Sunday, October 05, 2014

Bitcoin Newbie Series: How to Get and Spend Bitcoin

We aren't used to authority being a peer-to-peer responsibility as opposed to something imposed by a centralized institution. Authority floating freely has already happened in information - when information became decentralized with blogging and the restructuring of the media industry, and in entertainment, where individuals became their own taste-makers. In these cases individuals must examine content and think for themselves about its quality and validity. The bitcoin revolution is the same thing happening now with currency, economics, finance, and monetary policy. It might seem harder to let go of centralized authority in matters of government and economics as opposed to culture and information but we will mature into it (The number one 'still-not-getting-it' question with bitcoin - "But who is running it all?"). Ultimately we could have as many currencies as twitter handles and blogs, all of which may be fully useful and accepted in their own hyperlocal contexts. Blockchain technology is push (user pushes relevant information for this transaction only) not pull (credit card/bank info on file to be pulled anytime authorized). Financial intermediaries operating on blockchain technology (i.e.; Overstock) would not have information stores to have to protect that are inevitably hacked (i.e.; Target, Chase, etc.).

The word bitcoin is confusing because it means three different things. Bitcoin is used to refer to 1) the underlying technology concept (more appropriately called the blockchain, a decentralized ledger that allows individuals to engage in transactions without having to rely on a trusted third-party intermediary), 2) the technology protocol for the implementation of blockchain technology (individuals engaging in peer-to-peer currency transactions via encrypted electronic wallets with miners recording these transactions in the blockchain ledger), and 3) the actual currency itself. It is as if when Paypal launched, they would have called the Internet Paypal, upon which the Paypal protocol was run to transfer funds, and the currency of these funds was Paypal. More precisely, these 3 uses of bitcoin should be delineated as:
  1. The underlying blockchain technology (an information technology akin as a ‘class of thing’ to the Internet) 
  2. The Bitcoin protocol that runs on the blockchain for the tracking and transfer of cryptocurrency funds
  3. The Bitcoin currency (denoted as btc)

The blockchain is a record of where all the btc are, all the addresses they are associated with now, and this history over all time. It is continually updated, every 10 minutes, a new block (a new page is placed in the record book) with all the latest transactions.

Bitcoin is a digital currency. This means that you do not have physical custody of your btc, they are not in your physical possession, they are not on your computer or mobile wallet; they live on the Internet and are associated with addresses (like an email address but too complicated to store in mind). Per your address and encryption key (stored in the digital wallet on your mobile phone or computer), you have the authority to move your btc around and transact them. 'Stolen bitcoin' is a matter of having insecure storage and sharing of passwords and private keys.

How to get Bitcoin? (after step 1, get yourself a digital wallet mobile app like BlockchainInfo or Mycelium
  • (Easiest) Receive bitcoin as a gift or payment from someone else
  • Buy bitcoin locally through bitcoin meetups or Satoshi Square trading events
  • Exchange USD or other traditional currency for bitcoin without giving out your personal identifying information: Circle 
  • Exchange USD for bitcoin where you do specify your personal details at one of the exchanges/markets like Coinbase 
  • Buy bitcoin locally from an individual via LocalBitcoins or (coming) OpenBazaar 
  • Gift yourself bitcoin with giftcards: use Gyft,, Brawker, or Amazon giftcards 

Where to spend Bitcoin?
What is the Bitcoin Exchange Rate? 

How to accept Bitcoin if you are a merchant (save on merchant processing fees, welcome bitcoin customers):
Intro Presentation: Beginner Bitcoin Workshop
Advanced Presentation: Blockchain: The Information Technology of the Future

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