Monday, December 2, 2013

What is a Bitcoin

By CASASCIUS (CASASCIUS) [CC-BY-3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons

A bitcoin consists of two strings of characters. See bitcoin note above. On the left side there is the private key. It is the password to the bitcoin account. On the right side of the note, you see another string of characters called the bitcoin address. This is the account number. As you can see the amount is left blank. The reason is that a bitcoin account could have any amount of bitcoin in it at a given time.

The key points are: The private key is your password, keep it private but don't loose it. If lost, the bitcoin are lost - forever. The public key is your account number. You need both keys to spend bitcoin but only your bitcoin address is needed to receive bitcoin.

Bitcoin can be stored digitally in a bitcoin wallet or kept online. They can also be stored on paper as pictured above in a paper wallet. Online storage is risky because if your bitcoin are stolen, there is usually nothing you can do about it. You can download a bitcoin wallet from: http://bitcoin.org/en/choose-your-wallet . Be sure to use the encryption feature to password protect your money. A paper wallet is also called cold storage since it is not connected to the internet.

No comments:

Post a Comment