QUESTIONS 1-3)
http://en.wikipedia.org/wiki/GNU_Privacy_GuardGNU Privacy Guard (GnuPG or GPG) is an alternative to the PGP suite of cryptographic software.
Pretty Good Privacy (PGP) is a data encryption and decryption computer program that provides privacy(ONLY INTENDED RECIPIENT CAN READ YOUR MESSAGES) and authentication (INTENDED RECIPIENT KNOWS THE MESSAGE IS YOURS AND NOT ALTERED BY ANYBODY WHEN TRANSMITTED) for data communication. PGP is often used for signing, encrypting and decrypting texts, e-mails, files...
GnuPG encrypts messages using asymmetric keypairs (PUBLIC KEY -PRIVATE KEY) individually generated by GnuPG users. The resulting public keys can be exchanged with other users in a variety of ways, such as Internet key servers.
In simple words:
a) I peek a very large random number (this is my PRIVATE KEY)
b) Using this number as input to cryptography software a new very large number is derived (this is my PUBLIC KEY) satisfying some unique mathematical properties required by the CRYPTOGRAPHY ALGORITHM selected.
c) I announce to everybody my PUBLIC KEY and CRYPTOGRAPHY ALGORITHM selected but keep secret my PRIVATE KEY
d) Anyone that wants to communicate some data to me encodes them with my PUBLIC KEY before sending them
e) Only my PRIVATE KEY can decode received data to meaningful ones
Note: Someone might try to still my identity by announcing PUBLIC KEYS he created as coming from me. That's where KEY SERVERS and
WEB OF TRUST help by associating emails and names with PUBLIC KEYS.
QUESTIONS 4-5)
Bitcoin has many similarities with GPG so please read also previous answer for some definitions
A BITCOIN WALLET in simple words:
a) I peek a very large random number (this is my PRIVATE KEY)
b) By using a predefined CRYPTOGRAPHY ALGORITHM I derive the corresponding PUBLIC KEY
c) From this PUBLIC KEY I derive a BASE58 encoded alphanumeric string "1" prefix (this is my BITCOIN ADDRESS)
d) I share with the rest of the world my BITCOIN ADDRESS so they can send me bitcoins through a TRANSACTION
e) I use my PRIVATE KEY to SIGN (encode) a TRANSACTION transferring bitcoins from my BITCOIN ADDRESS to some other
f) Only my PUBLIC KEY and corresponding BITCOIN ADDRESS decode a SIGNED TRANSACTION to meaningful data preventing others from claiming my bitcoins
g)I have to use my PRIVATE KEY only when I want to transfer bitcoins from my BITCOIN ADDRESS in order to SIGN the TRANSACTION
A PAPER BITCOIN WALLET is just a piece of paper that records the
a) the PRIVATE KEY i peeked
b) optionally the PUBLIC KEY
c) the corresponding BITCOIN ADDRESS
Note: I always have to input my PRIVATE KEY to some software in order to SIGN TRANSACTIONS
Your bitcoins are safe as long nobody knows your PRIVATE KEY regardless of WALLET format. The possibility that some one computes the PRIVATE KEY that generates your BITCOIN ADDRESS and stole you is almost zero given the extremely huge range of numbers he has to test (2^256
http://en.wikipedia.org/wiki/Large_numbers#Large_numbers_in_the_everyday_world) and the computations cost. He has better chances to earn more bitcoins by mining than stealing them
QUESTION 6)
I don't see the point. I think you are severely influenced by IPhone marketing.
QUESTION 7)
http://people.mozilla.com/~bwarner/bitcoin/slides.html#1 An excellent introduction with many illustrations. Just browse it
A BITCOIN TRANSACTION in simple words:
a) Records the transfer of bitcoins between BITCOIN ADDRESSES
b) Resembles the familiar accounting system where money are transferred between accounts
c) Technically is a list of INPUTS and a list of OUTPUTS with additional data permitting validation
d) The OUTPUT list contains pairs of ADDRESS and AMOUNT of bitcoins to transfer
e) The INPUT list contains references to older/previous transactions OUTPUTS and data (SIGNATURE) proving we can claim and use those OUTPUTS
f) While everybody can verify easily that a claim is valid only the one who knows the ADDRESS's corresponding PRIVATE KEY can generate meaningful SIGNATURE data. Please note that generated SIGNATURE data depend also on other transaction parameters making them useless in other transactions than the one we SIGN
g) Each TRANSACTION is also uniquely identified by a very large number computed from its data a HASH.
h) You are free to create as many transactions you like transferring bitcoins from addresses you own (know the PRIVATE KEY) and submit them to the BITCOIN NETWORK for inclusion in the BLOCK CHAIN
i) The BLOCK CHAIN resembles the ledger that keeps record of all the previous transaction on the NETWORK
j) A TRANSACTION is eligible for inclusion in the BLOCK CHAIN and become legitimate if the following are true
i) All transactions it depends on have been recorded in the block chain
ii) No other transaction uses the older/previous transaction outputs it clams as inputs ("DOUBLE SPENT problem")
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