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Author Topic: Gotta be the DUMBEST Bitcoin question EVER!  (Read 1032 times)
kylegates
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July 06, 2011, 09:06:58 AM
 #1

Ok, so by reading the title of this topic you already know what yer walking into here.  I'm gonna ask now.....and I have been mining for a bit and have a few coins in a few pool accounts.....so im not %100 clueless but I have to be at around %99.3 on the clueless meter.  Here goes.....ok...gonna ask now...meow....


I can see that in my account for a pool (say BTCGuild for instance) that it says I have 2.5***** bitcoins.  And I know I can "move" these to a "wallet account" like at MyBitCoin.  But, I hear its best to keep these coins in a more secure "wallet" like on a thumb drive.  And I have even gone as far as to follow a guide to create such a drive.  But my question is...when I put cash in my real life wallet, its cash or paper if you will.  When I put a credit card in my wallet its not cash but its linked to a company that has my cash (and is keeping it secure)....so what ON EARTH an i putting in a Bit-Coin-USB-Thumb-Drive-Wallet?  Why is it more secure THAT way?

Trying to figure this out....Im SURE Im a moron..but it just isn't clicking.
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Alex Beckenham
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July 06, 2011, 09:10:13 AM
 #2

It's not that people are saying a bitcoin-thumb-drive is more secure than cash. It's that they're saying keeping the bitcoins on a thumb drive is more secure than trusting a site like mybitcoin with your coins *shivers up my spine*.


FreeMoney
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July 06, 2011, 09:11:56 AM
 #3

In order to spend the coins that have been sent to one of your addresses you need the corresponding private key. An online wallet holds them for you or you can hold them yourself. The risk is that if you lose them you cannot access the coins. If someone else gets the file (wallet.dat) where those keys are stored then they can spend them and you won't be able to. Putting that file on a thumb drive is safer if there is a chance that your computer could be compromised. Encrypting wallet.dat is a good idea too, then you can back it up in more places without worrying about it getting taken, provided you use a really truly strong password.

Play Bitcoin Poker at sealswithclubs.eu. We're active and open to everyone.
Bth8
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July 06, 2011, 09:16:03 AM
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Okay. Bitcoins are stored in the blockchain. Every client on the bitcoin network has a copy of this blockchain. The only way to access these bitcoins is with the private key to which they've been assigned. These private keys are what's been stored in your wallet. This means that only you can access your bitcoins, provided only you can access your wallet. This is why having a wallet on a thumb drive is more secure, as it means only you can access your bitcoins. Compare that to using MyBitcoin. As they're the ones with the wallet now, they could ostensibly take everything you have (to which you've allowed them access).

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July 06, 2011, 10:02:35 AM
 #5

my question is...when I put cash in my real life wallet, its cash or paper if you will.  When I put a credit card in my wallet its not cash but its linked to a company that has my cash (and is keeping it secure)....so what ON EARTH an i putting in a Bit-Coin-USB-Thumb-Drive-Wallet?

You're actually not putting anything into your Bit-Coin-USB-Thumb-Drive-Wallet.
That wallet is unchanged by your "putting something into it".

What you do is: you tell everybody on the network that you intend to put a bitcoin into your wallet.
Everybody on the network nods and it is commonly agreed upon that that specific bitcoin is in your wallet now.

Yeah, well... I'm gonna go build my own blockchain, with blackjack and hookers. In fact, forget the blockchain!
JoelKatz
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July 06, 2011, 10:08:01 AM
 #6

I can see that in my account for a pool (say BTCGuild for instance) that it says I have 2.5***** bitcoins.  And I know I can "move" these to a "wallet account" like at MyBitCoin.  But, I hear its best to keep these coins in a more secure "wallet" like on a thumb drive.  And I have even gone as far as to follow a guide to create such a drive.  But my question is...when I put cash in my real life wallet, its cash or paper if you will.  When I put a credit card in my wallet its not cash but its linked to a company that has my cash (and is keeping it secure)....so what ON EARTH an i putting in a Bit-Coin-USB-Thumb-Drive-Wallet?  Why is it more secure THAT way?
There are two senses in which you can have bitcoins, just like there are two senses in which you can have, say, gold. You can have the actual gold or bitcoins themselves. Or you can have an account with some entity you trust and they say you have that much gold or that many bitcoins.

When you have an account with MyBitCoin, they take the bitcoins you put in the account. You are trusting that when you want to withdraw those bitcoins, they will actually have them. If their total deposits are 50,000 bitcoins, they may or may not actually have 50,000 bitcoins. Just like when you put money in a bank.

This arrangement has some advantages and disadvantages for you. Just as a similar arrangement with gold means you don't have to store a bunch of gold which could get lost or stolen, so MyBitCoin manages your bitcoins for you and protects them. But, of course, if MyBitCoin goes away somehow, you may never see your bitcoins again, just like a bank with your safety deposit box.

When you have real bitcoins, they are stored in a data structure that is kept on tens of thousands of computers. When I send you bitcoins, I add a record to that data structure, and that puts the bitcoins where you can claim them. You need a private key to claim those bitcoins, typically stored in a 'wallet.dat' file. These are real bitcoins, they cannot be stolen from you unless the private key (which only you should know) is stolen.

However, if anyone gets your private key, they can clean you out. So you have to guard it with elaborate procedures and you face a problem -- if you store your private key in only one place, you might lose it. If you store it in 50 places, it can get stolen from any of them.

I am an employee of Ripple.
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joepie91
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July 06, 2011, 10:14:11 AM
 #7

I usually use this analogy to make it easier for people to understand how Bitcoin wallets work:

Consider that an 'address' is a locked chest with gold in it. Everyone has a copy of this chest. However, since it's locked, noone can do anything with the gold inside.

Now you have the only key to this chest - only noone knows you do. You have the same chest like everyone else, but as you are the only person with the key that is needed to unlock it - you are the only person who can use what is inside that chest!

If you put your wallet.dat (which contains your 'keys') on an encrypted thumbdrive, you are essentially putting the key of your chest(s) in a super-secure safe that can only be opened with a passcode.

If you generate a new address, you create a new chest, so to say.

Like my post(s)? 12TSXLa5Tu6ag4PNYCwKKSiZsaSCpAjzpu Smiley
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I just can't wait for fall/winter. My furnace never generated money for me before. I'll keep mining until my furnace is more profitable.
JoelKatz
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July 06, 2011, 10:39:57 AM
 #8

That's a great analogy. Easy to understand and technically correct.

I am an employee of Ripple.
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kylegates
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July 07, 2011, 05:22:05 AM
 #9

So then, does a guide (for a secure wallet) (like this http://startbitcoin.com/how-to-create-a-secure-bitcoin-wallet/) assume that you are solo mining?  Cause I am not sure how to get "coins" from my pool account onto an Unbuntu OS running on a thumb drive.
whenhowwho
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July 07, 2011, 05:35:28 AM
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So then, does a guide (for a secure wallet) (like this http://startbitcoin.com/how-to-create-a-secure-bitcoin-wallet/) assume that you are solo mining?  Cause I am not sure how to get "coins" from my pool account onto an Unbuntu OS running on a thumb drive.

you would simply send them from the pool to whatever addy you have on your thumb drive bitcoin wallet

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Shadow Wizard
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July 07, 2011, 05:59:48 AM
 #11

Actually I would have to say the dumbest question ever would be, "I am trying to find a bank that will give me my bitcoins because I would rather carry around a bunch of coins then keep it on my computer.  Can you tell me what bank I can go to to get my bitcoins?"
Sorry, couldn't resist
joepie91
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July 07, 2011, 09:52:42 AM
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Actually I would have to say the dumbest question ever would be, "I am trying to find a bank that will give me my bitcoins because I would rather carry around a bunch of coins then keep it on my computer.  Can you tell me what bank I can go to to get my bitcoins?"
Sorry, couldn't resist
That would be http://coinedbits.com/ Smiley

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Quote from: hawks5999
I just can't wait for fall/winter. My furnace never generated money for me before. I'll keep mining until my furnace is more profitable.
papa_snurf
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July 07, 2011, 08:42:05 PM
 #13

Actually I would have to say the dumbest question ever would be, "I am trying to find a bank that will give me my bitcoins because I would rather carry around a bunch of coins then keep it on my computer.  Can you tell me what bank I can go to to get my bitcoins?"
Sorry, couldn't resist
Lol
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