Newbie All-Day - Ask All Your Bitcoin Questions Here!

[jjc326]

yes, the confirmation time creates an issue for retail sales.  It seems to me that USUALLY a transaction is fine after just 1 confirmation, but I have heard 6 confirmations is necessary to be sure a transaction is secure.  So maybe for small buys, you can use 1 transaction but for big ones you need to wait longer.

[DannyHamilton]

Ok, so does this mean, a customer has to wait 10 minutes for his transaction to be validated, before he can leave with his goods?

Not necessarily.

(Note: The word you are looking for is "confirmed" (not "validated").  The transaction is "validated" within a fraction of a second of being sent.  If the transaction is not "valid" it won't occur since all peers will refuse to relay the transaction.)

Merchants already accept a certain amount of risk as the cost of doing business.

• Cash is not "confirmed" until you deposit it in the bank.  Until then there is a risk that the bill might be counterfeit.
• Personal checks (cheques?) are not "confirmed" until they "clear" in a few days. Until then there is a risk that they may overdraw the customer's account and "bounce".
• Credit cards and PayPal are not "confirmed" for several months. Until then there is a risk that the customer may contact the bank (or PayPal) are report the charges as fraudulent in which case the credit card or PayPal company will take the money back from the merchant.

Accepting unconfirmed bitcoin payments from a customer is just another small risk that a merchant will have to decide if they want to accept in order to provide a faster and more convenient buying experience.

There are steps that the merchant can take that drastically reduce that risk to acceptable levels.

As long as the merchant makes sure that following are all true, it is extremely likely that the transaction will confirm and is extremely difficult for an attacker to cancel the transaction:

• Bitcoins that fund the transaction already have at least 1 confirmation before they were spent
• The transaction includes a proper fee for its size
• The transaction is well propagated across the network
• The transaction does not include any "dust" output

These conditions typically take less than 2 seconds to occur after the transaction is sent, and would take a well written program only a fraction of a second to check on.

Also, a merchant can require that a customer register identifying information if they want to use bitcoins to pay. This information can then be used to contact (or prosecute) the customer if the transaction fails to confirm.

Additionally, trusted third-party services can be created that can pay the merchant bitcoins on behalf of the customer, and then can collect the bitcoins from the customer (either in a pre-pay form or in a monthly bill).

Will a merchant allow me to leave his store, if my transaction is not validated confirmed?

That will depend on the merchant.  Many merchants don't understand exactly what risks they are already accepting, and don't understand exactly what the risk of an unconfirmed transaction is.  Therefore, out of fear, they demand far more confirmations than they probably need.  With education, time, and competition eventually the process of accepting unconfirmed transactions will become standardized.

I saw someone saying on this board, it's only safe, to accept that the transaction went through, if you received 7 confirmations. I tested this last night, and a transaction with very little fees, took up to 30 minutes for 7 confirmations.

There is nothing magical about the number 7 (or 6) that makes 7 confirmations (or 6 confirmations) completely unable to be canceled while leaving 5 confirmations cancel-able.  A transaction with 1 confirmation is VERY very difficult to cancel reliably. A transaction with 2 confirmations is far more difficult (and expensive) to cancel than a transaction with 1 confirmation. A transaction with 10 confirmations is more difficult (and expensive) to cancel than a transaction with 9 confirmations.

The number 6 has become generally accepted as meaning "fully confirmed", but there really aren't many cases where 5 confirmations (or 4, or 3, or 2) would be just as acceptable.

[btchaste]

How can I set up a secure cold storage?

[marcotheminer]

How can I set up a secure cold storage?

DannyHamilton will *probably* give you a much more in depth answer but this is my way:

Follow the instructions of blockchain.info here - https://blockchain.info/en/wallet/paper-tutorial

That's my way. Make sure to generate the private keys offline and preferably if you can on a computer that has never been in contact with the internet or other files (to make sure it is virus free).

[DannyHamilton]

How can I set up a secure cold storage?

DannyHamilton will *probably* give you a much more in depth answer

Nope. The details in your link are pretty comprehensive.  As long as the bitaddress.org page is saved to a file and opened/printed from a computer that is not connected to the internet, that's a good way to go about it.

If you are exceptionally concerned, you can wipe the hard drive and re-install the operating system cleanly before attaching the computer to the internet after you've printed the paper wallets.

[marcotheminer]

How can I set up a secure cold storage?

DannyHamilton will *probably* give you a much more in depth answer

Nope. The details in your link are pretty comprehensive.  As long as the bitaddress.org page is saved to a file and opened/printed from a computer that is not connected to the internet, that's a good way to go about it.

If you are exceptionally concerned, you can wipe the hard drive and re-install the operating system cleanly before attaching the computer to the internet after you've printed the paper wallets.

Thanks again for keeping an eye on this thread and promptly replying!

[BigGameCAsino]

How can I set up a secure cold storage?

DannyHamilton will *probably* give you a much more in depth answer

Nope. The details in your link are pretty comprehensive.  As long as the bitaddress.org page is saved to a file and opened/printed from a computer that is not connected to the internet, that's a good way to go about it.

If you are exceptionally concerned, you can wipe the hard drive and re-install the operating system cleanly before attaching the computer to the internet after you've printed the paper wallets.

Hey danny! Will bitcoin hit $600 by the end of the year? 

[Kakmakr]

Will there be enough bitcoins?

I read that there are only 21 000 000 bitcoins. Of these bitcoins, only 13 000 000 have been released by the system.

That Satoshi person, has a few million and he is not spending it. Lots of other bitcoin whoreders [Is that the right word] keep the bitcoins for themselves.

So only a few bitcoins are in circulation.

In Africa, their are 14 000 000 000 000 people. I each of them, has only a few satoshis, nobody else will have any coins.

How do they over come this problem? [People on other forums says by increasing the decimal value = 0.0000000000]

How does that work?

[DannyHamilton]

Will there be enough bitcoins?

Yes.

I read that there are only 21 000 000 bitcoins. Of these bitcoins, only 13 000 000 have been released by the system.

Correct.  There are 13 252 000 released so far. The remaining 7 748 000 will be released between now and the year 2140.

That Satoshi person, has a few million and he is not spending it.

That's an assumption.  It may not be accurate.

Lots of other bitcoin whoreders [Is that the right word] keep the bitcoins for themselves.

I think the word you are looking for is "hoarders". Most hoarders will eventually spend and use their bitcoins.

So only a few bitcoins are in circulation.

In Africa, their are 14 000 000 000 000 people. I each of them, has only a few satoshis, nobody else will have any coins.

You are mistaken.

There are only approximately
        7 243 000 000 people in the entire world therefore there cannot be
14 000 000 000 000 people in Africa.

How do they over come this problem? [People on other forums says by increasing the decimal value = 0.0000000000]

How does that work?

13 000 000 bitcoins.  Each bitcoin is 100 000 000 satoshis.

That means there are 1 300 000 000 000 000 units of currency available.

1 300 000 000 000 000 satoshis / 7 243 000 000 people = 179 483 units of currency on average for every human being on the planet.

That assumes that every human (including infants) is actively participating in bitcoin and that there are no other currency systems in existence on the entire planet.

More than likely there will be many infants and other humans that do not participate in the bitcoin economy at all.  This means that each active participant in the bitcoin economy could have several hundred thousand satoshis.

As the number of bitcoins increases during the next 100 years, the average number of satoshis per active participant will increase perhaps to a million of more.

It appears there is not a problem with the quantity available.

[Kakmakr]

Seems like I had a few extra zero's there.

Thanks for the great explanation. ^smile^ I am seeing the bigger picture now.

How would we know, how many coins are lost forever, from people who, created wallets and lost their private keys?

Are these coins recoverable in any way?

With my experimenting, I have most certainly lost a few thousands already.

I even see people creating $5 vouchers as a marketing ploy, to get people to adopt the currency, and I figure a lot of people, just chucked it away. This is the type of thing, that destroy the currency. [It's lost forever]

[shorena]

Seems like I had a few extra zero's there.

Thanks for the great explanation. ^smile^ I am seeing the bigger picture now.

How would we know, how many coins are lost forever, from people who, created wallets and lost their private keys?

Its not possible to know whether a private key was lost or not. People might post here or somewhere else that they lost the private key, but they could make up stories.

Are these coins recoverable in any way?

Realistically: No.

With my experimenting, I have most certainly lost a few thousands already.

I even see people creating $5 vouchers as a marketing ploy, to get people to adopt the currency, and I figure a lot of people, just chucked it away. This is the type of thing, that destroy the currency. [It's lost forever]

Thats why bitcoin is considered deflationary. Every lost Satoshi will increase the value of all the remaining (as in still spendable) Satoshi.

[sifter]

Is it possible that unconfirmed transactions can never be confirmed again?

[PolyCoin-Team]

May seem like a stupid question but here I go:

How exactly does cold storage work? Read a lot about it but don't understand it. How does a paperwallet work? Lets say I have 1 BTC on a paperwallet (how do I get it onto the paperwallet?), how do I redeem that 1 BTC in lets say 2 years?

[shorena]

Is it possible that unconfirmed transactions can never be confirmed again?

Yes under certain circumstances a TX can not be confirmed. Lets say you have a TX (A) that has no fee, dust outputs (<600 satoshi) and is badly propagated (not known to many nodes). If you now make another TX (B) that has a at least reasonable fee, no dust outupts, is well propagated and spends the same input(s) as TX A, chances are that B will be confirmed but not A. Thus A can never be confirmed again because its inputs have allready been spend (with the confirmation of B).

May seem like a stupid question but here I go:

No such things... uhm well unless trolling

How exactly does cold storage work? Read a lot about it but don't understand it. How does a paperwallet work? Lets say I have 1 BTC on a paperwallet (how do I get it onto the paperwallet?), how do I redeem that 1 BTC in lets say 2 years?

The basic idea with bitcoin is that you have private keys that allow you spend coins and addresses that allow you to receive coins. But on a technical level you never actually "get" bitcoins, they are allways in the blockchain you only have the private key to "give" them to someone else. A paperwallet or cold storrage uses this fact to secure the private keys offline, where they can not be reached by malware.

A typical paperwallet would be:
- a private key in a format that is "easy" to read for humans (e.g. 5KKGFKMV...)
- the same private key as QR-Code to easily use it with smartphones or similar
- an address that belongs to said key in the same formats

on a piece of paper.

like this:




Note: DO NOT USE THIS! Its private key is compromised. You can make your own on bitaddress.org, but if you actually want to use it. Create it offline. In order to spend the coins I would scan the private key with my phone (IMHO mycelium is a great for that, but most other wallets allow this as well) and spend them entirely. The change (if any) would go to a new paper wallet or to another address on the phone.

Cold storrage usually refers to a computer that is offline. This computer would hold a basic OS (usually Linux, because its free) and a wallet software that manages the private keys. You also need a computer that is online to "watch" your addresses. If you want to spend coins you make a new TX on the online computer (hot wallet), transfer it to the cold storrage (e.g. via USB*), sign it there and bring it back to the hot wallet to broadcast it to the network. There are several setups and wallets for this, armory is probably the most secure and best known. Off the top of my head electrum and bither** allow cold storrage as well.

* This part is where it all can fall aparet. If the USB Stick you use to transfer the TX has some sort of virus that can infect the offline system all that hassle was for nothing.

** its for android, thus youd need an old phone

[Kakmakr]

I used that bit address site and I unplugged my network connection.

Then I created several of those fancy wallets with a password and printed the blue wallets.

What is the chance, that I would be compromised, when I plug in the network again?

Do they keep records of what I do, even if I am offline?

[shorena]

I used that bit address site and I unplugged my network connection.

Then I created several of those fancy wallets with a password and printed the blue wallets.

What is the chance, that I would be compromised, when I plug in the network again?

Using BIP38 is definitly a good way to increase the security of the paperwallet, totally forgot about that in my previous post.

Hard to say, if your machine is compromised unplugging the cable does not remove the malware. It will just sit and wait till it has a connection again.

Do they keep records of what I do, even if I am offline?

IIRC they do everything locally, thus clearing your browercache and a reboot to clear system memory should be enough.

[EternalWingsofGod]

I'll throw in a fun one I saw here one before
Person X is at a restaurant and does two transactions one to a waiter to pay for his bill, one to give a tip seperate bitcoin address, and one to take a taxi and use Bitcoins to pay for a taxi (It's the future)
The mobile client they use does not allow for the spending of two transactions at one time until the first transacion confirms through the network that takes roughly 1 block or ten minutes on average as it complains about an unconfirmed Tx

What solutions can be done to prevent this issue.

Do you mean the waiter takes the taxi after work (the TX from the customer has not yet confirmed)? Is that what you meant?

Person X (Is a Customer) there are two addresses one for paying the bill, one for tipping the waiter, and then one for taking the taxi later.

The previous transaction he made to pay for the bill transaction A is not confirmed through the blockchain yet needing at least ten minutes for one confirm through the network but the scenario is that user X now has a balance sending issue, when they are trying to tip the waiter with a seperate bitcoin address and running into this error, after this they want to pay for a taxi with Bitcoin  

What do they do besides waiting 30 minutes for all txts to hit 1 confirm ?

[DannyHamilton]

What do they do besides waiting 30 minutes for all txts to hit 1 confirm ?

On average 1 confirmation takes 10 minutes (not 30 minutes).

That being said, they can make sure that their wallet is funded with at least 3 transactions rather than having the entire amount received in a single transaction.  That way they will have at least three separate outputs in the wallet that can be spent.

[marcotheminer]

Updated the main post with previously asked questions! Check them before you post a new question!

[DomoMan]

Will there be enough bitcoins?

Yes.

I read that there are only 21 000 000 bitcoins. Of these bitcoins, only 13 000 000 have been released by the system.

Correct.  There are 13 252 000 released so far. The remaining 7 748 000 will be released between now and the year 2140.

That Satoshi person, has a few million and he is not spending it.

That's an assumption.  It may not be accurate.

Lots of other bitcoin whoreders [Is that the right word] keep the bitcoins for themselves.

I think the word you are looking for is "hoarders". Most hoarders will eventually spend and use their bitcoins.

So only a few bitcoins are in circulation.

In Africa, their are 14 000 000 000 000 people. I each of them, has only a few satoshis, nobody else will have any coins.

You are mistaken.

There are only approximately
        7 243 000 000 people in the entire world therefore there cannot be
14 000 000 000 000 people in Africa.

How do they over come this problem? [People on other forums says by increasing the decimal value = 0.0000000000]

How does that work?

13 000 000 bitcoins.  Each bitcoin is 100 000 000 satoshis.

That means there are 1 300 000 000 000 000 units of currency available.

1 300 000 000 000 000 satoshis / 7 243 000 000 people = 179 483 units of currency on average for every human being on the planet.

That assumes that every human (including infants) is actively participating in bitcoin and that there are no other currency systems in existence on the entire planet.

More than likely there will be many infants and other humans that do not participate in the bitcoin economy at all.  This means that each active participant in the bitcoin economy could have several hundred thousand satoshis.

As the number of bitcoins increases during the next 100 years, the average number of satoshis per active participant will increase perhaps to a million of more.

It appears there is not a problem with the quantity available.

What happens if world population keeps growing and growing after 2140 tho?