Blockchain

Appendix A. Cryptocurrency Basics

Bitcoin and other altcoins are digital cash, a way of buying and selling things over the Internet. The first step is establishing a digital wallet, either via a browser-based web wallet or by downloading a desktop or smartphone wallet from Blockchain.info, Mycelium, Coinbase, Electrum, or other Bitcoin wallet providers. Your Bitcoin address as well as your public and private keys are generated automatically when you set up your wallet. Your Bitcoin address is typically an identifier of 26 to 34 alphanumeric characters, beginning with the number 1 or 3, that represents a possible destination for a Bitcoin payment—for example, 1JDQ5KSqUTBo5M3GUPx8vm9134eJRosLoH, represented like this string of characters or as a QR code. (This example Bitcoin address is the tip jar of an informative podcast covering blockchain technology called Let’s Talk Bitcoin.) Your Bitcoin address is like your email address; people with your email address can send you email; people with your public-key wallet address can send you Bitcoins.

Because Bitcoin is digital cash, your wallet does not contain the actual cash (thus the term wallet is a bit of a misnomer). Your wallet has your address, public and private keys, and a record of the amount of Bitcoin you control on the blockchain ledger, but not any actual cash. Your wallet should be kept as safe as any traditional wallet to protect your private keys; anyone with access to them has access to controlling or spending or transferring ...