also look into Electrum offline, and Armory.


Correct.  Anyone with access to the private key can ALWAYS spend/steal the bitcoins.  Cold storage is just a way to significantly reduce the potential access to the private keys.


I'd suggest purchasing an "educational quantity" of bitcoins.  Something you can play around with and not get upset if you accidentally do something bad (like deleting a wallet, or posting a private key to a discussion forum) and lose them all.  How much depends on your own personal financial situation, but in my opinion it should be at least 0.05 BTC. Since the quantity won't be a significant sum you can play around with some of the lightweight wallets such as MultiBit, Electrum and blockchain.info/wallet and not have to panic about the fact that you are "online".


Yes,  you are vulnerable to attack/theft anytime your private keys are somewhere that someone else might gain access to them.  Wallets such as Armory allow you to create transactions without putting your private keys on a computer that's connected to the internet.


I really haven't heard much about Armory, Electrum, MultiBit, or Bitcoin-Qt being hacked.  Especially if the wallet is encrypted with a password.  While it isn't impossible, it is a rather rare occurrence and generally results from individuals installing and running untrustworthy software on the same computer as their wallet.


If you want to send a bitcoin transaction, you pretty much have to use some sort of client to connect to the network and broadcast the transaction.


Not sure what you mean by "online storage".  If you are talking about bitcoin based accounts where you don't have access to the private keys (such as Coinbase, MtGox, BitStamp, etc.)  then yes.  You should definitely avoid that as much as possible if you want to "stay on the safe side".  If you are talking about wallets that connect to peers (such as MultiBit, Electrum, Bitcoin-Qt), then you'll have to make a decision about what you want in the way of convenience and security.


If you're just looking for long term storage, then this is a perfectly good option.  Just make sure you have multiple copies in multiple locations (wouldn't want to loose your bitcoins to a fire, flood, tornado, etc) and that they aren't accessible by anyone that might want to steal the bitcoins from you.


Yes.  Generate the paper wallet offline.  When you purchase bitcoins, have the sender send to your paper wallet address.


No.  The key is generated first.  Then the key is used to generate the address.  Then you give the address out to the person that is sending you the bitcoins.  A proper paper wallet will have both the private key and the address on it.


Ebay?  I'd avoid that, but if you think you can find a good deal from a trustworthy source go ahead.  I'd suggest instead that you look at localbitcoins.com


Best practice is to generate a new address for every transaction.  You can re-use addresses if you choose to though.


If you get a new address for the transaction, it will have it's own new private key.  If you re-use an address, then there will not be a new private key.


One address has only one private key.  One private key has only one address.  They are mathematically linked and you can't change one without changing the other.


Correct.


It increases security, privacy, and anonymity.  It also helps with accounting.  If I give you a different address than I've given anybody else, then any time I receive a payment at that address I know immediately exactly who it came from.  If I use a new address for every transaction, then I know immediately not only who it came from, but also exactly what the purpose of the transaction was.


Yes.  you figured it out.


Just to play around with a small amount of bitcoin and get a feel for things, I'd suggest either blockchain.info/wallet (if you want to be able to access the bitcoins from multiple computers/locations), or MultiBit (if you'll only be accessing it from a single computer).


Coinbase is an account held by a company (like an uninsuread, unregulated, un-audited bank account).  It is not a wallet.


For getting started and playing around a bit, Electrum, MultiBit, or blockchain.info/wallet.  Look at all three, choose the interface that you like better.


Bitcoin-Qt is good, but it takes a long time to synchronize and uses up a lot of disk space.  You may want to switch to it, but if you're just trying things out it might not be worth the hassle to start with.

The smallest amount of bitcoin that can currently be sent over the network without issue is a bit less than 0.00005500 BTC (about $0.02475 worth at the current exchange rate).

Edit: I see Hamilton already answered everything, but I've already typed so much, here is it anyway ^^ 


The same address can be shared in multiple wallets. For every address there is a private key, which allows you to spend the Bitcoins on the address. (The Bitcoins are always on the blockchain, not in your wallet) You can have this key at multiple places.

Yes, everyone with access to the private keys, can spend the Bitcoins.

correct.

yes, that's a good way to learn.

yes

Online and local wallets are more comfortable to use, so you can use it like your real life wallet for day-to-day use.
E.g. You wouldn't run around with $100.000 in your pocket all the time (unless you are filthy rich and don't care about them being lost).


You could do that, receiving is fine (you need no connection to do that). But for spending you will have to use some client.
If you want the most secure way (but probably not easiest), you could try the Armory Offline wallet (spare offline laptop required).
 

You can send it to the same address, however using multiple adresses increases your anonymity.
(btw: don't buy Bitcoins at ebay)

yes, you did ;)


Bitcoin-qt needs to download the whole blockchain, so maybe it's not the best one to try out Bitcoin.
Electrum, Multibit or the online-wallet blockchain.info are good choices for small sums.

@bitzenbits: If you give me a Bitcoin address, I will send you a small tip to get you started ^^

Build up small positions and take it from there

Mining is not very profitable any more

Cold offline wallets are best....

WOW - thanks everyone for all the great responses and advice!

I decided to go with blockchain for now... seems that I'm all set up.

I suppose the things that still seem muddled will start clearing up as I go through the motions.

So - on that note...

@Birdy - THANK you; I'm eager to get the feel for a transaction but didn't want to ask anyone!

Address is:

128FXUn67GcR7DXy43ohdA9vGzZpd9sh6h

New bitcoiners  might want to check out "Getting Started With Bitcoins" at http://backintyme.com/btc01.php, especially topic 4.1 "Security".

You can get such amounts from free faucets with little work. You may test your wallet + see if your computer is not compromised when the BTC is not lost

I've sent it :)

Thank you so much, Birdie.

Now - is that it? Is there something I should be doing with the deposits that you and another person sent to me?

What about the "private key" and what-not?

I'd like to find someone on localbitcoin to buy a small bit from... but nervous that I'm still missing something.

This forum is such a huge help; thanks to everyone for all your replies!

There is a private key for every Bitcoin address, it's the really important part, because this is the thing giving you access to spend the Bitcoins.
Wallets like blockchain.info, Electrum... manage those for you.
In blockchain.info you can click on "Import/Export" and then on "Paper Wallet" to see those for all your addresses in there.
(remember to delete the addresses on blockchain.info, if you want to have them only offline)

The private key can be imported to most wallets (and gives you access to the Bitcoins then).
Another website to create your own Paper wallets is https://www.bitaddress.org

I am also a bit of a newbie and have a basic question...

If bitcoins are selling at $600 at mtgox (as they are right now) why is it when you try to buy some at bitbargain.co.uk the price there (per unit) is a lot more?

i.e. $600 = £372

but at bitbargain.co.uk the going rate seems to be around £500

can someone explain why this is pls ?

Because bitbargain is overcharging you.

So where is the best place to buy bitcoin in the UK ?

I don't live in the UK, so I'm not sure.

Have you looked at localbitcoins.com yet?

@Birdy - Thank you again.

I see there are a few conversations going on in here at the same time, so maybe I should start a new thread with my new phase/questions. lol

Everyone here has been so helpful!

I think we can still handle the discussion here, only 2 pages here - that is nothing :)
Sadly there are also quite a bunch of scammers and other troublemakers in this community (well, it's about money, what would you expect?), so don't be fooled to trust everyone.

Lots of useful stuff in here, cheers y'all.. I'm in the same boat, I've spent a lot of time in the last few days trying to figure everything out but I'm still struggling with how to actually buy BTC if face-to-face isn't an option, and all the while the price is shooting up.. I'm uneasy about having to register and prove my identity to any website after all that NSA shit, not sure if my paranoia about that is misplaced or not.

What percentage of people do you think go the full cold-storage route? Is it pretty common or more the domain of the extra-cautious?

You could try to find someone on this forum (use someone trustworthy as escrow!) or try localbitcoins.com.


You really should have the most of your Bitcoins in cold storage, there are many many websites and users that got hacked/malware infected.
The extra-cautious will also generate those paper wallet addresses completely offline.

Yep, just waiting til I get sprung from Newbie Jail for that one :)

Is cold storage only worth it if you go the offline laptop or similar route? If I kept a wallet on an encrypted USB stick for example, is there basically no benefit to this over using a password and encryption on a wallet stored on my laptop?

Thanks again.

A good encryption of the wallet on your laptop should also be fine (vulnerable at creation and everytime you type in the password), but you should at least have some backup, e.g. in case of hardware failure.
If you use a strong encryption method you probably could even have a backup hosted in a cloud or your mail account. I prefer something I can see that it's still there like paper wallets though.

This is my understanding and I'm a relative newbie as well.

MTGox is a Bitcoin exchange, whereas BitBargain.co.uk is a market. With bitbargain.co.uk you are dealing direct with the seller and transfer funds immediately using a number of options. Bitbargain.co.uk requires sellers to pass some tests and they must upload coins to prove they own what they are selling. I'm reading into this that bitbargin.co.uk is faster for the buyer and seller. At end of the day it is a sellers market if people are paying for coins at a higher pound rate then you can't blame the sellers, you can always buy yourself and sell later at a higher rate using bitbargain.co.uk. Commission is 1% and a one-off check for sellers of 0.1BTC at moment.

Paul

Thank you to all who helped me get started with choosing a wallet/client etc...

I generally consider myself relatively intelligent, but I don't feel so smart right now... even after spending ALL of last week watching videos, reading and getting myself mentally prepped to begin this venture.

So two people sent me small fractions over the weekend to get started...

I see them in my Blockchain wallet...

I went to the import/export tab and clicked on "import using paper wallet" and up popped a printable sheet with two QR codes, my addy and what I assume is the private key beneath the addy.. along with a mnemonic that is different than the original one I was given when I set up the wallet...

Questions:

1. What if I hadn't printed this sheet? Like, if I were out of printer ink or something... would I have lost access to the key associated with this address forever?

2. What would scan these QR codes, and when would I ever scan them (assuming my intent is to save BTC, not spend anytime soon...)

3. Is scanning just an alternative way to access the key/could the key be used without the scan?

4. Am I correct that the tiny series of numbers/letters etc beneath my BTC address is the key?

5. What is with the two-step verification? Is that necessary when I'm not spending? At what point is that relevant?

6. I'd like to choose a seller on localbitcoins w/high feedback, etc to buy a small amount of BTC from today. I know that'll mean going to a bank, etc - I've been reading through the different sellers' requirements, etc... but am I ready for this step, or would I be risking losing $ because of the fact that I'm not really understanding the whole "key" process/paper wallets, etc?

7. So my private key is sitting online in Blockchain, essentially, because it came from my wallet... right? So... oh, forget it... I'm just SOOOOO confused.

Thanks in advanced to any and all who can help me start getting the hang of this!

Afaik on blockchain.info it only shows you all adresses you have on the blockchain.info wallet. So they would still be there.

You can scan them with a smartphone app, there is a QR code for the Bitcoin address (to receive) and for the private key (to spend).
All the QR code does is saving you the time to type those.

yes

Probably, Bitcoin addresses always start with "1", private keys always start with "5".

It's an additional security feature to the online wallet. It makes spending your Bitcoins from there way more difficult for an hacker.

I think you should at least understand private keys, that's kinda important. I guess high frequency sellers there are probably used to answer a lot of questions, so maybe you.


Try this explanation: It's just like a key to a vault. If you want you can copy those and have multiple of the same key on different places.
Wallets like blockchain.info manage (/hold) those keys for you.

Birdy, +1 for the information and kindness, incase I didn't do it right.

Hi, I'm feeling just like bitzenbitz! But what a really useful introduction from some great contributors. Now you are a few days in bitzenbitz, how are you finding things? I'm going to give blockchain a try too. How is that for you? Oh and is it me but the dodgy looking/sounding advertisments on this forum make me feel a bit (more) nervous. Or am i just being over sensitive?!

Fixed that for you.

Great thred there!

Hey bitzenbits, I'm in the same boat as you, trying to figure it out and partly confused. This thread cleared up a couple of things I was just about to ask on a separate thread about security.

I'm just wondering why all of your concerns are more of technical nature. Maybe you have asked about this stuff elswhere, but I have spent quite a bit of brainpower considering topics like "Can the blockchains ever get so long BC becomes unuseable" or "Are there too many speculators involved".

After all, if you do everything right technically, but BC goes to 5$, you won't have any benefit of it...

Other than that, keep on rocking!

Thank you very much :3

You are right, most of them are good examples of places where you shouldn't spend your Bitcoins or are gambling at best.



Thanks ^^



Yes, there are plenty of things you have to ask yourself to get an idea if Bitcoin could be viable.
The size of the blockchain is an issue that was discussed a lot and there are possible solutions like pruning/compressing to reduce the size.
The number of speculators contributes to volatility, but this should diminish when Bitcoin reaches higher market caps.

Hey, birdy!


How do you do that?

Can I do that without a second laptop?

For sure, I want to stay as far away from the internet as possible with my wallet!

Ah, thanks, as long as it's not only me then!

You could use a linux-boot cd and generate your addresses there.
The website https://www.bitaddress.org, does also work offline. (and as you want to be extra-cautious: check, that the source code isn't rigged)

However I only have a rough idea of this, there are way more tech-savvy users than me at this forum (like DannyHamilton)
I remember also a step-by-step guide in this forum to do a secure setup, don't have the link at hand though.

Thanks for the awesome information!

How are you guys handling your bitcoins? One local save wallet with the important big amounts and multiple online wallets for transactions/trading?