Learning About Bitcoin-Part 1

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Author : Martedì Giugno

Step 1: Understanding Bitcoins. After reading many, many different articles all over the internet, I still didn't have a good idea of what bitcoins were, how they could be made, and if it was possible for the average person to use them. The first few things I read, they were made out to sound like you had to have a computer science degree to get them. However, after reading on about them, I learned that they are a type of currency that is 100% virtual. There is no government that regulates the currency, like almost every other single currency in the world. Instead, it is all virtual. The bitcoins that you own are stored on your computer. You can sell these bitcoins for real US or Canadian dollars. Below is a YouTube video explaining the whole concept of bitcoins. While good for visual learners, some like to read to learn. Bitcoins are a virtual currency. The currency is stored locally between peers. The currency (bitcoins) is transferred from computer to computer. Every transaction (transfer of bitcoins from one computer to another) is verified by "mining" for bitcoins. When first learning about bitcoins, you learn that bitcoins are stored directly on your computer. So, does that mean that by doing a bit of computer hacking you can give yourself thousands of dollars’ worth of bitcoins? The answer to this is NO! The system is worked out so well that hackers cannot do this.

The reason is because for bitcoins to be transferred from computer to computer, the transaction has to be verified. This verification is done by "mining." Mining is a process where everyday people like you and I install some software onto their computer. This software is very advanced and hard to understand, but basically it does some high-level computing (SHA256 decoding) to verify transfers of bitcoins. The next question that often comes up is: Why would anyone want to just give up their computer to help decode these encryption things? Well, the answer is that you get paid to do it. Well, you don't get paid, but you get free bitcoins for letting your computer work for you. This is almost the same as being paid, as you will learn in later steps. This is the ONLY way that new bitcoins are created. They can't just come from nowhere, making the system hacker-proof. Mining can be very simple, but it can also be very complicated. By following this Instructable, you will learn one of the easiest ways to mine bitcoins and gain money. For more information, check out the Wikipedia Article, at www.wikipedia.com/wiki/bitcoin as well as the Official Bitcoin Website, at www.bitcoin.org/. Step 2: Setting Up a Wallet. This step walks you through the process of installing the "Wallet" software. This software functions as a real wallet: it stores all of your currency, which in this case are bitcoins.

The first part of this step is to download the software. Go to the Official Bitcoin Website at www.bitcoin.org/. In a box at the top of the page, click the software version that applies to your given OS. The steps are the same for both Mac and Windows users, other than installing different software. Open the file and follow onscreen instructions. When it is done, open up the software from the Start Menu. It will take a few hours to download all blocks to your computer. You must just sit and wait during this time (see pictures). When it is done downloading the blocks (don't worry about what this means; it's not important), go over to the "Receive coins" tab up at the top. Right-click on the one existing list item, and click "Edit". Give it the label "Main" and hit OK. Right-click on it again and click "Copy Address". This is the unique address that your wallet was given. It is where you receive coins in later steps. The next step tests out your bitcoin wallet and shows you what a transaction looks like. Step 3: Test Your New Bitcoin Wallet.This step is for testing purposes only. Go to Daily Bitcoins at www.dailybitcoins.org. Near the middle of the page, paste your bitcoin address that you copied earlier. Uncheck the "Delay payment to minimize transaction fees" check box. It is to trick people. Enter the captcha (they are very simple ones on this website), and click Send. It will tell you that it was successful. If it didn't, re-enter the captcha properly. Wait ten minutes and then open up the Bitcoin Wallet software again.

Read more about Bitcoin and The BitClub Network.