Getting Started
Downloading your first wallet.
Starting simply and improving is better than than not starting at all.
So you’ve heard about Bitcoin, and you want to get involved. What’s the best way to get started?
Allow me…
Bitcoin Core
The best way to truly get started with Bitcoin is to download Bitcoin Core.
When you run the program, it will connect to other people running the same program, creating a network of computers that communicate with each other.
The first time you run Bitcoin Core, you will start downloading a file from the other nodes on the network. This file is called the blockchain, and it is one big file of transactions.
Once you have downloaded and verified the full blockchain (currently 0.00 GB), you can start making your own transactions, which propagate the network and are written to the blockchain on everyone’s computer.
And that’s the basics of Bitcoin.
Bitcoin Wallets
The requirement of running Bitcoin Core is that you need to download and store the full blockchain. This is a good thing, because it creates an extra copy of the blockchain, and you’re helping to relay transactions to other computers too.
However, not everyone has the hard drive space to store their own copy of the blockchain.
So instead of running Bitcoin Core, you can use something called a bitcoin “wallet” instead. Wallets allow you to send and receive bitcoins, but without needing your own copy of the blockchain.
If you’d prefer not to run a full node, a bitcoin wallet is the easiest way to get started with bitcoin.
What’s the downside of using a wallet instead of Bitcoin Core?
- Bitcoin Core - You have a copy of every transaction ever made. Therefore you can verify every transaction you receive and view them on your own computer, without the need to trust anyone else.
- Wallet - The wallet needs to connect to a node to get transaction information. You are therefore trusting the wallet to connect to an honest node to get correct transaction details.
Using a wallet is the most convenient way to use bitcoin (it’s the way I use it), but running a full node is the way to use bitcoin without having to trust anyone (which I also like to do).
The choice is yours.
Which bitcoin wallet should I use?
Bitcoin is an open-source program, so anyone can create their own wallet. Here are the ones that I would recommend to get started with:
But as I say, anyone can create a bitcoin wallet, so make sure the one you use is reliable (and not just the best looking).
Tip: If you don’t know or trust the people who made the wallet, you can’t trust that your bitcoins will be kept safe.
What does a wallet do?
When you first start using a bitcoin wallet it will give you a seed. This seed is a randomly generated list of 12-24 words that nobody else in the world has ever seen.
Your seed is unique, and it is used to create every address in your wallet.
- An address is what you give to people so that you can receive bitcoins.
- Each address has it’s own private key, which is used when you send your bitcoins to someone else.
So in short, a bitcoin wallet manages your keys and addresses so that you can send and receive bitcoins.
Tip: If you lose your wallet, you can recover all your keys (and all your bitcoins) with just your seed.
Warning: Keep your seed secure, and do not show it to anyone. If someone gets your seed they can access your bitcoins.
How does bitcoin work?
Bitcoin is a network of computers, and they all work together to share a file called the blockchain.
You can think of the blockchain as being a giant room of safety deposit boxes, where each of these boxes contains an amount of bitcoins and a lock on it.
When you make a transaction, your wallet selects a box of bitcoins from the blockchain that belongs to you, and creates a new box of bitcoins for the person you want to send bitcoins to.
Your wallet puts the other person’s address inside the lock on the new box, and uses the necessary private key to unlock the box of bitcoins that is currently locked to your address.
In other words, you’re unlocking your safety deposit box, and creating a new safety deposit box for someone else.
Anyway, this transaction (which is just a bunch of data) is sent in to one of the computers on the network, where it gets relayed from computer to computer until everyone on the network has a copy of your transaction.
Eventually this transaction will make its way in to everyone’s blockchains.
This happens because one of the nodes on the network collects the latest transactions they’ve received in to a block, and then mines this block on to the blockchain (which takes energy). They then share this mined block with the other nodes on the network, and they add it to their blockchain too.
So at regular intervals, every node on the network will update their blockchain with the latest transactions that have been sent in to the network. This process repeats over and over again, so the blockchain is constantly growing with new transactions.
Anyway, once a transaction makes it in to the blockchain, it cannot be removed1, which means the transaction is complete, and the bitcoins have changed hands.
And that’s how bitcoin works.
Conclusion.
If you’re curious about Bitcoin as a program and want to support the network, then download and run Bitcoin Core.
On the other hand, if you’re not concerned with the efforts of running a full node and just want to send and receive bitcoins, then just get yourself a wallet.
Personally I run a node on my home computer (because I like learning about Bitcoin and want to support the network), but I use a wallet for my day-to-day sending and receiving of bitcoin. I would recommend downloading a wallet to get started, then move on to running a node if you decide you want to learn more.
Note: This website is dedicated to interacting with a Bitcoin Core node and understanding how it works, but for simplicity the rest of this “getting started” guide will just focus on using a wallet.
Either way, the best way to get started with Bitcoin is to actually use it, and to do that you’re going to need to get your first bitcoins…
(You’ll figure the rest out as you go.)
Links
- https://bitcoin-intro.com/ - Another solid introduction to using bitcoin. Also the source of the quote at the top of this page.
A transaction can be removed from the blockchain, but it’s not easy. See 51% Attack.↩︎