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Author Topic: Bitcoin is WAY too confusing for the average person  (Read 2806 times)
whatisthename
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March 22, 2013, 02:24:42 AM
 #21

Danny, Thank you. PLEASE don't hate me for asking this ( I know it seems stupid) but I think it will help me wrap my head around it better.

Say your address is: 1AD1PeA41UYrcdtg68jcZoEzHJYTEh5XrZ

What prevents ME from getting into your wallet and taking your bitcoins? Is it because YOU (for example) have the only wallet in existence tied to that address? (as well as the only means of making a key that can access that wallet?)

Having a key means access to the bitcoins tied to that key
&
Having the address means you can only send to that address

Correct?

Thank you
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SmileyChris
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March 22, 2013, 02:36:53 AM
 #22

The address is a one-way derivative of the private key (i.e., you can calculate the address from the private key, but not the other way around).
With just the address, all you can do is look on the blockchain and see the amount in that address.
Only someone with the corresponding private key can actually make a valid transaction from that an address.
whatisthename
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March 22, 2013, 02:43:10 AM
 #23

Smiley & Danny,

At the moment I don't have any BTC so I'm just using words for examples.

Say right now I'm in my Multi-bit Wallet and I have 1 BTC, and I haven't done the "export private key option" yet.

If I want to send my 1 BTC coin to another address...does it just "work"? Or does the program ask for a password/private key for the send to be complete?

Is the "export private key option" only if I want to access my coins at a friend's house on his Multi-bit software for example by using the "import private key" option?
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March 22, 2013, 02:47:15 AM
 #24


What prevents ME from getting into your wallet and taking your bitcoins?


Absence  of Danny's private key, as far as I understand.

When Danny sends btc to somebody, program actually spreads a word around whole bitcoin network, that output address X transfers that much to input address Y. And you can not impersonate Danny, because his word is signed by his private key, which you do not have. AFAIU, cryptographic witchery works this way.
  

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rudeguy
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March 22, 2013, 02:48:04 AM
 #25

Smiley & Danny,

At the moment I don't have any BTC so I'm just using words for examples.

Say right now I'm in my Multi-bit Wallet and I have 1 BTC, and I haven't done the "export private key option" yet.

If I want to send my 1 BTC coin to another address...does it just "work"? Or does the program ask for a password/private key for the send to be complete?

Is the "export private key option" only if I want to access my coins at a friend's house on his Multi-bit software for example by using the "import private key" option?

It will work when you send it. This is because your instance of Multi-bit is associated with your private key. It will take some time to arrive- at least 5-10 minutes.

The import/export is designed for backup and, yes, to use on another device/machine/environment as in your example.
DannyHamilton
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March 22, 2013, 03:00:07 AM
 #26

Danny, Thank you. PLEASE don't hate me for asking this ( I know it seems stupid) but I think it will help me wrap my head around it better.

There is no hate here.  Nobody can understand something until they understand it.  I'll do what I can to help you reach that understanding.

Say your address is: 1AD1PeA41UYrcdtg68jcZoEzHJYTEh5XrZ

What prevents ME from getting into your wallet and taking your bitcoins? Is it because YOU (for example) have the only wallet in existence tied to that address? (as well as the only means of making a key that can access that wallet?)

A private key is a really big number that can be represented with 256 binary digits.
Here is an example of a private key:
290,546,074,773,574,840,000

We can represent this same number in hexadecimal as:
E9 87 3D 79 C6 D8 7D C0 FB 6A 57 78 63 33 89 F4 45 32 13 30 3D A6 1F 20 BD 67 FC 23 3A A3 32 62

This exact same number can also be represented in the standard bitcoin Wallet Import Format as:
5Kb8kLf9zgWQnogidDA76MzPL6TsZZY36hWXMssSzNydYXYB9KF

This value can also be represented in Mini Private Key format as:
SzavMBLoXU6kDrqtUVmffv

The three strings of letters and numbers above are just three different ways of representing the exact same 256 bit number.

Using this "private key" with the worldwide standard ECDSA algorithm and the secp256k1 curve we can generate a public key and from there we can generate the bitcoin address:
1CC3X2gu58d6wXUWMffpuzN9JAfTUWu4Kj

Normally, your wallet program takes care of choosing a private key for you and generating the bitcoin address.  The wallet program then stores the private key in a file, and displays the address to you so you can give it to others.  Anyone who is going to send you bitcoins needs to know what bitcoin address to send the bitcoins to.  Most wallets will allow you to have as many bitcoin addresses as you want.  You can generate a new address for every transaction.  The wallet program takes care of keeping track of all the addresses and adding up the total of all bitcoins associated with each address to display a total amount of bitcoins you control.

So, knowing what someone's bitcoin address is allows you to send bitcoins to them.

When you want to send bitcoins somewhere, your wallet program will assign some of the bitcoins that you have received to someone else's address.  To prove that you have the right to re-assign these bitcoins in this way, the bitcoin protocol will require a digital signature that is created using the private key of each address that the bitcoins are being reassigned from.  Since the wallet program is keeping track of the addresses, private keys, and bitcoins for you, it takes care of providing the appropriate digital signature.  Since you (or your wallet) is the ONLY one that has access to the private keys, providing the necessary signature to the bitcoin network is how the bitcoins get spent.

So, knowing the private key that a bitcoin address was generated from allows you to spend all bitcoins that are ever received at that address.

What prevents you from taking my bitcoins is the fact that you don't know the private keys that were used to generate any of my bitcoin addresses.  The wallet program that I use encrypts those private keys with a password.  You don't know my password, so you can't take my bitcoins even if you do get access to my private keys since you need my password to decrypt those private keys.

Having a key means access to the bitcoins tied to that key
&
Having the address means you can only send to that address

Yes.

Having a "private key" gives you access to spend/send the bitcoins that are associated with the bitcoin address that was generated from that private key.

Having a bitcoin address means you can reassign some of your own bitcoins to that address.

dendory
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March 22, 2013, 03:00:19 AM
 #27

I think the problem isn't that Bitcoin can't be explained to normal people, it's that so far we've done a bad job at it. Bitcoin is certainly much easier to understand than PayPal, for example.

All you need to know is that you have a wallet on your PC (or in the cloud) that holds your coins, just like a real wallet, and that you can give out your public address to receive money, or send money to someone else's address. Ideally all of the new addresses and transaction details should always be handled by the client software so that people don't have to deal with that stuff.


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DannyHamilton
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March 22, 2013, 03:06:03 AM
 #28

Say right now I'm in my Multi-bit Wallet and I have 1 BTC, and I haven't done the "export private key option" yet.

If I want to send my 1 BTC coin to another address...does it just "work"? Or does the program ask for a password/private key for the send to be complete?

I don't use MultiBit, so I don't know if MultiBit has any sort of encryption or password protection.  All the wallet programs that I use encrypt my private keys, so they won't send bitcoins unless I supply a password.


Is the "export private key option" only if I want to access my coins at a friend's house on his Multi-bit software for example by using the "import private key" option?

The main purpose of exporting private keys is to allow you to rebuild your wallet if it is destroyed. While you could import your private key on a friend's MultiBit at his house, he would then have access to spend your bitcoins.  The bitcoins associated with the bitcoin address that was created from that private key would essentially belong to your friend (as well as any bitcoins that are sent to that address in the future).

DannyHamilton
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March 22, 2013, 03:08:58 AM
 #29

I think the problem isn't that Bitcoin can't be explained to normal people, it's that so far we've done a bad job at it. Bitcoin is certainly much easier to understand than PayPal, for example.

All you need to know is that you have a wallet on your PC (or in the cloud) that holds your coins, just like a real wallet, and that you can give out your public address to receive money, or send money to someone else's address. Ideally all of the new addresses and transaction details should always be handled by the client software so that people don't have to deal with that stuff.

For general use of small amounts of bitcoin, I'd agree.

However, if you want to protect your bitcoins from loss due to damage/loss of the computer that you run your wallet on or from theft, then it gets a bit more complicated.  What do you need to back up? How do you restore it?  How can you make sure that malware won't steal your bitcoins?

whatisthename
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March 22, 2013, 03:20:54 AM
 #30

From Danny: "This exact same number can also be represented in the standard bitcoin Wallet Import Format as:
5Kb8kLf9zgWQnogidDA76MzPL6TsZZY36hWXMssSzNydYXYB9KF"

First off, thank you. I've read your postings several times now. The above in the parenthesis is the "private key code" so to speak.

My big question to anyone (and the one that "scares" me so far because I can't figure it out) is how do I GET that above code (and then how to use it someday if I have to, where do I input that above code) in the event that the computer with my wallet dies, and the private key file from multi-bit goes corrupt. (mywallet.key for example)

I'm searching for a way to have "the backup of all backups"

Thank you a million, billion times everyone
DannyHamilton
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March 22, 2013, 03:29:52 AM
 #31

My big question to anyone (and the one that "scares" me so far because I can't figure it out) is how do I GET that above code

- snip -

I'm searching for a way to have "the backup of all backups"

http://lmgtfy.com/?q=multibit+export+private+key

Did you try looking inside the wallet.key file? From what I can tell after Googleing MultiBit the private keys are stored in this file after you export them.

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March 22, 2013, 03:31:37 AM
 #32

I think the problem isn't that Bitcoin can't be explained to normal people, it's that so far we've done a bad job at it. Bitcoin is certainly much easier to understand than PayPal, for example.

All you need to know is that you have a wallet on your PC (or in the cloud) that holds your coins, just like a real wallet, and that you can give out your public address to receive money, or send money to someone else's address. Ideally all of the new addresses and transaction details should always be handled by the client software so that people don't have to deal with that stuff.

For general use of small amounts of bitcoin, I'd agree.

However, if you want to protect your bitcoins from loss due to damage/loss of the computer that you run your wallet on or from theft, then it gets a bit more complicated.  What do you need to back up? How do you restore it?  How can you make sure that malware won't steal your bitcoins?

How is that any different than real wallets? People get their credit cards stolen all the time, cloned, swiped, etc.. Not knowing how they work doesn't prevent them from using them.

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March 22, 2013, 03:37:06 AM
 #33

Cars are WAY too confusing for the average person.

Funny you should mention cars. I see Bitcoin in line with the internal combustion engine. To me, it's not a protocol but a source of motive power like an engine is.

When the internal combustion engine was invented in the mid-19th century, the old horse traders, carriage makers and buggy whip suppliers either ignored it or made fun of it. Very few of them understood it though. It was high mechanical science in its day and left the dinosaurs in the dust.

The bitcoin engine, like the internal combustion engine, is composed of many moving parts that couldn't have existed until the the perfecting of math and engineering allowed for their existences. The bitcoin engine, like the internal combustion engine, will require the creation of a large surrounding infrastructure to realize its potential use for greater numbers of people.

Every developer/miner/mechanic that tinkers with the Bitcoin engine increases its worth. Every user that spends a bitcoin is revving the engine which only makes it go faster. Every Bitcoin buy puts fuel in the engine. If Bitcoin or something like it becomes a larger and more permanent part of everyday life, the Bitcoin engine of ten years from now will probably be just as different as internal combustion engines were fifty years ago.

I hate to beat an analogy to death so I should stop while the corpse is still recognizable.

 

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March 22, 2013, 03:37:45 AM
 #34

Hi Danny,

I tried this earlier (I'll change random letters/numbers for protection purposes)
Essentially what I tried was opening the .key file in text editor. This is what came up. I don't know which part would be the private key though? And then if the private key is in here...what I'd do with the text, ya know? Would I just create another .key file and copy/paste into it??

This is what was in the text file of the .key:

U2FsdGaj8Jalot9KcoKJ6lUDpLPil8oNIFZ94rqKaD2eEQpoXo7fCjd9K9jahN73HjkLoTUZ3pHp
3HFhWOGej05+r/2texzsrZyxWgN7/Fh9Bss4GiRt+hjmMel5XVEL

Thank you Danny
DannyHamilton
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March 22, 2013, 03:40:30 AM
 #35

I think the problem isn't that Bitcoin can't be explained to normal people, it's that so far we've done a bad job at it. Bitcoin is certainly much easier to understand than PayPal, for example.

All you need to know is that you have a wallet on your PC (or in the cloud) that holds your coins, just like a real wallet, and that you can give out your public address to receive money, or send money to someone else's address. Ideally all of the new addresses and transaction details should always be handled by the client software so that people don't have to deal with that stuff.

For general use of small amounts of bitcoin, I'd agree.

However, if you want to protect your bitcoins from loss due to damage/loss of the computer that you run your wallet on or from theft, then it gets a bit more complicated.  What do you need to back up? How do you restore it?  How can you make sure that malware won't steal your bitcoins?

How is that any different than real wallets? People get their credit cards stolen all the time, cloned, swiped, etc.. Not knowing how they work doesn't prevent them from using them.

When my credit card is stolen, I call the credit card company and I'm not responsible for any of the charges and they send me a new card.

I don't store large amounts of cash in my "real" wallet, I keep most of it in an insured account.

I agree, general use of a bitcoin wallet is like general use of a "real" wallet.  It is fine for small amounts for day-to-day use.  If you are dealing with larger amounts, it becomes important to understand more.

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March 22, 2013, 03:45:14 AM
 #36

Hi Danny,

I tried this earlier (I'll change random letters/numbers for protection purposes)
Essentially what I tried was opening the .key file in text editor. This is what came up. I don't know which part would be the private key though? And then if the private key is in here...what I'd do with the text, ya know? Would I just create another .key file and copy/paste into it??

This is what was in the text file of the .key:

U2FsdGaj8Jalot9KcoKJ6lUDpLPil8oNIFZ94rqKaD2eEQpoXo7fCjd9K9jahN73HjkLoTUZ3pHp
3HFhWOGej05+r/2texzsrZyxWgN7/Fh9Bss4GiRt+hjmMel5XVEL

Thank you Danny

Did you choose to "Password protect export file"?  If so, then what you are looking at is an encrypted copy of the private keys.  You would have to decrypt them to use them.

According to these instructions:
https://multibit.org/help_importingPrivateKeys.html

You can import that file into a new copy of MultiBit and provide the password when you import so it can be decrypted.

If you want to see your actual private keys, you'll probably need to export with "Do not password protect export file" checked.

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March 22, 2013, 03:47:48 AM
 #37

The internet was way to confusing also.

Hello There!
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March 22, 2013, 03:50:24 AM
 #38

BitCoin is confusing, because the average user doesn't understand the banking structure that they take for granted. Cheesy
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March 22, 2013, 03:54:01 AM
 #39

BitCoin is confusing, because the average user doesn't understand the banking structure that they take for granted. Cheesy

Yes.  Yes!!


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March 22, 2013, 04:20:03 AM
 #40

Thank you Danny, very much. I'm going to rest my head and then look into it some more. I really appreciate it.

I really have come to the conclusion though that BitCoin won't become widely accepted unless there are legit services like Mt.Gox out there that are web based. The majority aren't going to hassle with downloading these types of software.

Blockchain.info is pretty cool.
I understand how you can send bitcoins back and forth from within it.
I understand how you can email yourself a copy of your wallet.

I see you can exchange your bitcoins for MoneyPak cards? What is this, a way to load up cards and avoid taxes?
Oh man, I'm tired for the night.

Goodnight everyone.
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