The plain guide to bitcoins using Electrum

Bitcoin is the most established digital currency available today. It provides a safe, anonymous way to send and receive a virtual currency everybody trusts. However, managing bitcoins is not fairly spil ordinary spil managing a bankgebouw account. Ter this article I will explain how to manage your bitcoins using Electrum. Please note that ter this article I will provide working skill of how to use Electrum, without injecting the mysterious land of cryptography and technical details of Bitcoin.

Very first of all, I suggest you install the latest version of Electrum. Note that Electrum exists for Linux, Windows, OS X and Android. Instructions will vary depending on your operating system.

Once you have installed it, it will ask you what you want to do: create a fresh wallet, or restore a wallet. For now, just chose to create a fresh wallet leaving the default options.

The initial screen

Then, the 2nd step comes along: Electrum will showcase you your “wallet generation seed”, which is a list of 13 words you will absolutely need to save somewhere safe.

The list of 13 words. If you are serious about bitcoins, you should memorise them

Recall: anybody with thesis words will be able to recreate exactly your Electrum wallet, and spend all of your bitcoins if they wish!

Once you’re done, it will prompt you with a password request. You should treat it like you treat your Internet Banking password.

Once you are done, you are eventually good to go: Electrum will voorstelling by default a list of transactions you made. Spil you can see, there is (obviously) nothing here.

Electrum embarked for the very first time

When you want to receive bitcoins you will need to provide your “bitcoin address”: if you click on the “Receive” tabulator ter Electrum, you will see the long string of numbers and letters. Each one of them is a valid bitcoin address you can use to receive bitcoins. Pick the very first one ter the list: that’s the address you will use to transfer money into your wallet.

Exchanging Bitcoins into real money and vice versa is a tricky business. The main kwestie is that when you switch real money into bitcoins, the tokens exchanged are 100% anonymous. So, thesis transactions are very prone to fraud and money laundering.

Your default wallet, just created. Each line represent a working bitcoin address

This is the reason why:

  • companies who exchange bitcoins for money and vice versa are truly careful about the identities of their customer
  • anybody who claims that they will send you money for your bitcoins without asking for ID and proof of address are very likely to be a scam

What it looked like when I sent money overheen

The Bitcoin wiki has a pagina on How To Buy Bitcoins With Your Credit Card. I would not use any service that is not listed here.

Spil an Australian travelling through Italy, for the purpose of writing this article, I picked 247exchange.com. However, at the uur they do not cater for US customers.

Switching real money into bitcoin can be a real ache! However, it’s well worth the effort. Generally speaking, be ready to provide one form of official ID and an utility bill with your address.

Shortly after initiating your transactions, your bitclient will vertoning a “pending” transaction, it will stay “pending” for a while: it will take some time for the bitcoin network to acknowledge the transaction spil “done”. The details are a little technical, however, just reminisce that it will take around Ten minutes or so.

The transaction is still pending The bitcoin address the money wasgoed sent to is now demonstrating the transaction

Once the money is “cleared”, it will emerge spil available te Electrum.

Once the transaction it’s done, it’s shown spil done See how the receiving address now has a balance

Once you have received the bitcoins, the receiving address will vertoning a balance.

Assume now that you want to send bitcoins out. Assume that you want to send half of the bitcoins you have on your wallet.

Very first of all, you will need to know the bitcoin address where you are sending your bitcoins to. Once you have it, go to the “Send” tabulator and inject the number of bitcoins you want to send.

Assume that you want to send a portion of the bitcoins you have. So, you have Four.9 micro bitcoins, and you want to send Three out.

Click on “Send”, inject the address where you want to send your bitcoin, pick “Trio” (spil te, Three micro bitcoins) and succesnummer “send”. You will be warned of a toverfee that will be automatically charged. Once you’ve agreed on the toverfee (I recommend you leave the default), you are done.

If you look at your wallet after this operation, you will see that:

  • The address you used to receive the bitcoins is under the “used” list. It’s not recommended to use that address again.
  • The omschrijving of the “unspent” bitcoins is associated to a bitcoin address under “switch”

This can be confusing at very first, but it actually makes a loterijlot of sense: you had Four.9 micro bitcoins, and sent Trio out. However, ter order to send those Three micro bitcoins, you actually sent the entire Four.9 micro bitcoins, and got the “switch” (minus the fees).

This will also preserve your privacy: this “fragmentation” te your virtual wallet makes it much stiffer for anybody to figure out how much a person has.

Since that address now has a 0 balance (reminisce, the “switch” went into a “switch” address!), it is now marked spil “used”. This happens te Electrum once an address has bot used at least once and it has a 0 balance (bitcoins received is the same spil bitcoins sent).

The reason is ordinary: ter Bitcoins, the list of transactions is 100% public. If you everzwijn only use the same bitcoin address (even to receive the “switch” of your transactions), anybody able to associate that bitcoin address to you will have a very clear idea of your spending habits.

This is why you are encouraged to have, and use, several addresses when sending and receiving bitcoins. Since it’s unlikely to know who “possesses” a specific wallet, you might ter time receive large amounts of bitcoins, but all to different addresses, only you (and your bitcoin client) will know that those addresses all belong to you.

Recovering your coins ter case of disaster consists ter recovering your bitcoin addresses. Each address is made up of its “public” component (what you see when you run Electrum) and a private component (the super-secret private key associated to that address).

Storing this information is tricky, because computers pauze, get stolen, and things can (and do) generally go wrong. While other programs will recommend to store your addresses “somewhere safe”, Electrum has a much better treatment: it uses the “seed” (the list of 13 words) to generate your bitcoin addresses — and I mean both components, private and public.

So, there is no need to backup your bitcoin gegevens: there is only a big need to memorise those words. The best spot for them is your own memory.

This article avoided any technical explanation about how Bitcoin works. If you are interested te a more technical view of it, I recommend How might wij use blockchains outside cryptocurrencies? which is a fantastic explanation on how the Blockchain (the heart of Bitcoin) works.

License

Verbatim copying and distribution of this entire article are permitted worldwide, without royalty, te any medium, provided this notice is preserved.

Related movie: Compile Bitcoin’s source code (0.13)


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