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General Questions
What is Bitcoin?
Bitcoin is a peer-to-peer digital currency. Peer-to-peer (P2P) means that there is no central authority to issue new
money or keep track of transactions. Instead, these tasks are managed collectively by the nodes of the network.
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FAQ | Bitcoin http://www.bitcoin.org/faq
For details, see the technical paper: Bitcoin: A Peer-to-Peer Electronic Cash System (/sites/default/files/bitcoin.pdf) .
Where does the value of Bitcoin stem from? What backs up Bitcoin?
Bitcoins have value if they are accepted as payment by many.
When we say that a currency is backed up by gold, we mean that there's a promise in place that you can exchange the
currency for gold. In a sense, you could say that Bitcoin is "backed up" by the price tags of merchants – a price tag is a
promise to exchange goods for a specified amount of currency.
It's a common misconception that Bitcoins gain their value from the cost of electricity required to generate them. Cost
doesn't equal value – hiring 1,000 men to shovel a big hole in the ground may be costly, but not valuable. Also, even
though scarcity is a critical requirement for a useful currency, it alone doesn't make anything valuable. For example,
your fingerprints are scarce, but that doesn't mean they have any exchange value.
As of October 30th 2009, there are about 26,000 blocks in the block chain, which means 26,000 * 50 bc = 1,300,000
bitcoins in existence. You can see the up-to-date number of blocks in the status bar of the Bitcoin main window.
What is a "block"?
A block is a unit which contains the information of the transactions made after the previous block, plus a transaction
which assigns a new coin to the creator of the block. Blocks form a chain from the first block to the latest block. To
create a new block you need to spend CPU time, which acts as an unbribable timestamp for the previous transactions.
The average rate of block creation in the whole system is 6 / hour. For details, see the technical paper: Bitcoin: A
Peer-to-Peer Electronic Cash System (/sites/default/files/bitcoin.pdf) .
The block chain length is shown in the status bar of the Bitcoin main window. The number increases rapidly while your
Bitcoin client is downloading the block chain from other nodes. After the downloading is finished, your node can start
generating new blocks.
At the moment, though, you can generate new coins quite profitably, if you expect them to have real value in the
future. If you choose to, be aware that Bitcoin is still experimental software.
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FAQ | Bitcoin http://www.bitcoin.org/faq
If you lose your wallet or if some unknown attacker gets it and manages to break your password, there’s no way to
get your coins back. On the other hand, that is usually also the case if you lose your physical wallet.
Using Bitcoin
How do I make a transaction?
When you want to send coins, click the ''Send Coins'' button up in the main window. You can send coins to the
recipient's IP address if he's running the Bitcoin client, or to his Bitcoin address even if he's not online or doesn't want
to reveal his IP. A comment can be included when sending to an IP.
If you're receiving a valuable amount of coins from a sender whom you can't be sure to trust, before accepting the
transaction you may want to wait until it's verified by a few blocks. The more blocks you wait, the closer to zero is the
sender's chance to successfully double-spend the coins sent to you. The amount of blocks after the transaction is shown
in the ''Status'' column of the transaction list in the main window.
Your average coin creation rate will be (6 * 50 coins / hour) * (your CPU speed / the total CPU speed in the Bitcoin
network). At the moment (December 2010) it would take a year on average to generate 50 coins with a typical PC.
You can get an estimation of your block generation rate here (http://www.alloscomp.com/bitcoin/calculator.php) .
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FAQ | Bitcoin http://www.bitcoin.org/faq
to forward the port correctly. Select your router from the list and see its Default Guide.
Windows XP:
C:\Documents and Settings\username\Application Data\Bitcoin
Windows Vista:
C:\Users\username\AppData\Roaming\Bitcoin
Linux:
~/.bitcoin
You need to make a backup of the wallet after every transaction, as the old backup file will be partially or fully invalid.
Wait at least a few seconds after your last transaction before making the backup.
If you want to encrypt your backup, you can use some program like TrueCrypt (http://www.truecrypt.org/) . An in-built tool
for encrypting your wallet will be included in Bitcoin later on.
Advanced Questions
How do I use Bitcoin on the server-side?
Run bitcoin with switch -server or use the Bitcoin daemon (bitcoind) supplied with the download package. Bitcoin has
an API that can be used via command line or JSON-RPC. The API documentation can be found in the wiki
(http://www.bitcoin.org/wiki/doku.php?id=api) .
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