• A beginner's guide to Bitcoin

    Q. How does bitcoin work?

    Bitcoin is a peer-to-peer network, a set of protocols (standards for
    interoperability), client interfaces (called wallets) and a currency
    that operates on top of all of those technologies. The bitcoin system
    allows any person to send or receive a fraction of a bitcoin (the
    currency unit) to another person, anywhere in the world. The bitcoin
    system operates on the Internet without the need for banks or bank
    accounts and allows people to send money like they send email.

    To start using bitcoin, you need a bitcoin client, or "wallet"
    application. The bitcoin client allows you to use the bitcoin network,
    just like a web browser allows you to use the web. There are many different types
    and makers of bitcoin wallets
    , for desktop and mobile operating
    systems and also available as web applications. To receive bitcoin, you
    need a bitcoin "address", which is a bit like an email address or bank
    account number. If someone knows your bitcoin address, they can send you
    money, but cannot do anything more, not even identify who you are or
    where you are. Therefore, you can freely share your bitcoin addresses
    with anyone without fear or security risk. Once you have a "wallet," it
    can create any number of bitcoin addresses for you, even one per
    transaction. Give those addresses to anyone you want to send you
    bitcoin. Tip: bitcoin addresses are created by your wallet and do not
    need to be registered with anyone, or linked to your identity or email
    address. They can be used immediately to receive money from anyone and
    become part of the network once they have some bitcoin sent to them.
    Bitcoin addresses always start with the number "1" and they look like a
    long string of number. One of my bitcoin addresses is
    "1andreas3batLhQa2FawWjeyjCqyBzypd". This is known as a vanity address,
    because it has my name in the beginning, but it works just the same as
    if it was a long string of random letters and numbers. I use it to
    receive tips and donations from people all around the world.

    Your wallet also allows you to send bitcoin to another bitcoin
    address. If a friend of yours has a bitcoin address, you can ask them to
    email it to you, or they can show it to you in the form of a barcode (QR
    code) that your mobile bitcoin wallet can easily scan with its camera.
    Once you have an address to send bitcoins, you can then use your wallet
    to create a "transaction", which is like writing a check. You tell your
    wallet which address should receive the bitcoin (your friend's address)
    and how much bitcoin you want to send. You can send a whole bitcoin
    (about $660 at this time), but that's usually too much! Instead, you can
    send a small fraction of a bitcoin, for example 0.001, which is 50
    cents. When you send bitcoin, your wallet will also calculate a small
    fee that is paid to the bitcoin network in order to process your
    transaction, usually half a cent ($0.005 US dollars). Hit send, and your
    friend will see their wallet receiving 50 cents, in a matter of seconds.
    Within 10 minutes the transaction will "confirm" (like a check
    "clearing" in your bank) and your friend can then spend it.

    Bitcoin transactions are "push" transactions, meaning that you are
    always in control of your wallet. No one can "deduct" bitcoin from your
    wallet, you have to explicitly sign a transaction to send it out. This
    makes bitcoin much safer than credit cards when shopping online, as your
    transaction only authorizes a single payment and never reveals your
    private identity.

    Q. I don't own any bitcoin. How do I get some?

    Now that you have a wallet, how to get some bitcoin? Well, the
    easiest way is to sell a product or service for bitcoin. You can start
    accepting bitcoin, by adding a bitcoin address for payments on your
    invoices, your shop window or lemonade stand! Most merchants use a
    service like bitpay to facilitate
    this, acting as a payment processor. Their service can create a new
    bitcoin address for each transaction, keep accounts, handle refunds and
    even convert bitcoin to USD or your local currency instantly, shielding
    you from exchange rate fluctuations. They also offer plugins for many
    popular online store applications, for easy integration. If you plan on
    using bitcoin for many transactions it might be best to use such a
    service. Services like Shopify, Square and Stripe also offer bitcoin as
    a payment option for their online merchants, so that might be a good

    If you don't want to trade products or services for bitcoin, you can
    buy some instead. To buy bitcoin, you have to convert your local
    currency into bitcoin, at the current exchange rate (see
    bitcoinaverage.com for the current rate). For this purpose you can use a
    broker or exchange that facilitates a market for buyers and sellers of
    bitcoin: Coinbase (US), Bitstamp (Europe), BTCChina (China) and others.
    If you use these services to buy bitcoin it is prudent to transfer your
    bitcoin once purchase into your own wallet. That way you control the
    bitcoin and do not have to trust them not to lose it.

    Another way to buy bitcoin is using a local trader. You can find
    local traders using localbitcoins.com and your city or
    zip code. Localbitcoins can help you arrange a meeting with someone in a
    public space (like a cafe) and will handle the escrow of bitcoins to
    protect you from fraud. It is the fastest and easiest way to purchase
    small amounts of bitcoin (eg. $100-$500 USD worth)


  • Apple yanks last remaining bitcoin wallet

    Above, a gentleman who was unhappy with Apple's decision to remove the Blockchain bitcoin wallet from the iTunes App Store shot holes through his iPhone with a rifle.

    • Boing Boing presents a guest op-ed from the the Chief Security Officer of Blockchain, a Bitcoin wallet app recently removed from Apple's App Store.

    On Wednesday February 5th, Apple yanked Blockchain, the last remaining bitcoin wallet from the App Store without notice, firmly establishing iOS as the bitcoin-hostile mobile operating system. In a terse email to the app's developers, Apple cited an "unresolved issue", without any further explanation. While Blockchain's developers scrambled to get clarification, it appears the unresolved issue is that the application is a bitcoin wallet, something that cannot be "resolved." Blockchain was the last of the bitcoin wallets, the others yanked months ago by Apple's innovation gatekeepers.

    Meanwhile, across the mobile market divide, Google's Android OS is quite bitcoin friendly. More than a hundred bitcoin related apps, including a dozen different wallets, compete for attention in a crowded market. Clearly, Apple's "unresolved issue" is not related to bitcoin's legality, which has been firmly established in the US and almost all other jurisdictions. Presumably, Google's lawyers arrived at the same conclusion as US law enforcement agencies and the Financial Crime Enforcement Network (FinCEN) in the United States, that the use of bitcoin is perfectly legal.

    So if legality is not the problem, what is?