A Bitcoin Primer

[mckoss]

We are frequently asked for details about Bitcoins and how they work.  So we have prepared this "white paper" that goes into a bit more depth than the typical introductory material available online.  While not designed to be a technical explanation, we hope that this will be of some use for people trying to decide if they should get more involved in the Bitcoin economy, focusing on the benefits and risk of using Bitcoins.

A Bitcoin Primer (PDF)

Here's an outline of the sections (it's about 8 pages long).


What is Bitcoin?
How does Bitcoin work?
What are the benefits of Bitcoin?
  Financial Self-Determinism and Control
  Irrevocable Transactions
  No Need for Middlemen
  Low Cost Transactions
  A World-wide System
  An Inflation Hedge for Long-term Savings
What are the Inherent Risks of Bitcoins?
  Irrevocable Transactions
  Underlying Value and Volatility in Prices
  Anti-Inflationary
  Computational Attack
  Regulatory Uncertainty
  Risk of Loss
  Is Bitcoin “The One”?
Applications Well-suited to Bitcoin
References and Links


Corrections or suggestions for improving this document as a general resource would be appreciated.

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[Yankee (BitInstant)]

This looks really nicely put together, Im reading thru it now.

[Phinnaeus Gage]

This looks really nicely put together, Im reading thru it now.

8 Pages of reading to do. 20 minutes left on that Matthew video to view. Posting to do. Website to complete. Projects in development. I remember when I had a life prior to Bitcoin, albeit this is much more productive. When asked by friends what I've been up to lately, I tell them that I'm in the process of helping to change the monetary system of the world. The other day I was asked how, whereupon I pulled out a US dollar from my wallet and tore it up in front of her. She was shocked. I then went on to ask her how much are these pieces of paper worth now. She answered 'nothing'. I then told her that prior to tearing in up, it was worth almost double that. Then I told her that I've busy with a thing called Bitcoin but didn't want to go on a diatribe of what it's all about for she was about to eat lunch. So I left the pieces of scrap paper on her table and wrote Bitcoin on the back of my card and handed it to her and told here to Google it. I would have preferred to hand her one of those trifold brochures I read on this board the other day. Those looked neat!

I look forward to reading this 8 page White Paper later this evening, but need to first do some other catching up here.

~Bruno~

[dunand]

Good paper. I will print and hand this paper to my friend who want to learn more about bitcoin.

[paraipan]

Good paper. I will print and hand this paper to my friend who want to learn more about bitcoin.

+1 nice read

[Yankee (BitInstant)]

This looks really nicely put together, Im reading thru it now.

8 Pages of reading to do. 20 minutes left on that Matthew video to view. Posting to do. Website to complete. Projects in development. I remember when I had a life prior to Bitcoin, albeit this is much more productive. When asked by friends what I've been up to lately, I tell them that I'm in the process of helping to change the monetary system of the world. The other day I was asked how, whereupon I pulled out a US dollar from my wallet and tore it up in front of her. She was shocked. I then went on to ask her how much are these pieces of paper worth now. She answered 'nothing'. I then told her that prior to tearing in up, it was worth almost double that. Then I told her that I've busy with a thing called Bitcoin but didn't want to go on a diatribe of what it's all about for she was about to eat lunch. So I left the pieces of scrap paper on her table and wrote Bitcoin on the back of my card and handed it to her and told here to Google it. I would have preferred to hand her one of those trifold brochures I read on this board the other day. Those looked neat!

I look forward to reading this 8 page White Paper later this evening, but need to first do some other catching up here.

~Bruno~

Its 11pm here, as soon as 1am rolls around and I close up the office, Im lighting up and watching the Christmas special.

When your in NY, hit me up..weeds on the house.

-Charlie

[bitcoinbetas]

really,really good job 

[Clark]

I've created a prettier version of the PDF (and corrected some typos).

I emailed a copy to CoinLab (so they can post), and you can also download the PDF here.

The quality of this document should not be diminished by the styling of the PDF offered for download, especially when the text looks great on the CoinLab site.

[Red Emerald]

I've just skimmed it so far, and sent to my friend to read.

I did notice that you make mention of PFLOPS.  Bitcoin uses 0 FLOPS.  All FLOP measurements are estimates.

The total computational power of the Bitcoin network is over 100 PetaFLOPs/s

should be something more like

The total computational power of the Bitcoin network is equivalent to over 100 PetaFLOPs/s

[mckoss]

I've created a prettier version of the PDF (and corrected some typos).

Wow, thanks for doing this.  Looks much better than our original (just using Google Docs to create the PDF).

[mckoss]

really,really good job 

Thanks!  Glad you like it.

[farfiman]

Just one comment on the PDF..

Maybe you shouldn't enter that a btc  is around 4$  but maybe a more vague term....( on the rise maybe)
You don't want to have to edit the pdf whenever the price moves.

[bitcoinbetas]

I've created a prettier version of the PDF (and corrected some typos).

I emailed a copy to CoinLab (so they can post), and you can also download the PDF here.

The quality of this document should not be diminished by the styling of the PDF offered for download, especially when the text looks great on the CoinLab site.

Thanks for doing this. I was hoping to have a prettier version to hand out to people. Thanks!

[BrightAnarchist]

This is great! I especially like the section about "The Manipulator", personally I have never believed in him/her

But this is probably the best rundown of the important properties, as well as pitfalls, of Bitcoin that I've seen.

[DeathAndTaxes]

I get a 404 error trying to use pdf link at the top.

I would remove the "non-classified" aspect of the encryption description.  As you point out the US govt authorizes the algorithms for use in protecting classified documents.  The "non-classified" part is wordy without conveying any information.  It uses two of the strongest encryption algorithms.  There may be classified algorithms which are stronger (I doubt it as security through obscurity is not security) but unless you have information that the algorithms are far less secure than classified ones the extra words provide no information.

[mckoss]

I get a 404 error trying to use pdf link at the top.

I would remove the "non-classified" aspect of the encryption description.  As you point out the US govt authorizes the algorithms for use in protecting classified documents.  The "non-classified" part is wordy without conveying any information.  It uses two of the strongest encryption algorithms.  There may be classified algorithms which are stronger (I doubt it as security through obscurity is not security) but unless you have information that the algorithms are far less secure than classified ones the extra words provide no information.

Good points.  Fixed the 404, BTW - I was updating the links to Clark's excellently formatted version.  But I restored the updated plain-formatting PDF as well.

Thanks!

[mckoss]

I've migrated the source of this document from Google Docs to be a Markdown-formatted file AND moved the master source file to GitHub.  If you have any further corrections, you can edit it yourself and send me a pull request!

Thanks again for all the input!

[Red Emerald]

I've migrated the source of this document from Google Docs to be a Markdown-formatted file AND moved the master source file to GitHub.  If you have any further corrections, you can edit it yourself and send me a pull request!

Thanks again for all the input!

Great work.  Using git for something like this is really neat.

[mckoss]

I've migrated the source of this document from Google Docs to be a Markdown-formatted file AND moved the master source file to GitHub.  If you have any further corrections, you can edit it yourself and send me a pull request!

Thanks again for all the input!

Great work.  Using git for something like this is really neat.

Thanks.  You might also like to see this version:

http://wiki.pageforest.com/#a-bitcoin-primer

You can edit online and see changes in real-time, and save your own version on the Pageforest Wiki site.  I used this to edit the original when I was transforming it to Markdown so I could see formatting changes in real-time.

Now I just need to find a way to convert to LaTex or similar, to apply the style sheet used by Clark's formatted version to create a two-column printable PDF.

[cypherdoc]

i stopped reading after the 2nd paragraph in which you mention "digital drugs" preferentially over other more useful products to be bought with Bitcoin.  why does everyone have to always first mention this usage?

"In April 2011, Forbes Magazine’s Andy Greenberg wrote an article describing the qualities of Bitcoin: it cannot be forged or double-spent, controlled or inflated by any government; it is not impeded by international boundaries, and some digital drug-dealers have started accepting it."

even Greenberg in the article cited mentions other uses before talking about drugs.  in the paragraph immediately preceding the mention of drugs he says this:

"About $30,000 worth of Bitcoins change hands every day in electronic transactions, spent on Web-hosting, electronics, dog sweaters and alpaca socks."