What is Bitcoin?

Cryptocurrency invented by anonymous author in 2008. White-paper is here: https://bitcoin.org/bitcoin.pdf

How does it work?

I will use analogy (copy-pasted from lurkmore.to/Bitcoin) to explain this. Imagine a golden coins with teleport built-in and public log of transactions.

There is no better analogy than that, so I will explain it in more detail:

• Golden coins - because overall count of bitcoins is fixed to 21 mega coins. New coins can be earned with slow speed via mining. Mining will completely stop in some point in future.

• With built-in teleport - because, like BitTorrent, it is hard to block bitcoin during it's distributed nature.

• And public log of transactions - because each node stores full list of transactions done since start of bitcoin network, forever, and this list is available for reading to anyone.

Bitcoin is opensource. It is based on opensource cryptographic functions (ECDSA for keys and SHA256 for Proof-of-Work).

Is there any centralized control of this?

No. It is distributed system. Let us compare the behavior of bitcoin and behavior of normal online pay system.

User A sends funds using normal online pay system. His computer asks server something like this: "Hello, here is me, please, transfer 5 bucks from me to the user B". Server decides to complete transfer, or refuse to complete.

With the bitcoins it goes different. User A creates a message like "I do transfer 0.0005 bitcoins to the user B". Than use private key corresponding to the wallet A to make a cryptographic signature. And send this signed message to every node. Each node decides on his own whether to include this transaction into list, or not.

So, if you want to shutdown the normal online pay system, it is as easy as shutdown the server. With bitcoin network you have to shutdown the network, which is harder to perform.

Bitcoin can suffer from "51 percent" attack. Another flaw is network segmentation in case of local internet disconnections when international internet lines are heavily filtered and censured (in near future).

What is a blockchain?

It is a way to protect public list from modifications. Sort of. If you modify a block, this will lead to block hash change. Any upper blocks become invalid and needs to be rehashed again.

What is mining?

It is a process of maintaining the network. Miners do create blocks containing new transactions and append it to the blockchain. Miners become profit from each block (new block reward + transaction fees). Proof of work is there to slow down the process of mining, so miners will not mine all blocks instantly. PoW difficulty gets auto-regulated so each new block comes circa each 10 minutes. If computing power (hashrate) rises, than difficulty rises too.

How Proof-of-Work works?

Easy. Block hash must contain leading zeros in it's binary value. The only way to find this hash is to hash it multiple times with various nonce each time until the right one is found. PoW can be useful in your other contraptions to reduce spam, for example.

How many storage is needed to store the blockchain of bitcoin?

356.1 GB at time of this post.

How to create a wallet?

Install some software. There are multiple opensource bitcoin clients for desktop. Electrum is a nice one. It does not need to store full blockchain, just the newest part. It will generate keys for you. No internet is needed to create a key. You can create as much addresses as you want. They will be empty, of course.

How to fill wallet with money?

Ask someone to send you bitcoins. There are a lot of people that change fiat money to bitcoin and vice-versa.

Another possibility is mining.

Do I need to keep my computer running to receive bitcoins?

No. Only when spending.

How do I spend bitcoins?

You will need to enter destination address and quantity and press "send" button. Your software will make the rest. It will push transaction to the network. If other nodes see it eligible, they will put it into blockchain.

Can I send bitcoins to non-existing address?

Sure. Nobody will be able to spend it from there anymore, unless he has private key for that address.

Is it legal to buy or sell bitcoins?

It depends on country where you live. You have to learn local rules and be careful.

Is bitcoin anonymous?

Well, look, there is a blockchain. It stores information about every transaction and every address ever used. So, the question is how to link bitcoin address with real person. There are two things to care about when you want to stay anonymous with bitcoins:

Stay anonymous while buying bitcoins so your new bitcoin address will not be linked to you

Use anonymity tools when sending bitcoins, because your node may be tracked down when you push the transaction to the network (you can push transaction by other means)

It is possible that in near future more sophisticated analysis tools will be able to extract more information from blockchain and link it to the real money movements.

Can I trust online wallets?

For small amount, yes. Note that online-wallet is the same thing as a bitcoin node, but it is not operated by you. Also, it may require face scan, id card, phone number and other sensitive info in a case if you trying to spend money from it.

Can I trust cryptocurrency exchanges?

The same thing as above. You can study feedback and see how long this exchange operates. Too short life time and lot of negative feedback is a bad sign.

Can I remove my transaction from blockchain and have my bitcoins back?

No. Cryptographically strong no. Unless the recipient is kind enough to send it back to you.

As a merchant, am I at risk that customer will ask a refund and hold my bitcoins?

No. Bitcoin has no transaction cancel capability. You can send it back manually.

When sending back should I use the address that appears as sender in previous transaction?

If your peer uses online wallet or exchange, he will not get the money. You have to ask him for a new destination address.

Can I sign custom text message with bitcoin private key?

Yes. This may be useful to prove that this address belongs to you.

Can I push transaction via web page via Tor-Browser?

Yes. Go to https://www.blockchain.com/btc/pushtx or https://live.blockcypher.com/btc/pushtx/ and use a transaction pusher web-form.

My electrum says that my bitcoins are in danger and I must download a new improved version. I just want it to send bitcoins. WTF?

It is a vulnerability of old version that allows attackers to display various contents in tx error window.

See the brackets in the text? Use less malicious node next time, or use previous advice to send bitcoins anyway.

Can officials or banks take my bitcoins away from me?

As long as you give them your private keys. They are stored in file keys.dat or something similar. It is your duty to keep keys.dat file in a safe place.

Can a computer virus steal my bitcoins?

It is very likely. See scam picture above.

What is a mining pool?

Solo mining is difficult. When you try to put a block into blockchain, you have to put a bitcoin address in special field, so mining reward will land into that address. A lot of computing power is needed to have a probability of finding a block.

When mining at pool, many people run mining software with address that belongs to the pool owner. When someone finds the block, pool owner will receive bitcoins and share them between miners based on computing power of each miner.

Can mining power cause global heating and destroy our planet?

I do not know. Some people use heat from mining equipment to heat their house at cold times. (my friend think that alien civilizations have the same problems, they develop the tech, and then they encounter cryptocurrencies and stop evolving any further)

Can a mining pool be scammed?

Sure. It is pool owner that operates a pool, not you.

If I will trade bitcoin, will I win more money?

I do not know.

I want to invest into bitcoin. Will that bring me more money?

I do not know.

But other people have won a lot of money with bitcoin.

That's right. Bitcoin has grown because it has features not seen before. It is very usable to make payments. It is unblockable like BitTorrent.

What are alternative coins?

Alt-coins. Tons of them. Some of them are strong and offer new features. Some are just junk and do nothing except fraud.

Which alt-coins are good?

I do not want to name them. I am not sure.

Will I win money if I invest into this coin?

I do not know.

Why are there so many scam projects regarding alt-coins?

It is easy to scam people with alt-coins. Algorithm is as follows:

• Invent a new coin with magic features
• Pre-mine a lot of coins
• Sell them all

Many people are fooled and try to invest in such coin. Do not do this.

Is a big pre-mining a bad sign?

Basically, yes. This means that coin owners can manipulate the coin exchange course in a bad ways.

Bitcoin Doubler, what is this?

https://hackaday.io/project/8781

What do you think it can be?

DuinoCoin, what do you think about this one?

https://hackaday.io/project/180830

CiferTech the author pours a lot of water and gives as little clue as possible about how this thing works and why it is better to mine this coin on arduinos. Arduinos are performing a lot of weaker as a modern PC when it gets to crypto mining, so it is technically not true what he is saying.

Should moderators remove the project from hackaday?

No. Hackaday is a platform with some degree of freedom of speech, so, let him stay. But nothing will stop you or me to post a comment about it. It is a reason why I am here writing this long post. I see that cryptocurrencies is a hard topic. So I am here to explain it.

My comment is removed, WTF?

It is because moderator supports scammer and acts against you. This sometimes happens (in my case). Use screenshots to save your comments so you can restore them later. If you feel that the whole project is to be deleted, you can take a picture of it for the time being. As I can tell, every removed comment can be restored.