Most basic question(s) in the history of bitcoin

[mouse123]

hi,
i have just installed that software for wallet on my pc's hard drive. Did some research about how does it work, also checked FAQ page on your forum (that faq amount of questions is very tiny on this forum) but I am still being pretty much confused about the following three subjects:

1. I know ewallet id (address) changes to the new one every time the transaction is made. But does it changed every time I receive funds or also changed every time I send them?

2. I made passphrase and noted it down on two different papers that are located on two different offline locations. So just in case if i lose or cannot find the paper, I have reserve. However I have on purpose to buy new computer soon. Which files are important that I transfer to the new computer so I remain having the budget on balance without losing anything? Passphrase for sure isn't enough and I am 100% sure that if I just download on new computer the bitcoin software once again, even if I use same passphrase, I will lose all funds I have. So which files I need to transfer to new computer to remain having funds?

3. Partially related to first question: After id/address changes Im afraid that all balance will be lost. In reality I might be very wrong at this otherwise noone on the planet would use bitcoin but could you explain based on what (any particular file on hard drive?) is balance saved? Example: Starting from zero balance, I receive A amount of funds and I have X id/address. I can close/rerun bitcoin software as many times as needed. A amount will be always linked to X id/address so that ''X'' bitcoin address is recognized as having A amount of funds. Then i get another payment. Now I would have B amount (obviously higher than A) but the id/address of bitcoin ewallet changes from X to Y. How will then Y id/address recognize that I own B amount even after closing software? Reason for such question: For example in bitcoin's alternative (e.g. webmoney, egopay,....) we have static (not being changed) ID of wallet and balance on account is matched with that ID. But how is balance matched in bitcoin if there is no static id? Perhaps via some file? if yes which one?

Thanks a lot. Just trying to figure out how to use that.

[Colin Miner]

1. you can use the same address for sending and receiving every time, its up to you if you make new ones for receiving.

2. wallet.dat

3. You manually make new addresses, so its all under your control. Don't worry.




Adding extra addresses is useful to see who paid you,

wallet.dat is in

        Windows: %APPDATA%\Bitcoin\
        Linux: ~/.bitcoin/
        Mac: ~/Library/Application Support/Bitcoin/

You can make a new address for receiving funds easily in your client. The software won't force you to use a new address. The bitcoins are stored in the public block chain, and not your wallet.

[kthejung]

If you do not have thousands of $ of bitcoins, I suggest opening up a wallet with coinbase or other trustworthy online wallets so that you don't lose bitcoins due to improper use or encryption.  I don't mess with wallet softwares.  I use coinbase as my personal wallet but once I start accumulating much more bitcoins, I plan on moving some to a paper wallet.  WARNING:  the thing about paper wallets is that when you send bitcoins from them, you must be sure to send all of them of you will lose the remaining change.  Look up "bitcoin address change" on google to learn more about this.  I personally place trust in coinbase because of their "two factor security" measures and the fact that they store most of their bitcoins in an offline storage.  In order for me to send bitcoins through their website, I have to confirm a code that they send to my cellphone each time I send; which makes it hard for hackers to take my bitcoins unless they have access to my text messages.

[odolvlobo]

It is a common misconception that a wallet has an address or that an address is a wallet. Actually, a wallet contains one or more addresses.

The different wallet programs work differently, but here is how Bitcoin-qt works:

The wallet contains a pool of 100 addresses that are hidden from you. The addresses are hidden because they are managed by the wallet program and you generally don't need to worry about them. When you first start up the wallet, it will generate 101 addresses. One of them is the one you see, and 100 are in the hidden pool.

Whenever you send bitcoins, the change is sent to one of the hidden addresses. When you send bitcoins from your wallet again, the program will automatically send them from the new address and send the change to yet another address. The wallet program keep track of which addresses have how much BTC so that you don't have to.

You can reuse addresses as often as you like. Addresses are never thrown out.

[AndrewGucci]

It is a common misconception that a wallet has an address or that an address is a wallet. Actually, a wallet contains one or more addresses.

The different wallet programs work differently, but here is how Bitcoin-qt works:

The wallet contains a pool of 100 addresses that are hidden from you. The addresses are hidden because they are managed by the wallet program and you generally don't need to worry about them. When you first start up the wallet, it will generate 101 addresses. One of them is the one you see, and 100 are in the hidden pool.

Whenever you send bitcoins, the change is sent to one of the hidden addresses. When you send bitcoins from your wallet again, the program will automatically send them from the new address and send the change to yet another address. The wallet program keep track of which addresses have how much BTC so that you don't have to.

You can reuse addresses as often as you like. Addresses are never thrown out.

That is a good point, thanks.

[Sonny]

The wallet contains a pool of 100 addresses that are hidden from you. The addresses are hidden because they are managed by the wallet program and you generally don't need to worry about them. When you first start up the wallet, it will generate 101 addresses. One of them is the one you see, and 100 are in the hidden pool.

Whenever you send bitcoins, the change is sent to one of the hidden addresses. When you send bitcoins from your wallet again, the program will automatically send them from the new address and send the change to yet another address. The wallet program keep track of which addresses have how much BTC so that you don't have to.

Just a friendly reminder on backing up your wallet.dat file.

Whenever you generate a new address or a new change address (when you send bitcoin out), your wallet will take one address out of that 100 "pre-generated addresses, and pre-generate a new one.
After you used 100 new addresses, you would need to do a new backup...

Thus, you should do a backup once in a while, or use the "-keypool=<n>" argument to pre-generate more addresses.

[tjkurtisss]

As soon as I start thinking I understand about btc I come across a thread which shows me something new again and again.

This was pretty useful, however basic. Thanks a lot.

[Ritual]

As soon as I start thinking I understand about btc I come across a thread which shows me something new again and again.

This was pretty useful, however basic. Thanks a lot.

Agreed. For me also.

[AndrewGucci]

Good thread for helping to understand basics, thanks.

[Hilaryclok]

Yes, thanks.