Bitcoin For Dummies book cover

Bitcoin For Dummies

By: Peter Kent and Tyler Bain Published: 04-05-2022

A primer on the currency alternative that's changing the world

Bitcoin can be a bit puzzling to the uninitiated. Ledger? Blockchain? Mining? These cryptocurrency concepts aren't going away, and there are tremendous opportunities for those with some know-how to get onboard with the crypto culture. Bitcoin For Dummies helps you get un-puzzled, learn the Bitcoin basics, and discover the possibilities in the new world of digital currencies.

With this 100% new edition, you can step into the fascinating culture of cryptocurrency and learn how to use Bitcoin as a currency or an investment vehicle. A little bit of knowledge will go a long way, and you’ll be ready to sail smoothly ahead as the crypto tsunami advances.

  • Demystify Bitcoin and learn how to buy and sell cryptocurrency
  • Create a digital wallet and make everyday purchases using Bitcoin
  • Discover the ins and outs of investing in Bitcoin and other up-and-coming cryptocurrencies
  • Participate in the cutting-edge culture of crypto

Bitcoin For Dummies is great for beginning Bitcoin users and investors who need to know the basics about getting started with Bitcoin and cryptocurrency.

Articles From Bitcoin For Dummies

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45 results
Bitcoin For Dummies Cheat Sheet

Cheat Sheet / Updated 02-07-2022

Bitcoin ― what an enigma! It seemingly came out of nowhere, and 13 years later is worth hundreds of billions of dollars, even though few people understand how it works. The information in this Cheat Sheet should help reduce some of the mystery and confusion so that you can begin your Bitcoin journey with confidence.

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Peer-to-Peer vs. Regular Bitcoin Exchanges

Article / Updated 12-21-2021

Two types of bitcoin exchanges are in use: peer-to-peer and regular. Regular bitcoin exchanges use an order book to match, buy, and sell orders between people. However, neither the buyer nor the seller has any idea who the other party is, and this provides all users with a certain level of anonymity and privacy protection. This is the most commonly used form of exchanging local currency to and from its digital counterpart in the form of bitcoin. However, bitcoin was originally created to enable peer-to-peer transactions. Unlike other familiar peer-to-peer technologies you may be familiar with, such as torrent applications, in the bitcoin domain peer-to-peer means a one-on-one relationship. A peer-to-peer transaction means that you have data related to the person or entity you're interacting with at all times, rather than interacting with several different peers, as in the case of torrents. The information you have on that person can range from a bitcoin wallet address, to their forum username, location, IP address, or can even involve a face-to-face meeting. Rather than using an order book to match up buy and sell orders — and thus controlling all the funds being used on the exchange platform itself — peer-to-peer exchanges match buyers and sellers without holding any funds during the trade. For example, say you want to buy a bitcoin from someone who lives in the same city as you do. Rather than hoping to stumble across that person on a traditional exchange — chances of that are slim to none — you can initiate a peer-to-peer transfer with that individual. There are several bitcoin platforms in existence that allow you to register an account in order to find other bitcoin enthusiasts in your local area. Some of the more popular platforms include Gemini.com for the U.S. market, whereas Bitstamp.net and Kraken.com offer facilities for customers in international markets subject to their individual policies and restrictions. That said, not everyone will be willing to meet up face to face. Some people prefer a payment by traditional means, such as a bank transfer or PayPal, rather than meet up for a cash transaction. Depending on what kind of trading experience you prefer, peer-to-peer trading may be more suitable for your needs than the regular exchange. Generally, peer-to-peer trades do not require you to provide any documentation regarding your identity and offer a reputation system in order to track your own — and other users' — trading history. In doing so, your chances of completing a trade successfully will only increase. One of the most interesting aspects about peer-to-peer bitcoin exchanges is their built-in reputation system. Because you're dealing with other traders directly, whose funds are not overseen by the platform owners themselves, the trust element is more important than ever before. It only makes sense to know a little bit more about traders' previous history before going into business with them.

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Bitcoin Public and Private Keys

Article / Updated 07-01-2021

There is more to a bitcoin wallet than just the address itself. It also contains the public and private key for each of your bitcoin addresses. Your bitcoin private key is a randomly generated string (numbers and letters), allowing bitcoins to be spent. A private key is always mathematically related to the bitcoin wallet address, but is impossible to reverse engineer thanks to a strong encryption code base. If you don't back up your private key and you lose it, you can no longer access your bitcoin wallet to spend funds. As mentioned, there is also a public key. This causes some confusion, as some people assume that a bitcoin wallet address and the public key are the same. That is not the case, but they are mathematically related. A bitcoin wallet address is a hashed version of your public key. Every public key is 256 bits long — sorry, this is mathematical stuff — and the final hash (your wallet address) is 160 bits long. The public key is used to ensure you are the owner of an address that can receive funds. The public key is also mathematically derived from your private key, but using reverse mathematics to derive the private key would take the world's most powerful supercomputer many trillion years to crack. Besides these key pairs and a bitcoin wallet address, your bitcoin wallet also stores a separate log of all of your incoming and outgoing transactions. Every transaction linked to your address will be stored by the bitcoin wallet to give users an overview of their spending and receiving habits. Last but not least, a bitcoin wallet also stores your user preferences. However, these preferences depend on which wallet type you're using and on which platform. The Bitcoin Core client, for example, has very few preferences to tinker around with, making it less confusing for novice users to get the hang of it. Your bitcoin wallet generates a "master" file where all of the preceding details are saved. For computer users, that file is called wallet.dat. It's saved on a Windows machine, for example, in the C:\User\Yourname\Documents\AppData\Roaming\Bitcoin\folder. Make sure to create one or multiple backups of this wallet.dat file on other storage devices, such as a USB stick or memory card. The bitcoin wallet software will let you import a wallet.dat file in case your previous file is damaged or lost, restoring your previous settings, including any funds associated with your bitcoin wallet address.

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Can You Trust the Idea of Bitcoin?

Article / Updated 07-09-2019

With bitcoin, trust has to work on both sides. Even though you as the user are always in control of your own finances, you still have to trust the rest of the bitcoin network to not drop off the face of the earth tomorrow. The chances of bitcoin disappearing are so slim that it isn't something you should worry about. However, if there is one thing that life has taught you, it is that there are no certainties in life. Luckily for everyone involved, the bitcoin network consists of many individual users, as well as bitcoin nodes, which are put in place to keep the network running at all times. The concept about bitcoin that people have the most difficulty with in terms of trust is decentralization. As mentioned, bitcoin is a decentralized digital currency, which means there is no central point of failure that would cause the bitcoin network to not recover. Every individual user is an integral part of the bitcoin ecosystem, so it would take a nearly impossible amount of collaboration in order to shut down everyone at the same time. You can compare bitcoin's decentralization with how Google's search engine works. The engine itself gets accessed by millions of people at the same time, yet it never seems to slow down. That's because Google's search engine runs on so many servers — in a decentralized manner — that it would take a tremendous effort to bring it down altogether. Decentralization also brings forth another aspect that makes people think twice before getting involved in bitcoin. Because the network is made up of lots of individual users, there is no central authority overseeing the bitcoin network. That means if you own bitcoin and something goes wrong for some unforeseen reason, no one will reimburse you. When your BTC are gone — either by you having spent them or even having lost them, they are gone — there is no chance to recover them. Trusting bitcoin technology Human nature tells you to keep doing things the way we have been doing them. Beware change. When the Internet came around in the early 1990s, few thought it would ever become a commonplace, household service. It was for geeks. Yet look where you are now — everybody's grandparents and their pet dogs are on the Internet. That being said, the transition from no connections to people all over the world being connected was a big change. Bitcoin is often compared to the early Internet, a new and disruptive technology that seems to be far ahead of its time. In part, that's true, as bitcoin is solving a technological problem that most people don't think about in the first place. Not because the evidence isn't there, but simply because human nature rejects changes as long as things "still work fine the way they are." And just like the Internet, it will take a rather long period, many years at least, before bitcoin becomes mainstream technology. Even though several great bitcoin projects and platforms are in development, it will take a lot of time until they are ready to be used by the general public. On top of that, there need to be more educational efforts regarding bitcoin that focus on the underlying ideas and technology, rather than the "alternative currency" aspect. On the other hand, a lot of people have already put their trust in bitcoin technology. Most of the technology in existence today is focused on financial means, such as the remittance market. Bitcoin technology allows you to send money to anyone in the world, at little to no expense. In doing so, remittance players such as Western Union, Moneygram, and even traditional banks will potentially face stiff competition from this "fake Internet money," as bitcoin is often called. Whether you should put your trust in bitcoin technology is something only you can decide for yourself. Bitcoin was, is, and will always be intended to put you in control of your bitcoin money. Trusting bitcoin as currency As previously noted, bitcoin is not a proper currency in its truest sense, but rather an alternative, digital method of payment. Granted, you can buy and sell services and goods in exchange for bitcoin, but the monetary aspect lacks certain features required for it to be considered as a true "currency" in the traditional meaning. Nevertheless, lots of merchants put their trust in bitcoin as a payment method, simply by accepting it alongside more traditional ways of paying. The reasons are fairly simple: No extra costs associated with accepting bitcoin payments No additional infrastructure to set up On top of that, as a merchant, you can integrate bitcoin payments in both your online and physical stores, if you want. In either case, you will be able to convert any bitcoin transaction to your preferred local currency immediately and have funds deposited to your bank account the next business day. From a consumer point of view, using bitcoin as a payment method means you don't have to spend any of your cash, nor use a bank card or credit card linked to any of your bank accounts. However, in order to obtain bitcoin, you usually have to buy some first, which does involve spending your own money. Bitcoin is all about letting the individual user control funds at any given time. And that aspect scares a lot of people away, as governments and banks have been holding our hands along the way for the past half century or so. Taking care of everything ourselves can be a burden, as many do not want that responsibility. And if you honestly feel that you don't want to invest your time in managing your money at your leisure, when you need it, at any given time or place, then bitcoin is not for you. But if you're fed up with the current financial system of governments and banks, bitcoin is well worth the time and effort. No one is saying that bitcoin has to replace the local currency you've been using to date. Both systems can coexist peacefully. However, once you start seeing the benefits and potential of using bitcoin for various types of purchases, you will feel a rush of excitement, and more importantly, invigorating financial freedom.

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How Bitcoin Works

Article / Updated 07-05-2017

Bitcoin is changing the way people think about money by planting a seed of doubt in people's minds — in a positive and thought-provoking way. Mind you, given the financial crises over the past decade, it's understandable that some people are trying to come up with new and creative solutions for a better economy. Bitcoin, with its transparency and decentralization, may prove to be a powerful tool in achieving that goal. One thing bitcoin does is bypass the current financial system and could therefore potentially provide services to unbanked and underbanked nations all around the world. Whereas most people in the Western world find it normal to have a bank account, the story is quite different elsewhere. Some countries in Africa, for example, have an unbanked population of anywhere from 50 to 90 percent. Do these people have less right to open and own a bank account than Americans or Europeans do? Absolutely not, but doing so may come with rules so strict as to be unobtainable for many citizens. For a while now, society has been evolving toward a cashless ecosystem: More and more people use bank and credit cards to pay for goods and services both online and offline, for example. Mobile payments — paying for stuff with your phone — are now on the rise, which may become a threat to card transactions. Bitcoin has been available on mobile device for years now. People are slowly starting to grasp the concept of blockchain technology's potential and future uses: A blockchain can do pretty much anything; you just have to find the right parts of the puzzles and fit them together. Here are some examples of what bitcoin technology is capable of: Taking on the remittance market (transfers of funds between two parties) and coming out on top in every aspect. Sending money from one end of the world to the other end in only a few seconds. Converting money to any local currency you desire. Overriding the need for a bank account, making bitcoin an incredibly powerful tool in unbanked and underbanked regions of the world. What if you live in an unbanked region and have no reliable access to the Internet? There's a solution for that as well: Some services allow you to send text messages to any mobile phone number in the world in exchange for bitcoin or a few other digital currencies. Once again, bitcoin proves itself a very powerful tool in underbanked and unbanked regions of the world. Perhaps the most impressive showcasing of what bitcoin can do is the bitcoin network itself. All transactions are logged and monitored in real time, giving users unprecedented access to financial data from all corners of the world. Furthermore, the blockchain enables you to track payments' origins and destinations, even as money is on the move in real time. Such valuable insight will hopefully be adopted in the current financial infrastructure, even though there may be a period of adjustment while that takes place.

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Bitcoin Fees

Article / Updated 08-29-2016

Bitcoin is often touted as a global payment network that includes no transaction fees. Up to a certain extent, that statement is true, but it doesn't tell the entire story. No transaction fee is involved for the recipient on any bitcoin transaction coming from another user on the network. But sometimes, there is a transaction fee involved, albeit very minimal. Transaction fees in the bitcoin world are not included in every transaction. In fact, most bitcoin wallets allow the user to optionally include a transaction fee in order to speed up the transaction itself. By speeding up, a transaction including a small fee will be prioritized to be included in the next network block, whereas transactions without fees have a lower priority. Certain exceptions to including a transaction fee don't affect the transaction speed. In the Bitcoin Core client, if your transaction is smaller than 1,000 bytes in size, has only outputs of 0.01 BTC or higher, and has a high enough priority, a transaction fee is not required. All of these conditions have to be met in order for this exception to be applicable. If these conditions are not met, a standard transaction fee of 0.0001 BTC per thousand bytes will be added. Bitcoin Core client users will notice whenever a transaction fee is included, as the client will prompt the user to either accept or reject the fee associated with the transaction. Rejecting that fee lowers the prioritization and affects the speed at which network confirmations are applied, though. Most bitcoin transactions are around 500–600 bytes in size, and depending on the output, may or may not be subject to a 0.0001 BTC transaction fee. Including a transaction in a network block is completely random, but is affected by the transaction fee (if required). Every block leaves 50,000 bytes of room for high-priority transactions — regardless of transaction (TX) fee — to be included (roughly 100 transactions per block). After that, transactions subject to the fee of 0.00001 BTC/kilobyte are added to the block, with the highest fee-per-kilobyte transactions being included first. This process is repeated until the block size reaches a size of 750,000 bytes.

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How Bitcoin Transactions Work

Article / Updated 08-29-2016

At its simplest, a bitcoin transaction works by you giving someone else a designated amount of the BTC you own. In order for a bitcoin transaction to be deemed "valid," there has to be at least one input, although multiple inputs are possible as well. An input is a reference to an output from a previous transaction. Note that every input associated with a bitcoin transaction has to be an unspent output of a previous transaction. Furthermore, every input in a bitcoin transaction must be digitally signed, which occurs through the private key associated with the bitcoin address initiating the transfer of BTC. If multiple inputs are associated with one bitcoin transaction, this means that the amount being sent is coming from multiple bitcoin wallet addresses. Any bitcoin user can generate an almost infinite amount of wallet addresses, each of which can hold any amount of BTC. Here's an example: If you send 2 BTC to lucky old "Joe" again, 1 BTC comes from wallet address #2, 0.33 BTC comes from wallet address #7, and the remainder comes from wallet address #8. In this example, wallet addresses #1, #3, #4, #5, and #6 have no actual bitcoin balance and can therefore not be used as an input because there is no unspent output associated with these addresses. However, a bitcoin transaction can have not just multiple inputs, but multiple outputs as well. As you might expect, multiple outputs indicate a bitcoin transaction has been sent out to be split over multiple addresses. For example: Your 5 BTC balance will be sent to the now BTC-wealthy Joe (2 BTC) and Marie (1 BTC), and the remaining 2 BTC is sent to a different bitcoin wallet under your control. On the blockchain, this one transaction will have three different outputs, one going to Joe, one to Marie, and the third to your other bitcoin wallet address. Sending a bitcoin payment can be denominated in a multitude of satoshi, the smallest increment of bitcoin transactions (8 decimal points after the period). Because bitcoin is so divisible compared to traditional fiat currency, the value of 1 satoshi can vary greatly. Whereas 1 satoshi is worth next to nothing today, it could be worth a handful of cents — or even dollars — in the future, as bitcoin adoption becomes a mainstream trend. Bitcoin and cash payments are not so different in terms of transactions. The amount of bitcoin associated with all of the transaction inputs combined can be greater than the amount of money being spent, which creates "change." With traditional fiat currency, change is issued to the customer in either bills or coins. With bitcoin, change is issued in the form of digital ownership of BTC associated with your wallet address. Should the amount of inputs be greater than the amount associated with the transaction outputs, an additional output to the originating address will be created for the "change" amount. There are several ways to send a bitcoin transaction to another bitcoin user. First of all, you can ask the recipient's bitcoin address and send the money through the bitcoin software on your computer or mobile device. For mobile users, there is an easier alternative in the form of scanning a QR code, generated by the recipient. Every type of bitcoin software allows users to create QR codes, which can include the wallet address to send funds to, as well as the total amount to be paid. An example: Your bitcoin wallet address has received a total of 5 bitcoin over the course of a certain period of time, and you are sending 2 BTC to Joe. The bitcoin transaction will have one input (the unspent outputs of the bitcoin transaction through which you received those 5 BTC) and create two different outputs when you send money to Joe. The first output will be the transaction to Joe, for the full amount of 2 BTC. The second output will be the "change" transaction, which "returns" the unspent 3 BTC to your wallet address.

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How to Secure Your Bitcoin Wallets

Article / Updated 08-29-2016

In the same way that you wouldn't walk around with your real wallet hanging out of your back pocket, or keep your bank card PIN number on a piece of paper inside that wallet, you need to be security conscious about your bitcoin wallet, too. Secure mobile bitcoin wallets A mobile bitcoin wallet is convenient to use, because it can be installed on either a tablet or smartphone. Either of these devices is more often than not in close proximity to everyday consumers and doesn't require users to take additional items with them wherever they go. Similar to how a desktop bitcoin wallet works, having access to an Internet connection — either through mobile data or WiFi — is a great plus when it comes to sending and receiving transactions. However, this is not a must, as most bitcoin wallets allow users to send and receive funds through NFC or Bluetooth Low Energy connection. In return, this makes mobile wallets more versatile compared to their computer counterparts, which is also part of the reason why bitcoin has received a lot of appreciation from its users. In terms of security, the story with mobile bitcoin wallets is not all that different from a piece of software installed on your computer. The private key — which allows you to spend bitcoins from your wallet — is stored on your mobile device itself. As a security measure, this reduces the risk of the private key falling into the wrong hands. However, there is a potential risk in doing so as well. Given the current rate at which technology — and consumer behavior — evolves, smartphones and tablets are being replaced at a rapid pace. Considering that your private key is stored on that mobile device, it is important to make a backup as soon as you install the mobile bitcoin wallet of your choice. Depending on which type of mobile wallet you're using, a backup feature is included in the software itself. A copy of your backup can then be exported to cloud services such as Dropbox or Google Drive, or even sent to yourself via e-mail. Any application you have installed on your mobile device with backup capabilities should be available to use. Authentication is an important security measure to prevent funds being stolen or misused by someone who "borrows" your phone. Most mobile wallets enable a PIN code system, forcing users to enter a four- to six-digit code before accessing the wallet itself. Failure to provide the correct PIN code within a certain amount of attempts will automatically lock down the wallet. The bitcoin wallet owner will be notified either via SMS or e-mail with instructions on how to unlock the mobile wallet again. All in all, mobile bitcoin wallets can provide the best solutions when balancing the needs of security and convenience, but it all depends on the individual user in the end. If users are careless with their device, or forget to back up their private key, there is no option to restore access to their mobile bitcoin wallet. Bitcoin allows users to take full control — and full responsibility — at every step, which includes responsibilities such as backing up their mobile wallet. Secure online bitcoin wallets — or not You could easily draw a parallel between online bitcoin wallet providers and financial institutions such as banks. Both services handle your personal funds, and you can check the balance, as well as send and receive funds at any time. But you are trusting a bank to keep your funds safe, and that's not what bitcoin is about. Ever since bitcoin's inception, trust has played an integral role in the development of this ideology. Satoshi Nakamoto envisioned that the future development of bitcoin would eventually lead to a "trustless" society, where all interactions were done between people directly, without using any third-party service. An online bitcoin wallet service is very convenient, but it's also a tremendous security risk. Being able to store bitcoins online and accessing them from the browser at any time sounds like an advantage, but in doing so, the user is relying on the online wallet provider to be honest at all times. Online wallet providers are third-party services, as they will control your funds for you. Additionally, the biggest security risk is that, even though you know your online wallet address, you don't have access to your private key. In the event of the online wallet service shutting down or being hacked, you would have no control over the funds being stored in your wallet. On top of that, you are responsible for protecting your personal mobile wallet service account. Most online bitcoin wallet platforms provide options such as two-factor authentication. And although that additional layer of security protects the user from harm — in most cases, as no system is truly perfect — it will not prevent your funds from being stolen if the online wallet service itself is hacked. If you already have the mindset of wanting to control your own funds at any given time, there's no reason why you should even consider using an online bitcoin wallet. As convenient as these services may be, there are risks to your funds, because you are not in control of your funds at any given time. Online bitcoin wallets are not what Satoshi Nakamoto envisioned when he created bitcoin. Secure paper bitcoin wallets A bitcoin paper wallet can be best described as a document containing all the data necessary to generate private keys, effectively forming a "wallet of private keys." But that is not its only purpose, because a paper wallet can also be used to store bitcoins safely and securely, in which case the paper itself also includes public keys and redeemable codes. The main purpose of a redeemable code is to use it as a means of funding and "redeeming" funds associated with a certain bitcoin wallet address. However, it is important to note that paper wallets should only be used once, because a paper wallet is not a bitcoin wallet intended for daily use. Paper wallets can serve many purposes. A bitcoin paper wallet makes for a great gift when introducing friends, family, and loved ones to bitcoin. Or you can give someone a paper wallet as a tip, to show your appreciation for something the other person has done. Redeeming a paper wallet as a gift or tip requires recipients to have a bitcoin wallet installed on their computer or mobile device, through which they can import the private key associated with that address. Regardless of how you look at it, paper wallets are a very secure way of storing bitcoin. A paper wallet is not connected to the Internet, can't be hacked, and is not a third party you rely on. However, it is a paper wallet, making it subject to theft, fire or water damage, getting lost, or being redeemed by someone else. Storing a paper wallet inside a vault or safe deposit box is a good way of securing your funds, but it's not too practical for most users.

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Bitcoin Addresses

Article / Updated 08-29-2016

Similar to the way e-mail addresses work, a bitcoin address can be used to both send and receive data — or in this case, bitcoins. That said, there is one major distinction to be made between bitcoin addresses and e-mail addresses. People can have multiple bitcoin addresses they can use to send and receive transactions. In fact, it is advisable to use a brand new bitcoin address for every transaction, which may or may not be manageable for individual users depending on how many transactions they intend to process on a daily basis. Contrary to popular belief, the generation of a new bitcoin address does not require an active Internet connection. A bitcoin address is an identifier representing a possible destination — or origin — for a bitcoin transaction. Every bitcoin address is between 26 and 35 alphanumeric characters in length and can start with a 1 or a 3. Creating new or additional bitcoin addresses can be done free of charge through the installed bitcoin software, or you can obtain a bitcoin wallet address from an exchange or online wallet provider. One important aspect of a bitcoin address to keep in mind is that every address is case sensitive and exact. A bitcoin address like the following has both uppercase and lowercase letters in its string of characters: 1L5wSMgerhHg8GZGcsNmAx5EXMRXSKR3He Changing an uppercase letter to a lowercase letter or vice versa would result in an invalid recipient address, and the funds would not be transferred. There is always an off chance of an invalid address being accepted as a recipient, but that only occurs once every 4.29 billion transactions. Use a different bitcoin address for every transaction. Keep in mind that there is — technically — nothing wrong with using the same address over and over again, but using a new address for every transaction creates an additional layer of privacy protection. Every bitcoin address is a specific invoice for a payment. Once a payment has been received to your bitcoin address, there is no reason for the sender to retain that data. However, in the event of a wallet address being lost or compromised, any future payments to this same address would be sent to a "black hole," and be forever lost to the original address owner. This is the main reason why it is advised to use a brand new bitcoin address for every transaction — in order to avoid potential loss.

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Bitcoin Web Wallets

Article / Updated 08-29-2016

Some companies offer bitcoin wallet services. They effectively act as a middleman to hold your bitcoins and allow you to spend and deposit as you want, taking responsibility for the administration and security of your account. It also means that the company will ask you for personal information, thus making this a non-anonymous environment. If you intend to use a third-party bitcoin wallet, ensure you can trust the company behind the service. In the past, there have been several companies that held bitcoins for people, but have rapidly disappeared, been hacked, or gone bust. For example, in February 2014, the major bitcoin exchange Mt. Gox ceased operating and closed suddenly, with lots of people losing their bitcoins that had been stored with them. So choose with care. In general, exchanges or other third-party companies that hold funds on your behalf should be treated with caution. The country where that company is registered will have its own requirements as to how well regulated that company must be. Because regulations of bitcoin as a financial service or product are still being developed in many areas of the world, you should choose a country with a strong background in regulating financial services, such as the United States, United Kingdom, or the Isle of Man. While regulations are developed, take extreme care when storing funds on a third-party exchange or similar company — and don't store any more than you need or more than you can afford to lose should the worst come to pass. Various types of third-party solutions are available as web wallets. Here are some examples: Bitcoin exchanges: Some like to hold their coins or a portion of their coins on exchanges to allow them to take advantage of being easily accessible to trade their coins for either fiat currencies like USD, GBP, or EUR, or for alternative crypto-currencies. Although this may be convenient, it is not recommended. Dedicated wallet service: There are dedicated bitcoin wallet service websites with no exchange connection. Mobile wallets: As with all the majority of software released today, companies are offering web solutions for multiple mobile devices.

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