Bitcoin Paper Wallet is the Key Tool for Investors

A paper wallet is one of bitcoiner’s best security practices. In this article we will provide a brief overview about its main advantages and important points to care about before starting to invest in the crypto currency.

> What is a Paper Wallet? The Basics

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Bitcoin paper wallet generated at bitaddress.org

Also referred as Cold Storage, a paper wallet is a way to store bitcoins as a physical offline document that can be handled as any other real-world materialized currency or value. The main purpose of the paper wallet it to take your private key out of any online record by printing it onto paper.

Once done, bitcoins on a live wallet (web based or software client) can be sent to the public address printed on your paper wallet document for safekeeping.

> Paper Wallet Advantages

As of its advantages, bitcoin paper wallets offer:

(1) A high level of protection against software that might be compromising your computer, like malwares and keyloggers, and of course, against hackers!

(2) The security of possessing your bitcoins on paper, as we are used to deal with cash, although it means that mobility might be an issue at certain point and you need to take other kind of previsions to keep the document in shape.

(3) No dependence on a third party wallet service provider.

(4) Risk reduced by not having to rely only on the security standards applied by a website.

> Points to Care About with Paper Wallets

– Make sure you create a strong and complex enough passphrase when creating your brain wallet on websites like bitaddress.org

– Be aware that the paper contains all the data needed to check your bitcoin balance and import it or spend it, so choose the right place to store it. Also protect it from humidity and other things that could damage it. Losing a single character of any of your 2 keys could become a big issue to recover your assets.

– Before transferring your bitcoins to your paper wallet, make sure you verify it by checking it on alternative sites to bitaddress.org. If the same info comes up, it means everything is ok. Check it on at least 3 more sites.

Hope you found this helpful. On the next article about wallets we will go deeper into how to generate safe paper wallets.

Maximiliano Garcia
Cryptor Trust Inc.

Learn How Bitcoin Transactions Work

Bitcoin transfers are one of the main concerns for those taking their first steps at the crypto-currency ecosystem.

For sure you already know how the usual electronic transfer operates. There are two parties and a middle man. The two parties want to electronically move money from one side to the other. To do so they need a middle man that provides the service, call it bank, Paypal, Western Union, etc. who will almost always take a pretty relevant percentage of the money being sent.

> So, What is Different with Bitcoin Transfers?

money-transfer-stock-board

In the first place, the middle man is now out of the equation. Transfers are made from peer to peer (P2P) using bitcoin wallets. This is digitally signed for security reasons.

> The Transaction Structure Involves 3 Pieces of Information

Those are: Input > Amount > Output

Supposing that John wants to send bitcoins to Mark, the first piece of information is the “Input”, which specifies the address from where John received bitcoins in the first place (from Peter’s address). The second piece of information is the “Amount” that John want to send to Mark, and the third is the “Output”, which will be Mark’s wallet address.

The transfer is distributed through the network and registered in a vast general ledger (public record) called block chain that validates all transactions. This means that everyone can know about transactions being made and trace its history to the point of its inception.

> Sending Bitcoins is Fairly Simple

To send bitcoin, both the address (public key) and the private key assigned to your bitcoin wallet are needed.

At the time John (from the example above) wants to send bitcoins to Mark, the private key is what he will use to sign the message that includes the input, amount and output (Mark’s address).

After the bitcoin is sent from John’s wallet into the BTC network, miners will verify the transaction, put it on a transaction block and solve it. This verification process made by miners usually take up to 10 minutes or less. The bitcoin protocol is set on that time frame to mine each block. You should wait until the process is fully confirmed, but usually some merchants will trust on you assuming that you will not try to spend the same bitcoins before the process is completed.

> Bitcoin Transactions May Involve Fees

Bitcoiners will not always have to pay transaction fees, but that doesn’t mean you shouldn’t. Wallets usually let you manually set the transaction fees. Miners usually process transactions for free as they are rewarded by the block (with bitcoin), but we might see miners starting to raise some low fees in the future, as the block reward decrease.

Sometimes there are portions of transactions that the recipient doesn’t pick up or is considered as change. This is usually considered a fee or a tip for the miner’s good job!

If you have any doubts about how bitcoin transactions work, please let us know by leaving us a comment in the comments section below.

Maximiliano Garcia
Cryptor Trust Inc.

Get Familiar with Bitcoin Wallets

Bitcoin wallets are the key tool to start using the digital currency. Read this straight forward overview about (1) types of wallets, (2) best wallet services and (3) basic tips to better manage your wallet.

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Equipment for money transfer. Caricature by O. Schmerling in 1906.

> First of all, What is a Bitcoin Wallet?

A bitcoin wallet it’s like your physical wallet or your bank account (without all the paper work) but for the BTC network. It allows you to store, manage and control your transactions. Once created, the wallet generates two keys, one public, and one private. The public key or “address” is used to receive payments (or donations), and send payments. The private key (composed of fifty-one alphanumeric characters, starting with “5”)  guarantees that you have the right to use the bitcoins in that wallet. Important: never reveal this piece of data!

> Types of Bitcoin Wallets

There are two types: software and web wallets. Software wallets can be installed on your own computer or mobile device, providing you with a certain level of autonomy since you are the only responsible of keeping it safe. On the other hand, web wallets are hosted by a third party company. In this case you need to trust that they are doing their homework at keeping high security standards to protect users’ assets.

You can check Coinbase, Blockchain, Armory, Bitcoin-Qt and Electrum as good options in the market.

The tools mentioned above are supposed to provide a high level of security, which is recommended for investors adopting the usage of the digital currency. Learn how bitcoin transactions work (internal link) here!

> Recommendations for New Bitcoiners

Creating your first wallet is fairly easy and fast. Here are some key points that you should consider upfront:

1- Choose a password that contains letters, numbers, and symbols (#, %, $, @) to make it as strong as possible.

2- Don’t keep your private key and password data saved on any document on your computer, email client or web based third party apps you may use.

3- Web wallets are more vulnerable to attacks. We recommend a software wallet.

4- Create more than one address to manage your transactions and have specific purposes for each, say “Investments”, “Shopping”, “Savings”.

5- Learn more about how to generate a paper wallet to better protect your assets.

Maximiliano Garcia
Cryptor Trust Inc.

What is Bitcoin ?

The Khan Academy’s video “What is Bitcoin”  is the second video we recommend if you want to learn more about the basics of this crypto currency.

More on the basics of bitcoin by Zulfikar Ramzan.

Zulfikar Ramzan is a world leading expert in computer security and cryptography and is currently the Chief Scientist at Sourcefire. He received his Ph.D. in computer science from MIT.

Geir Solem
Cryptor Trust Inc.

Bitcoin Overview

The Khan Academy’s video “Overview of Bitcoin” is a good place to start if you want a quick introduction to this crypto currency.

An introduction to the mechanics of bitcoin and an overview of how transactions take place by Zulfikar Ramzan.

Zulfikar Ramzan is a world leading expert in computer security and cryptography and is currently the Chief Scientist at Sourcefire. He received his Ph.D. in computer science from MIT.

Geir Solem
Cryptor Trust Inc.

Shaping Crypto Evolution

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