Bitcoin Best Practices: How A Newbie Can Neither Lose Coins Nor Fall Victim To Digital Theft (Op-Ed)

By January 14, 2016Bitcoin Business

I lost the first bitcoin I had, shortly after the first Mt. Gox compromise. If you haven’t lost coin yourself, I’m sure you’ve heard of those who have. The reasons vary, but all come down in the end to a lack of experience and education .

As we go about bringing bitcoinCT r: 10 more into use in our day-to-day lives, it becomes important to have a basic understanding of what bitcoin is, how it works, and how we can use it without putting our value at unnecessary risk. A very short primer on Bitcoin and the Blockchain

Firstly, Bitcoin is a layer on top of an accounting abstraction implemented in software called ‘the blockchain’. Think of the blockchain as the network, and bitcoin as a protocol running on that network. Some have called the blockchain a ‘peer-to-peer ledger’, and they have the peer-to-peer part right, but it is very much more journal than ledger . It ‘contains’ a large list of transactions . The people who run the programs or ‘nodes’ that record the transactions are paid in bitcoin, and the ‘records’ they create are called ‘blocks’.

It’s important to note that bitcoin transactions are stored cryptographically. No one actually ‘holds’ the coin; they hold cryptographic keys to the coin. These keys come in pairs, one public and one private. The public key is used to check the balance and make deposits; the private is used to ‘sweep’ or collect the coin from the key pair. Every transaction represents a movement of some value, and so that value is always finally ‘stored’ in some key pair. The point is, the key pair is the wallet; not the paper it’s printed on, not the website holding your coin, not the software in your mobile phone.

The disposition of your coin is under […]

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