Topic: Kapyong's easy explanation of Bitcoins (Read 742 times)

Wow.  Nice explanation!  Is this technology legal? Can it be insured? Are there any remedies in case of theft or fraud?  What if somebody bounces a transaction with it?  How is its value determined?  Are there any noteworthy disadvantages to using this platform? 

not if you are using an SPV client 

Thanks franky1

I have adjusted the wallet paragraph and added some details you suggested.


Kapyong

to word it better, from:
to:

after all a wallet can be a paper wallet,  a wallet can also be a text file and a wallet.dat passworded file.. not just a program.

Thanks all

yayayo -
yah, the 'anonymity' of bitcoin is complex.
Yes, explaining mining would mainly be for the interest - it's a fascinating topic, especially for people who know some computing.

Raimonn
I left out the halving system, I may mention it, thanks.

Kprawn,
Yup, wallets are not always safe, I might change that to 'CAN safely store...'.


Regards,

Kapyong

Not a bad explanation for a newbie... Keep up the good work. I differ from one part of your summary : " A wallet is a program that safely stores all your private keys - which represent ownership of

addresses (which contain bitcoins.) " - The safe part are a bit over rated, if you ask me... It all depends, where it is saved... Cold storage in paper wallets are quite safe, but online wallet is a whole

other story... so you might re-think that part a bit. 

Wow its a very nice article about bitcoins. I would add the halving event (its near, mid july aprox), the reward for mining now is 25 bitcoins (but on first 209.999 blocks the reward was 50) and with the next halving the reward will be 12.50 btc.

Great article. This should be included in a "bitcoin user manual"! Looking forward to your article on bitcoin mining.

You've made a nice summary that will be understandable by most intelligent people.

Regarding anonymity of Bitcoin: In fact Bitcoin is essentially pseudonymous. It can be anonymous, if you ensure that you do not purchase or spend it with a linked personal address and take measures to hide your IP address.


There is no standard fee. The recommended fee for a transaction depends on the number and age of inputs that constitute the amount to be spend, the size of the amount, the transaction size in KB, and how fast you want the transaction to be confirmed. However 5-10 cents might be sufficient in most cases.


I think that's a waste of time if you want to instruct newcomers, since solo-mining is mostly dead. Almost all remaining players are professional companies.

ya.ya.yo!

At the moment, adding a 100bits fee (about $0.05) is considered "standard" for most transactions (please, anyone, correct me?). You may try 0 fee but most likely the system will reject the Tx.

Gday all,

Thanks for your positive comments gentle-persons
I like to write, I like to inform.
I will consider those suggestions.

So, 5 US cents is becoming the standard fee ?
Seems reasonable I guess.

Keeping it short and simple does mean leaving a lot out.
I think I'll do a Part 2 - an easy explanation of Bitcoin mining.


Kapyong

And limited supply.There could only be 21 millions coins and supply can't be increased beyond that once all the coins are mined.
Anyway op has really done a superb job of explaining everything in simple layman language

Well done! You might be a newbie but it looks like you've done your homework before joining the forum, you've pretty much summed up the basics of Bitcoin 
The only thing I would consider adding is this - having to download the blockchain (which takes up HDD space) and sync up with the network before you're able to use your wallet (just in case newbies don't realize that a transaction won't immediately be broadcasted through the network if they've had their wallets offline for some time)
BTW welcome to the forum 

I think these are good. Maybe two additional points:

- It is free to use but you will need to pay a very small fee (about $0.05) for sending bitcoin.
- There is no chargeback in bitcoin.

Gday all,
I've been learning and lurking for a while, now I've put together a simple explanation for bitcoin - suitable for a layman, not an engineer.   What do readers think of my explanation ?


Bitcoin is like a world-wide online bank owned by no-one, with records visible to everyone.

The records (called the blockchain) is securely spread over many computers.

The blockchain openly shows the quantity of bitcoins at every bitcoin address.

A bitcoin address is a bit like a public online bank account number, and somewhat like an email address too :

• It's like an account number because it has an amount of bitcoin recorded in it.
• It's like an email address because anyone can send bitcoins to it.

Bitcoin addresses are essentially anonymous, but buying into the system usually leaves a trail somewhere.

Bitcoins are created (called mining) at the rate of 25 every new block - about every 10 minutes. Creation will gradually halve and then stop at 21 million bitcoins.

The newly created bitcoins are the reward to the miner for doing the hard processing needed to create each new block.

A block is a collection of bitcoin transactions that are verified, then added to the blockchain.

A transaction - i.e. sending bitcoins from one address to another - is quick and easy (typically 10 minutes or so), and very cheap (not quite free.)

Bitcoin transactions are safe and secure and there is also no chargeback - it is protected by the proven mathematics of encryption and hash functions. Of course there are still various risks in buying and using them.

Spending bitcoins from an address requires the owner's private key for that address (like your secret password for an online account.)

A wallet is used to store all your private keys - which represent ownership of addresses (which contain bitcoins.) Your wallet must be kept safe and secure, and can be stored on a web-site, on your PC, on a USB stick, or even printed on paper.

You can buy bitcoins online using your bank account (leaving a trail), or with a cash deposit if you want more anonymity.

You can use bitcoins to buy goods and services, more and more every day.

There is no middle-man to charge fees (but there IS a small transaction fee, typically 5 US cents), or required to provide trust.


I.e. - it's a revolutionary new form of money that is not controlled by the banks, or anyone else.


If you are curious, you can observe the blockchain and transactions happening in real-time here :
https://blockchain.info/
On top are the latest blocks, bottom left are transactions pouring in. Click on addresses, blocks, transactions, miners etc. to see the details.


(later changes in brown, thanks 7788bitcoin and Raimonn and Kprawn and franky1 and others )


Kapyong