Bitcoin

Step by Step

Author: Michael Caughey

© Copyright Michael J Caughey 2012. All rights reserved.

 I dedicate this book to
the developers of the so ware,
the designers of the mining rigs,
the miners digging for BTC blocks that keep the network alive,
the exchanges and services that e non BTC to BTC so this market can
coincide with tradi onal markets,
the old hands that con nue to help others enter the marketplace,
the newcomer who will be an old hand soon enough,
the merchants that use BTC in their Markets,
the depositors,
Cindi for edi ng this,
and my wife who realizes that I have BTC fever.
-Michael
Contents
Introduc on
What Is A Bitcoin?
Bitcoin Storage
Bitcoin Exchange
Funding Your Market Account
Extrac ng Funds to Government Backed Currency
Bitcoin Transac ons
Other Transac on Types
Bitcoins in Ac on
Earning Bitcoins
Bitcoin Underbelly
Appendix A: Other Resources
Appendix B: Bibliography
Introduction
The goal of this book is not to be the complete guide to Bitcoin (BTC). This
eBook is meant to get the new user up to speed quickly and safely. The
user should be able to have a secure wallet, buy and sell BTC, accept and
send BTC with the same level of trust and confidence as the exis ng user
base.
There are many people before me that put a lot of hard work into
documen ng everything there is to know about Bitcoins. My goal is to
condense all that into something that will get you up and running quickly.
If you are the type of person willing to take the me and make the
mistakes, you can figure it out without this eBook. I had it figured out in
about three weeks of research and something like 80 to 100 hours of me.
There has been even more me added since then. I hope to fast track your
user’s experience and get you using the BTC infrastructure as easily as
possible. The goal is to get you up to speed and using the Bitcoin network
in the me that it takes you to read this eBook.
I will make references throughout the eBook to a number of addi onal
resources that expand on the informa on that I’m giving you. O en mes
I will point to the wiki site. Throughout many places in the eBook, there
are screenshots from copyrighted sources. I did obtain the wri en
permission to include the screen shots. I hope you will visit the sites
referenced in the eBook.
What Is A Bitcoin?
A Bitcoin is a unit of measure in an online currency exchange system.
Unlike government backed fiat, such as the USD, there is no government or
central owner of the BTC (Bitcoin). A Bitcoin is traded within a peer to peer
network which uses cryptographic processes to build trust around each
transac on, thus building proof of ownership for your BTC. According to
the Bitcoin wiki site:

“Bitcoin is an experimental new digital currency that enables instant

payments to anyone, anywhere in the world. Bitcoin uses peer-to-peer
technology to operate with no central authority: managing transac ons
and issuing money are carried out collec vely by the network. Bitcoin is
also the name of the open source so ware which enables the use of
this currency.

The so ware is a community-driven open source project, released

under the MIT license and originally created by Satoshi Nakamoto.

Bitcoin is one of the first implementa ons of a concept called crypto-

currency which was first described in 1998 by Wei Dai on the
cypherpunks mailing list. Building upon the no on that money is any
object, or any sort of record, accepted as payment for goods and
services and repayment of debts in a given country or socio-economic
context, Bitcoin is designed around the idea of using cryptography to
control the crea on and transfer of money, rather than relying on
central authori es.” (anonymous, 2012)

Let’s define a few terms.

Bitcoin: a unit of measure for the currency traded, which can be sent over
the internet
Block: used to record the ownership of the BTC within the network
Hash: used in the cryptographic process
Market Value: the total number of BTC mes the current exchange rate in
the government backed currency
Mining: The process of finding cryptographic hashes that can be used to
keep the network running or to find new blocks of 50 BTC which enter
circula on a er found
The current number of blocks is 199,446. There are 9,972,350 BTC and the
USD Exchange rate is $12.10 / BTC. So, the total market capitaliza on is
$120,665,435 USD. In simple terms, if I had $121 Million USD, I could buy
all the BTC in existence if everyone sold them to me at the current rate.
As I will explain in the chapters that follow, the exchange rate is
determined by supply and demand. What you should take away now is
that the number of BTC is not fixed at this me but growing. In the future
it will become fixed.
The number of BTC grows slowly over me and will reach a maximum
number at 21 million at which me there will be no more BTC created. The
only method through which new BTC can enter into the market is through
BTC Mining opera ons. This is where users buy specialized computer
equipment which can be used to process the work required to find the
unique hashes that are used for the network. The miners keep the
network alive. The hardware they use is what keeps the network traffic
flowing. Without it moving, a transac on would not occur. The miners
must buy the equipment and pay for the electricity to run it. In exchange,
they stand a chance of finding new 50 BTC Blocks, known as a reward. The
reward will reduce to 25 BTC some me around 12/1/2012. Once a miner
finds the reward it becomes theirs. Some miners mine in pools that share
in the finds over me.
If you are the sort of reader that is strong in math and are looking for a
really good source of informa on about how the Bitcoin infrastructure
works, here is a good link to the Bitcoin wiki:
h ps://en.bitcoin.it/wiki/Difficulty
The eBook, which can be found for $0.99 on Amazon, describes the math
in great detail.
Bitcoin: A Peer-to-Peer Electronic Cash System [Illustrated]
h p://www.amazon.com/Bitcoin-Peer---Peer-Illustrated-
ebook/dp/B00538IVFK/ref=sr_1_1?ie=UTF8&qid=1348453217&sr=8-
1&keywords=Bitcoin%3A+A+Peer-to-Peer+Electronic+Cash+System
Bitcoin Storage
As a user of the Bitcoin network, you will eventually own your own BTC.
You’ll need somewhere to put them. The most logical place is a wallet. As
it would happen, this is exactly where you would put them, into an
electronic wallet. The wallet can reside locally on your computer, on a USB
S ck or online in one of the many online wallet sites.
As a professional security prac oner, I feel the need to make the following
statement with regards to all implica ons of security referenced in this
eBook:
Note: All claims to security in this book cannot take into account all
threat vectors, namely you. If you allow an a acker to infiltrate your
computer with a Trojan that has a back door and key logger, they will
likely end up with your wallet.
There are many unforeseen a ack surfaces. I will a empt to document
some good prac ces. I also cannot speak to the level of security actually
provided on the secure online wallets. Recently an exchange was
infiltrated and approximately $250,000 USD worth of BTC was stolen (Kirk,
2012).
My goal is not to scare would-be users away, but I do want to ins ll in them
a fair sense of security. I can say that I use the Bitcoin network and feel
safe in using it.
Trading BTC
Let us start with how BTC is exchanged. In simple terms, the process of
sending BTC from one user to another is based on asymmetric
cryptography. This means that if Alice wants to send Bob 12.5 BTC, the
following would have to occur:
1. Bob uses the wallet applica on to create an address, which is
represented by the so ware as a long string of alphanumeric
characters.
2. Bob gives Alice the address which is the public key for which Bob
has a matching private key in his wallet.
3. Alice uses her Bitcoin applica on to send 12.5 BTC to Bob using the
provided address.
4. The transac on is made public on the network and miners begin to
process it.
5. Once the transac on has gone through enough cycles on the
network, it is released to Bob.
The 12.5 BTC are now no longer Alice’s. The 12.5 BTC now belong to Bob.
The informa on that proves Bob’s ownership exists in the database of
blocks which is stored on your local PC by the wallet applica on or on the
online wallet service if you choose an online wallet. The proof of
ownership for Bob is that private key which is stored in his wallet. The fact
that everyone in the network has the same informa on protects Bob’s
right to ownership as long as he retains the secret keys. He could give
someone his wallet, or it could be stolen from him and the bearer would
have the ability to take the BTC and transfer them to another account.
Online Wallets
The choice to use an online wallet is one which should be weighed heavily.
I would like to quote something from the wiki which I believe is very
important:
“When bitcoins are stored online, the provider retains full control of those
amounts. You are trus ng a third party to maintain your Bitcoin balance on
your behalf. In comparison, if you run the Bitcoin so ware yourself, you are
in full control of your coins so long as the wallet file stored on your
computer is kept secret and secure.” (Anonymous, Browser-based wallet,
2012)
A list of eWallets can be found here:
h ps://en.bitcoin.it/wiki/Category:EWallets
A newer breed of eWallet called Hybrid eWallet can be found here:
h ps://en.bitcoin.it/wiki/Category:HybridEWallets
A Good place to start when crea ng an online wallet is Blockchain:
h ps://blockchain.info/
Step 1: Create a New Wallet
Their online wallet can be found at:
h ps://blockchain.info/wallet/

Select “Start A New Wallet”.

Step 2: Create Password

Create your password, and confirm it. Select a complex password. Use the
following rule:
· At least one capital le er
· At least one lowercase le er
· At least one number
· At least one symbol ~!@#$%^&*()_+=-[]\{}|;’:”,./?><
· Make the password at least 24 characters in length
Following these steps will make it near impossible for an a acker to crack
the password and gain access to your account.
Next: WRITE DOWN THE PASSWORD, and keep it safe.
Enter the Captcha.
Press the “Con nue” bu on.
Step 3: Make Note of the Wallet URL

I blocked out my address since I do not want to provide extra informa on

to an a acker. Copy the en re URL from h ps:// through to the end of
that line.
You can op onally add an email address and nickname.
Then press “Proceed To Login”.
Step 4: Login to Online Wallet

Again, I covered up my address. You’ll no ce that the address in the

Address Bar of your browser is the one previously noted.
Enter your password which you created in Step 2.
Press “Open Wallet”.

From here you can:

· Fund your wallet
· Withdraw funds
 · Modify your account se ngs
· Back up your wallet
· Send money
· Receive money
· View your transac ons
· View account balances
You’ll no ce an address above the twi er bird. This is the address that
others will use when sending you BTC.
Un l you have become very familiar with the BTC environment and your
wallet, you should consider not playing with the import/export
func onality.
In the remainder of the book, I will demonstrate various tasks:
· Funding your wallet
· Sending BTC
· Receiving BTC
· Viewing transac ons
If you have an iPhone, there is an applica on (of course) that will allow you
to perform some basic func ons with your wallet. For instance you can
view your balance, send and receive BTC. Here is an address for more
informa on on it:
h ps://blockchain.info/wallet/iphone-app
The previous ar cle indicated that you could not download from the App
Store. Apparently this has been resolved, because I have downloaded it
from the App Store and it works just fine. Addi onally, your other op ons
are to load it on a jail broken phone. I highly discourage this since any jail
broken phone can easily be compromised by an a acker and render your
account vulnerable. If you have a way to build the app, you can download
the source code, compile it and load it on your phone. You will need a Mac
and a number of tools to do this. I have on occasion done this in the past.
It is not for the faint of heart. If like me, you are a so ware developer and
happen to have this environment already, this might be an op on.
Android is not le out either. There is an app on the Android Market. I
have not reviewed this app, but it does exist. Here is the address for more
informa on:
h ps://blockchain.info/wallet/android-app
Step 5: Verify Your Email
You will receive an email shortly a er se ng up your account. When you
receive the email:
· Log into your account if you are not already logged in.
· From the home screen, press the “Account Se ngs” bu on on the
right-hand side of the screen.
· You will be taken to a screen which has a small menu on the le -
hand side.
· The General menu will be selected by default.
· Enter the code provided in the email and press the “Verify”
bu on.
Step 6: Optional Security Features
If you decide to use an online wallet, consider some of the addi onal
precau ons available such as:
· Double encryp ng your wallet - This will use the password
previously generated to authen cate you. The second password will be
used to make transac ons.
· Use mul -factor authen ca on
· Payment no fica ons
Step 6A: Double Encryption
From the main URL:
h ps://blockchain.info/wallet/

Select “2 Double Encryp on”.

Enter a password using the previously men oned standard and write it
down.
Step 6B: Multi-Factor Authentication
Mul -Factor Authen ca on (MFA) allows you to increase the security of
your account. A password helps keep your account safe because it allows
you to keep something that you know privately and present it to the
service. Only someone that knows this piece of informa on can gain
access to your account. MFA allows you to add something that you have.
One such solu on is the YubiKey which is a small USB device that plugs into
your computer and acts like a keyboard. When you press the bu on on
the YubiKey, it types a One Time Password (OTP). (This combined with
your password that you know means that only if someone has both can
they access your account.) This means that someone can only access your
account if they have both the OTP and your password that only you know.
To configure your online wallet to use MFA, log in to the wallet.
Select the “Account Se ngs” bu on on the right-hand side of the screen.
Select the “Security” op on in the menu on the le -hand side of this
screen.

One op on is to use a Yubikey. Yubikeys are a small USB device that stores
cryptographic string hashes and are synced to a server. You can find more
informa on here:
h p://www.yubico.com/yubikey
Using mul -factor authen ca on means that if an a acker does get your
password, they will also need the USB key in order to gain access to your
account. This follows the rule of something you know, your password, and
something you have, your Yubikey. If you do choose to use an online
wallet, I strongly suggest you invest in a $25 Yubikey.
Step 6C: Email Noti ications
From the Account Se ngs screen, select the “No fica on” menu op on.
The op ons on this screen are fairly straight forward. You can have the
wallet no fy you via a number of different methods and for a couple of
different reasons. The simplest is to select email.
To set up SMS No fica ons, select the “SMS No fica ons” checkbox. You
will be prompted with a list box of country codes. Select the one that fits
where your phone service resides. Then enter your phone number. In the
U.S., make sure to enter your area code. Then press “Enter” on your
keyboard.
NOTE: I entered dashes the first me and the message didn’t come
through. A er wai ng about 15 minutes, I returned to the page and
took the dashes from 555-555-1212 and made the number
5555551212. Then, I hit enter again, and the SMS message arrived
within 10 seconds.
When the confirma on code arrives, enter it, and then Press “Verify”.
Important Note for Online Wallet User
I will use the personal wallet to demonstrate much of the func onality
around sending, receiving BTC, as well as funding your account. While the
steps will differ, the func onality can be translated to how you would do it
in the online wallet. The next sec on describes how to create your
personal wallet.
Personal Wallets
I will walk you through the process of installing and se ng up your wallet
on your local computer. The basic setup will install a wallet.dat and blocks
database on your local computer. I will show you how you can secure this
by moving it onto a secure drive using TrueCrypt, an open source tool for
crea ng secure drive volumes. I will walk you step by step through the
process. This will allow you to either store the wallet on a secure drive on
your computer’s hard drive or place it on a USB memory s ck which you
can secure in a fire safe or other safe loca on.
Remember that if you lose the wallet, you have lost your money, so we will
also see ways to back this up. If all of this seems too much for you, then
s ck with the online wallet.
Step 1: Install the Bitcoin Wallet Software
Download the so ware from the wiki:
h ps://en.bitcoin.it/wiki/Main_Page

Depending on your opera ng system, download the correct one for you.
The wiki also has a set of screen shots to walk you through the set up:
h ps://en.bitcoin.it/wiki/Ge ng_started_installing_bitcoin-qt
There is even a link to get some free BTC (even if it is just a frac on of a
BTC).
Step 2: Synchronize the Blocks
Once you have the so ware installed, you will no ce that it begins a
process of synchronizing the blocks. This can take about 24 hours to
complete and will transfer 2 to 4 GB of data to your computer. It is an
important step, and you will have to let it complete before you con nue
performing other steps.
I recommend that you con nue to read and come back to this step once it
is complete. You can con nue with Steps 3 & 4 while you wait.
Once the ini al blocks are installed, then you can con nue with Step 5.
Step 3: Install TrueCrypt
There are a number of applica ons that can be used for this step. I chose
TrueCrypt because it’s open source, which means it’s free to use. It is also
fast and reliable. The fact that it is open source means that the code has
been and can be reviewed by anyone which makes it much more secure to
use.
Download TrueCrypt from here:
h p://www.truecrypt.org/downloads
Once downloaded, install the applica on.
Select the defaults.
Step 4: Create Secure Drive
Once installed, open the applica on:

Select “Create Volume” and follow the wizard.

Select “Next”.

You will want to place the volume either on a hard drive or on a thumb
drive where you can create at least a 10 GB file.
Select “Next”.

The size of the drive needs to be at least 10 GB.

Select “Next”.
This step is so very important. I cannot stress this enough.
Select a complex password. Use the following rule:
· At least one capital le er
· At least one lowercase le er
· At least one number
· At least one symbol ~!@#$%^&*()_+=-[]\{}|;’:”,./?><
· Make the password at least 24 characters in length
Following these steps will make it nearly impossible for an a acker to crack
the code and gain access to the drive should they find it and download it.
They will have to download the en re 10 GB file in order to try to crack it.
Next: WRITE DOWN THE PASSWORD, and keep it safe. If you build a small
fortune in BTC in your secure drive and then forget the password to it and
you followed my recommenda on, you may be safe from a ack, but you’re
not going to get into it either. Those BTC will be lost.

Select “Large Files”.

Select “Next”.

Select “Next”.

Then move the mouse around on this next screen and hit “Format”.

Step 5: Move Wallet and Blocks to Secure Drive

Do not con nue with this step un l the wallet applica on has finished
synchronizing.
If the Wallet applica on is running, exit out of the applica on.
Open TrueCrypt and press “Select File”. Then, select the file we created in
the above process. Also select a free drive le er. You will want to use the
same drive le er every me.
Now select “Mount”.
Enter your password, and hit “OK”.
If everything worked as it should, now the secure drive should be mounted
and looks like a hard drive.
Now we need to iden fy where your Bitcoins Wallet file is. The reference
for what’s in the data directory and where you can find it is here:
h ps://en.bitcoin.it/wiki/Data_directory
Looking at that page, the loca on for Win7 is:
C:\Users\YourUserName\Appdata\Roaming\Bitcoin

With the Bitcoin wallet applica on closed, you want to copy the contents
of this directory to your new drive. First, make a directory in the new drive
called Bitcoin. Now open that folder and copy the files into it.
Step 6: Con igure Your Wallet Application to Use the New Location
Once the files are copied over, we need to tell the app where the data files
are. There is a command line op on that we need to set. To do this on
Win7, right click on the desktop shortcut and select “proper es”. If there is
no shortcut on your desktop, copy it from the Start Menu to your desktop
if you’d like, or edit the one in the Start Menu. That is up to you. You will
need to note which shortcut you edit. This is where you will need to
launch it from in the future. In the example below, I mounted my secure
drive to Drive X, so the wallet.dat is located in X:\bitcoin.
No ce the –datadir=x:\biticon

Add the parameters a er the Bitcoin-qt.exe in the target. This is where

you set the command line op on. It will differ for Linux and Mac opera ng
systems. Press “OK”.
You’re done.
Step 7: Reopen Wallet App
The process to open your wallet will always be the following:
1. Open TrueCrypt.
2. Mount the Encrypted Drive.
3. Open bitcoin-qt (your wallet applica on) using the shortcut with
the modified target.
If you try to open bitcoin-qt without opening the encrypted drive first, it
will not be able to locate the wallet or blocks while the encrypted disk
drive is mounted.
Each me you open your wallet you will no ce that it needs to synchronize
with the network.
Do not leave it open. You should only open your wallet when it is required.
If you do have a Trojan or other back door on your computer, your
wallet.dat file is vulnerable to being copied off your system.
There is more informa on on the wiki about securing your wallet:
h ps://en.bitcoin.it/wiki/Securing_your_wallet
Bitcoin-qt
Once installed and all the blocks are updated, you will see the main
overview screen.

The Overview Tab shows the current number of BTC you have and the most
recent transac ons.
The Send Tab allows you to send BTC. I’ll demonstrate this in a later
chapter.
The Receive Tab allows you to set up addresses that can be used to receive
BTC. I’ll demonstrate this in a later chapter.
The Transac ons Tab will show you a history of the transac ons for this
wallet.
The Address Book allows you to enter addresses that you o en send
money to.
Export allows you to export your received addresses.
Bitcoin Exchange
Spending Bitcoins is certainly a useful thing to be able to do. However,
un l it takes over as the primary currency, (I’m not sugges ng it will.) users
will need to be able to move government issued money in and out of the
system. This is done through exchanges. Currently, there are a number of
exchanges that convert many different denomina ons to and from BTC.
The price of the exchange is set by you, the buyers and sellers, in an open
market format.
Anyone can sell BTC for USD, EUR or other currency. You can place an
order to sell at a preset amount known as a limit order. When someone
decides they need to buy BTC, they can purchase at that price. Users can
also decide that they would like to buy BTC at a preset price. They can
enter a limit order and wait un l someone determines it’s fair and sells
their BTC. The exchanges charge a small fee. One such market MtGox, the
largest such market, charges 2.5% per trade.
Limit orders are good when you have a lot of BTC that you want to receive
a specific price for and have the me to wait. If you just want to buy or sell
BTC, you can place a market order. If the transac on is small, under a
thousand USD, it should hit near the current bid or ask price depending on
if you are buying or selling. If you plan to sell a lot fast, expect to drive the
price down. If you plan to buy a lot, expect to drive the price up.
At the me of this wri ng, the current market capitaliza on in USD is $120
Million. You can see the current market details at:
h p://bitcoincharts.com/bitcoin/
You can see the Market Book, the list of sell orders and buy orders
outstanding for a given market, at:
MtGox : h p://bitcoincharts.com/markets/mtgoxUSD_depth.html
The number of BTC and the price they are being sold at or bought at is
listed. There is a calculator which can be used to determine how much a
par cular number BTC will cost and if the order can be filled or not. This is
useful if you want to obtain a specific price or if you will be funding a
Bitcoin purchase. You should plan the purchase. You may buy many coins
and drive up the price, then make a purchase shortly a er at this elevated
price. It is possible that the price will drop significantly as someone else
sells BTC at the bid price rather than your ask purchase.
For example, based on the numbers in the chart shown above, let’s say you
want to buy 742 coins. The last sale price will be $12.24. You will have just
raised the price of BTC from about $12.10 to $12.24 USD. If someone else
comes in and sells their BTC to someone based on the bid, which would
occur if they didn’t want to wait to sell, then the new price would be
$12.08. As you can see, there can be some vola lity in the markets.
There are a number of different markets that you can trade BTC to
government backed currency and government backed currency to BTC. For
a list of the markets, visit the All Markets page at:
h p://bitcoinwatch.com/
or
h p://bitcoincharts.com/markets/list/
A graphical market index with all the current markets can be found at:
h p://bitcoincharts.com/markets/
The page provides Last Price, 30 day thumbnail, Average Price, Volume,
Low and High, Bid and Ask, 24 hr avg. and volume.
Another list of markets can be found on the Bitcoin wiki:
h ps://en.bitcoin.it/wiki/Buying_bitcoins
Funding Your Market Account
Given the large number of markets and the various ways to fund each of
them, it is beyond the scope of this eBook to describe every possible
combina on. I am currently a member of MtGoxUSD, which is also the
largest exchange. They claim, as of July 2011, to handle 80% of the Bitcoin
trade. See their home page for the reference: h ps://mtgox.com. From
the current numbers, it appears they do indeed have the largest share but
not 80%. Demonstra ng how to fund on this market account is the best
place to start since using it will provide you the best liquidity.
Step 1: Sign Up for An Account
h ps://mtgox.com/signup

Once you are signed up, you’ll be asked to go through a verifica on

process. You should consider doing this. However, if you will not be
moving more than $1,000 USD / day and $10,000 USD /month, you do not
need to be verified.
Step 2: Fund Your Account
From the Home Page, Select “Funding Op ons”.
To get money into the account, you can do a bank transfer, which is best for
large amounts. If you have cash and want to get it into the system fast, the
following is one way to do it.
Step 2A: A Cash Deposit through BitInstant
Select “Cash Deposit via BitInstant”.

You can enter an amount and it will tell you the fees. For instance $500
will be $23.45, so $476.55 will be deposited.

Then select the “Add Funds”.

You will be prompted if it is valid to send. There is an upper limit on
deposit through this method.
TrustCash will use your addresses provided to MtGox to determine the
nearest loca ons where you can deposit the funds. Select a bank loca on
and fill in the informa on. You will be given a receipt to take to that bank
loca on.
The handling fee that I’m seeing is $1.26, which might be different if you
use a different bank than I selected, so the total fee to deposit this money
is
· 4.49% + $1 = $23
· $1.26 at the bank
That comes to about 4.9% overall. That is not too bad, but you will lose
money in the process of trying to fund the account.
Step 2B: Alternative BitInstant – BitInstant Site Directly
Before going to the BitInstant site, it is important to note your account
number from MtGox. It can be found at the top of the web page in the
center. It will say “Account Number” next to it. You will need that number
to ensure you will receive the money.
Go to the site: h ps://www.bi nstant.com/

Select “MoneyGram” in the Pay From drop down menu and “MtGox” in the
Pay To drop down menu. You can experiment with other op ons. Look to
see if there are CVS or 7/11 stores that support transac ons in your area.
Near me, only MoneyGrams are supported. I can go to Wal-Mart and have
it funded.
In the account box, place your MtGox account number.
Enter the amount to send and no fica on email.
When you do, you will be taken through a series of screens where you will
verify addi onal informa on. I cannot finish the process to get the screen
shots. If I do, I will have an outstanding money order. So there are no
screen shots for this. When you do this, you will end up at a ZipZap site
where you can enter your phone number and search for a loca on to send
the MoneyGram.
Once you’re done entering your informa on, select “Create Payment Slip”
at the bo om of the screen.
Print this out and take it to the loca on you chose. I’ll con nue with the
example assuming you picked Wal-Mart. At Wal-Mart, there is a Money
Center generally in the front of the store. Go there, grab a blue
MoneyGram form and fill in the informa on. The slip you printed out will
have the informa on you need to properly fill it out.
Pay the clerk the money. Drive, walk, take a cab, bus or train home.
Within 30 to 60 minutes, your MtGox account will be funded.
The fees on this are a li le bit less:
· 3.99% = $19.94 on $500
· $3.95 MoneyGram
Total Percentage is 4.78%, which is a li le less than if you fund it directly
from MtGox.
Step 3: Buying Bitcoins
If you recall from the Exchange sec on, you can place a market order to
tell the system how much USD you want to spend, and you’ll spend that
much money and receive the number of BTC based on current BTC for
sale. Alterna vely, you can enter a limit order and set the price at which
you want to buy the BTC. With a limit order, you will need to wait un l
someone in the marketplace decides they want to sell at the price you are
asking.

To enter a limit order:

· Enter the number BTC to buy.
· Enter the price to pay.
· Select the “Buy Bitcoins” bu on.
Your open order will be displayed in the bo om sec on of the screen. If
you simply want to place a market order, check the “market order” check
box. Enter the number of BTC you wish to buy, and you will be told
approximately how much it will cost.
You can do the same for Selling Bitcoins.
Step 4: Sending the Bitcoins to Your Wallet
From the Trade window:
· Select “Funding Op on”.
· Then, select the “Withdraw Funds” tab.

· Enter the number of BTC to transfer.

· Enter an address from your wallet. (See the sec on in a later
chapter about crea ng an address for others to send to you. You will use
one of these addresses.)
· Select the Open transac on.
It is op onal to pay the transac on fee on small transfers. The transac on
fee helps pay the miners. This is another way to help fund the
infrastructure. If you consider adding 0.005 BTC at $12USD/BTC, it works
out to about $0.06. It is worth considering. It will speed up your
transac on. If you don’t, it will s ll go through but could take longer. The
fee will provide an incen ve for the miners to con nue to mine.
· Press “Confirm”.
Now check your wallet. Eventually you will see the money there. It does
tend to move quickly.
Extracting Funds to Government Backed Currency
There are a number of ways to convert your BTC back to a government
currency like the US Dollar. MtGox is planning to release their MasterCard
Debit card which will allow you to maintain USD balance in your account
and spend it directly using the debit/MC. This means that you will not
need to transfer the funds to your bank first. It is due to be released at any
me. Since we have already discussed using this market, when debit
becomes available it would be something worthwhile to look into. It is
supposed to e your USD or other currency to the debit card which will
work like a MasterCard. There really is not much to say about this since it
has not yet been released.
MtGox allows you to perform a bank wire to your bank. This will allow you
to extract larger sums of money directly to your bank. This is good for
larger amounts since there is a $25 service charge involved.
Step 1: Where to Go
To get to withdraw the op ons, on the MtGox site:
· Go to “Home” in the main tool bar.
· Then select the op on for “Funding op ons”.
· OR URL: h ps://mtgox.com/trade/funding-op ons
· Then select “Withdraw Funds”.

· Select the “Available Withdraw Methods” drop down to select one

of the many methods.
Step 2: How to Add Other Options
· Press the “Add Withdraw Method”.

· Select the “Bank Transfer”

Select one of the methods that suit your needs.

Step 3: Add money to PayPal
There are a couple of methods to do this. I will walk you through the one I
found to be the easiest. The fees are a li le higher.
Step 3A: BTCPak
Go to h ps://www.btcpak.com/

This is going to allow you to convert BTC to MoneyPak which can be used
like cash to fund your PayPal card or pre-paid debit cards.
You will also need to add an address for refunds to be sent to in the event a
refund is required. This is rare but if for some reason a refund is made and
there is no address, the BTC will be lost. You should use an address that
exists in your wallet, so you end up with the money in the event of a
refund.
Without BTC to move out, I cannot show more steps.
You’ll no ce that the funding of the MP takes about one hour. The one
hour is the me that it takes for six confirma ons of the transac on to
occur. If you send money from MtGox and Use a Green Address, it will
create the MoneyPak instantly.
Bitcoin Transactions
Now that you understand what a Bitcoin is, how to store them, what gives
them value and how to fund your account, let us talk about how to send
and receive them. When you use a wallet to store your BTC, you know that
it actually stores a key, which proves your ownership. This key is actually a
pair. There is a public key and a private key. The public key is known as an
address. This address can be used to send BTC from one user to another.
BTC are traded using Public Key Cryptography.
A full descrip on of Public Key Cryptography is beyond the scope of
eBook. I will give you a simple explana on. For a complete explana on
checkout:
h p://en.wikipedia.org/wiki/Public-key_cryptography.
Two very large prime numbers are found that when used can both unlock a
message if the message is encrypted with one of them. One of the
numbers becomes the public key and the other becomes the secret key.
Encryp ng with one key allows the message to be decrypted only by the
corresponding number (key). We can then provide our public key, and
when someone uses it to send (encrypt) BTC to us, we are the only ones
with our secret key that can receive (decrypt) it.
Let us say we have Alice and Bob who want to exchange BTC. Both have a
key pair.
1. Alice uses Bob’s public key to send the money.
2. The BTC is encrypted with Bob’s public key.
3. The Transac on is signed by many of the miners using the hashes
they are finding. This builds the trust in the network.
4. Bob can then open the transac on with Bob’s private key.
Receiving BTC
To receive the BTC, open your wallet. We will demonstrate here with
Bitcoin-qt. Use the procedures previously noted to open your wallet.
Once open, if it has shut down for a while, you will no ce it is out of sync.

Give it a li le me and it will begin to sync.

The syncing is the applica on going out and ge ng the most current
blocks. These blocks tell the applica on who owns what. It only knows
based on the signed blocks. Either a local private key in the wallet can
decipher the block and prove ownership, or it cannot. These are the only
two op ons.
So, if someone sends you BTC and your wallet is not in sync, you may not
see the transac on come through. Once all the blocks are in sync, you will
be able to see it.
Once you can see the green check mark in the lower right-hand corner, the
wallet is synced.
In order to have someone send you BTC, you will need to create an address
for them. Click on the “Receive Coins” bu on:

Create a new address. Press the bu on in the lower le side of the screen,
“New Address”.
Give it a name. I like using the conven on Year-Month-Day name. This
allows me to know how old the address is.
Click “OK”, and the address will show up in the receive window.

To get the address so that you can provide it to others, right click on the
address and select “Copy Address”.

Address to send to: 13QPmiJymZpuv2q2rhdgXWokdybit8cFZC

Now we can provide that address to another person to send us BTC.
When a new transac on comes in, you will see a message in the lower
right-hand corner (on windows).

If you switch to the Overview Tab, you can also see the transac on:

No ce that you see an unconfirmed amount and that there is s ll a zero

balance. The transac on needs to be processed. Trust needs to be built
around this transac on. Once that occurs, you can spend the BTC. When
we cover sending BTC, you will see there is an op on to pay a transac on
fee in order to speed up the handling of the transac on.
If you go to the Transac on Tab, you can see the transac on.
Double click on the transac on to see the details.

About nine minutes later, the transac on received its first confirma on.

Switching to the Overview Tab, we can see that the BTC is now confirmed
and is in your balance:
Sending BTC
In order to send BTC, you first need an address to send to. For this
demonstra on, we will use the eBook Demonstra on in my other wallet:
1P9scjVao6n9t9ihNUBGXiCSHYAghzhzY7
Please feel free to send BTC to any of the addresses listed in this book. J
Dona ons are welcome even if it is only 0.01 or less.
To send, click on the “Send Coins” bu on.

Then enter the address and a label to help you remember why you sent me
the BTC.

When the confirm message appears, click “Yes”.

If you do not have enough to fund the transac on, you will see something
like the message below. In this case, the wallet was adding a transac on
fee automa cally. There were not enough funds to cover the amount to
send and the transac on fee.

You have the op on to set a transac on fee. The transac on fee

encourages the miners to process your transac on faster. The default is
the amount shown in the window above. Think of the transac on fee as a
p for good service. When all the Bitcoin blocks are found, it will be the
transac on fees that keep the network going. At the present me, you are
not required to submit a transac on fee on small transfers. However, it is
highly recommended that you get in the habit of adding one. At the
present me with BTC around $12, 0.005, BTC is equal to six cents USD.
This is nothing if you are sending $100 USD or 8.5 BTC or more. If you are
only sending 1.5 BTC as we are, consider giving 0.001. We will adjust the
transac on fee to 0.005 for this example.
Click on “Se ngs” in the toolbar.

Then select “Op ons”.

Use the arrow keys to move the value by 0.001 up or down to zero. Then
click “Apply”.
Now let’s enter a new value to send.

This me it will go through and clear out our balance.

Con irmed Transactions
It takes six miners to process the transac on before it is considered fully
confirmed. We were able to resend the BTC before it was fully confirmed
but not un l it was confirmed at least once. About 30 minutes a er it was
ini ally sent, it was s ll not fully confirmed:

A er six confirma ons, it is considered fully confirmed. The network will

con nue to confirm the transac ons. To view this, send my address 0.01
(Okay; you can use any address.) and watch the confirma ons build over
the days and weeks. I have a transac on that is a few days old and it has
500 confirma ons. The chain of confirma on will con nue to grow.
It took 41 minutes for the transac on to reach the six confirma ons.
Other Transaction Types
Escrow
You might be asking yourself, if this marketplace is built on trust and non-
revocable transac ons, then how can I do business with someone I do not
trust? In some cases, trust will have to be implicit with the fact that they
are doing business in the marketplace and they would not last if there was
not trust. For instance, the market with high volume makes more money
by opera ng ethically than if they were to steal from any one person.
This is not the case with individuals. If someone is promising you
something for BTC and you do not know who they are, then suggest using
an escrow service. These are services that exist in order to broker trust
between two untrusted par es.
Let us have Alice and Bob perform an escrowed transac on. The escrow
service facilitates the exchange for a fee. Let us trade something simple
that seems to be a common untrusted exchange. Alice finds Bob, and Alice
wants to buy 50 BTC from Bob for $600 USD. You might ask, “Why not just
use the exchange?” As we noted in the previous sec ons, there are a lot of
middlemen in the process who all take a transac on fee. These fees can
mount. The buyer and seller will need to do their own math to determine
if an over-the-counter transac on is one worth their effort.
Bob will sign into an escrow site and set up a transac on and send the 50
BTC. Once the coins are confirmed, then Alice will need to pay for the
coins. She doesn’t have possession of them, but neither does Bob. The
escrow service has them. Once Alice pays Bob and provides a method to
verify the transac on has occurred, the escrow service will release the 50
BTC minus the transac on fee. The ability to verify might be a PayPal
transac on number that can be viewed by both par es or some other
agreed upon verifica on method. If the exchange is goods, then the buyer
may have an inspec on me. Once the inspec on me expires, then the
payment is made. These transac ons are generally slow, so users beware.
However, they are a lot safer than the alterna ve. There are many
scammers out there.
A list of escrow services can be found here:
h ps://en.bitcoin.it/wiki/Bitcoin_Escrow_Service
There is more about secure trading here:
h ps://en.bitcoin.it/wiki/Secure_Trading
Over the Counter
Over-the-counter(OTC) trades are another way to trade BTC for government backed
currency. This system allows you to buy and sell BTC. To interact with the OTC, you will
need to download and install an Internet Relay Chat client. I will go over how to do this
on Windows, but there are clients for Mac and Linux as well.
You can use any IRC Client you want, but I will demonstrate the use of mIRC which costs
$20. You can download it from here: H p://www.mirc.com/get.html . There was a me
when there were free IRC clients. If you have access to one, feel free to use it. The
commands I will be demonstra ng will work in any IRC Client.
Once you have it downloaded, go ahead and install it. Just accept all of the defaults.
Once it is installed, we need to set up your IRC Account. IRC will allow you to log in and
interact unverified. I highly recommend that you log in and create an account with a
password. I will review how to do this.
Double click on the icon on your desktop for mIRC:

You can use the tool for free for 30 days, or if you’d like and want to use it longer, you
can register it for about $20. Since there is a free 30 day trial, you can use it in order to
follow my instruc ons to create your IRC User (which is different than registering the
IRC Client). You can always find a different free one, or register this one at a later me.
I am not affiliated with mIRC, but I do have a registered copy.
When the applica on comes up, it will ask you to enter your Nickname, also known as a
nick. This is a unique name that you want to use in the channels. The channels are the
community message areas where chat can occur. I’ll explain that more once we are
registered.

Then select the “Servers” item and change to Freenode > Random Server.
Click, “OK” and then hit the “Connect” bu on (looks like a lightning bolt) in the upper
right-hand corner of the screen.

You will see a screen that looks like this:

The arrow points to the Command window. The commands that you will need to type
in will need to be typed in here.
Once connected, enter:
/msg nickserv register <your-password> <your email address>
Use your own password and email address. Also note that your IP Address appeared.
We will fix this as well. Write down your password, and do not use a simple password,
as it can be stolen. You do not want someone to take over this account if you are going
to establish it with the Bitcoin OTC marketplace. You will receive an email with a
command to verify. You must do this step before you can con nue.
/msg NickServ VERIFY REGISTER <your nick> <Code>
When you need to log in to IRC in the future, you will need to use the following
command to log in:
/nickserv identify<Password>
The token <Password> is replaced with your password. You will generally have about
30 seconds to enter it. If you do not enter it fast enough, the IRC server will boot you
thinking you are not the nick owner.
As I men oned before, the IRC is made up of channels. You first need to visit the help
channel and ask for a cloak. This will hide your IP Address from prying eyes. Hackers
will be looking for you. If you leave the IP visible to them, they will be able to launch an
a ack against you. If they get your wallet, it’s game over for your money. So you need
to protect yourself.
To join the help channel use the following command:
/join #help
In the new channel window, ask the admin for a cloak. Simply type:
Admin, can I get a cloak?
Without the cloak, your IP Address is visible to everyone. With the cloak, your IP
Address is hidden from other users. This way they cannot detect what computer you
are on and try to a ack it. So now when you log back in, you will be auto cloaked. It is
important that you obtain a cloak before you begin to trade. All an a acker needs in
order to a empt to a ack you is your IP Address.
To join the Bitcoin OTC, let’s join the correct channel. Use the command:
/join #bitcoin-otc
To authen cate with the service, you need to interact with the channel bot. The bot is
a computer applica on that is logged into the channel as a user. The bot here is named
gribble. So to start a private conversa on with gribble, type:
/query grible
You will see a new channel appear. This is gribble.
Let’s quickly try something with gribble before we authen cate. Enter the following
command and make sure to use the preceding semi-colons. That tells the bot you are
entering a command for it to consume.
;;ticker
You should see something like this:
<gribble> Best bid: 12.1388, Best ask: 12.19988, Bid-ask
spread: 0.06108, Last trade: 12.1388, 24 hour volume:
39840, 24 hour low: 11.6304, 24 hour high: 12.27
Now switch over to your wallet and create a new receive address. We are going to use
this in the authen ca on process to follow. I named mine, 2012-09-23-Bitcoin-OTC.
Now copy the address and use the following command to authen cate:
;;bcregister <your handle>
1CXnFLTUc1Z15uvhune6P1VtjcXnrsbzq

You will receive a message sta ng:

<gribble> Request successful for user <your nick>, hostmask <your nick>!~<your
nicK>@unaffiliated/<your nick>. Your challenge string is: freenode:#bitcoin-otc:<Some
long string>
Go to your wallet applica on and select the “Receive Coins” bu on.
Select the address you just created and press the “Sign Message” bu on at the bo om
of the screen.
Now a sign message screen will appear:
Copy just the challenge string into the window in the area marked 1 which will look like
this:
freenode:#bitcoin-
otc:2b5195d2442cbfc302a0b2f6d7b856cd04ecc0435d0e306827b94e9c

You must use the one provided in order for this to work for you. Then press the “Sign
Message” bu on. Then a message will appear in the window labeled 3. To copy this
out, press the “Copy to Clipboard” bu on.
Now in the IRC Client, issue the following command to gribble:
;;bcverify random-looking-gibberish-that-is-your-signed-
message-goes-here=

If the process worked, then you are authen cated with this nick. If it doesn’t work,
review the instruc ons here for more informa on:
h p://wiki.bitcoin-otc.com/wiki/Bitcoin_address_authen ca on
The Bitcoin-OTC wiki has a lot more details about how to use the service. You can find
the wiki here:
h p://wiki.bitcoin-otc.com/wiki/Main_Page
There is an important note about trading on the OTC that I extracted from the wiki:
“There are no automa c systems set up to match buyers and sellers. The en re system
is OTC, if you see a bid/ask you like, contact the counterparty directly on channel or in
private message to set up the transac on. Issues to discuss may be: who bears the
transac on fees? Who pays first? What escrow agent do we use that is mutually
trusted? Remember, this is a direct nego ated transac on - so every detail is
nego able.” (Anonymous, Using bitcoin-otc, 2012)
More Information
More informa on about Bitcoin-OTC (Over The Counter) can be found
here:
h p://wiki.bitcoin-otc.com/wiki/Using_bitcoin-otc
You can see the list of current orders on the BTC-OTC here:
h p://bitcoin-otc.com/vieworderbook.php
For a more complete guide to IRC:
h p://en.wikipedia.org/wiki/Internet_Relay_Chat
List of IRC Commands:
h p://en.wikipedia.org/wiki/List_of_Internet_Relay_Chat_commands
Bitcoins in Action
So now you know about BTC. You have a wallet and probably funded your
account. You know that the value of the BTC is based on the fact that there
is liquidity through the markets such as MtGox. However, the supply and
demand is driven by the fact that people can use the BTC for something
real. As long as there is something that people can use the BTC for, there
will be a market. For the naysayers who tell you BTC are not backed by
anything, I would tell you that as long as they can be liquidated to USD or
other currencies and as long as BTC can buy you something useful, there
will be a market for them and an associated value. This value will be driven
by the number of people buying up BTC versus the number of people
selling BTC.
Staying Informed
So if you are going to join the market, you will want to stay informed.
There are many blogs out there. Here are a few good online resources:
· h p://bitcoin.alltop.com/
· h ps://twi er.com/bitcoinnews
· h p://www.btcnn.com/
· h p://www.bitcoinblogger.com/
· h p://www.thebitcointrader.com/
· h p://www.bitcoinnews.com/
A current list can be found on the wiki:
h ps://en.bitcoin.it/wiki/Category:Blogs
Where to Spend
So let’s inves gate some of the things that you can buy with BTC. I’m not
going to go into much detail about any one item. I will provide links below
and you can inves gate for yourself. I am not personally endorsing any of
the places here. I’m just trying to provide a list to kick start your
enjoyment. My goal is to demonstrate that there is a huge marketplace out
there.
Equity Trading
These stock floors are not regulated like tradi onal trading, but some good
deals can be found. Just be careful who you do business with.
GLBSE: h ps://glbse.com/
BitFloor: h ps://bi loor.com/
At the me of this wri ng, GLBSE had closed due to the lack of regula on.
According to an ar cle given in Bitcoin Magazine, the goal is to open back
up in a regulated manner. If they can pull this off, this would be something
significant. As a user, you should be careful in this space. There can be a
lot of scams.
The wiki site maintains all sorts of training sites (This is a must see page.):
h ps://en.bitcoin.it/wiki/Trade
You can also trade in the following:
· Precious metal
· Gi /Debit card
· Currencies
· Local In Hand Exchanges
Merchants that Accept Bitcoins
There are a number of places that you can go to make purchases with
Bitcoins directly.
There are a couple of places that you can visit in order to find where you
can spend the Bitcoins. One of the sites is:
h ps://www.spendbitcoins.com/places/
The wiki page previously men oned, h ps://en.bitcoin.it/wiki/Trade, also
lists systems you need in order to enhance your ability to accept Bitcoins:
· Bitcoin eWallets
· Payment systems
· Escrow
· Mobile service
There is a list of VPN Services so that you can maintain anonymous
connec vity from areas that might impede on your right to do something
on the internet.
There is a list of internet related services that you can buy that accept BTC.
(##) is the number currently listed.
· Crea ve Design Services (15 )
· Wed Design Services(50+)
· Art Design Services(6)
· Web hos ng(36)
· Dedicated/Virtual Servers(20+)
· Domain Name Hos ng(16)
· Email(2)
· VoIP/SMS(13)
· Security Services(7)
· Mobile App Development(3)
· Produc vity(1)
· Other(13)
· Search Engines(1)
· Cloud Providers(7)
 · So ware(5)
· Educa on Related(13)
· Gambling(30+)
· Games(20+)
· Graphic Design(5)
· File Sharing(8)
· Music(20+)
· Virtual Art(2)
· Digital Downloads(6)
· Entertainment Books/Magazines(8)
· Social Media(2)
· Cyber Begging(1)
· Internet Marke ng(1)
So let’s say you are not interested in internet related services. You can go
shopping for just about anything. I had originally planned to include the
list from the wiki site in this book; however, it consumed 25 pages. I
realized it would be be er to direct you to the wiki. This is a valuable
resource I highly recommend that you visit:
h p://en.bitcoin.it/wiki/Trade
Earning Bitcoins
So now you’re excited about everything you can do. However, you don’t
want to pay the fees associated with moving currency into the system. You
would rather offer services. If you have a service, I’m sure you can find a
service out there that can help you get started. You certainly can start a
business and make it big in the Bitcoin world. It’s beyond the scope of this
book to tell you how to do that. With the number of services available, I
think you can find someone that can help you. When you figure it out, you
could write an eBook to tell others how to do so. I have not seen one
available yet.
If you like eBay and Craigslist, check out the marketplaces if you have
something to sell:
Marketplaces
· The Bitcoin Marketplace - Bitcoins classified site and marketplace.
Buy and Sell anything with Bitcoins.
· Bitcoin Harbor - Users can buy and sell for Bitcoins -- out of
business.
· Bitmit Secure Bitcoin marketplace. Sell and buy goods for Bitcoin.
Worldwide!
· MokiMarket The ebay/craigslist of Bitcoins!
· Bitcoin shopping Shop with your Bitcoins - Worldwide shipping
Auction sites
· CentBiz.com - One of the oldest Penny and Cent Auc on online,
BitCoins Accepted for Payment. Available for Portugal, Ireland and UK.
0,25 euro/pound per Bid.
· Penny Auc ons - Bartering marketplace where users can purchase
credits to bid on items, or earn credits by auc oning off goods or
services as penny auc ons for free. Bitcoin is accepted as payment.
· Bidding Pond (info)
· Bidnapper eBay sniper - Places bids on eBay and other auc on
sites in the final seconds, called sniping.
· Bitmarket (info)
· Bitmit - BitCoin auc on house & shopping portal (English &
German)
· goSnipe eBay Sniper - Place your bid in the final seconds of an
eBay auc on. Load your account with Bitcoins.
· Myibidder Auc on bid Sniper for eBay - Auc on bid Sniper for
eBay, bid on last seconds automa cally. The Windows client applica on
can be purchased with Bitcoins.
· HASTUschon? (info) A German auc on site.
· BitBid Bitcoin Auc on House.
Mining
The big service out there is the mining service. All I’m going to do here is
provide you with some links as to how to get started mining. This is the
only way to get BTC for essen ally nothing. You provide the hardware and
the electricity to run the equipment, and you get paid. As long as the
electricity costs less than the BTC you are making, you turn a profit.
Beginners guide to mining: h p://startbitcoin.com/
Mining Guide: h p://www.weusecoins.com/mining-guide.php
Pooled Mining: h ps://en.bitcoin.it/wiki/Pooled_mining
Mining Hardware: h ps://en.bitcoin.it/wiki/Mining_hardware_comparison
Bitcoin Underbelly
I want to keep this book posi ve and promote the good about the Bitcoin
infrastructure. There is however an underbelly. There have been some
high profile cases in just the past month or so that have shed a bad light on
the Bitcoins. That said, Bitcoins are not the problem, the criminals are.
One ar cle recently seems to indicate that the BTC transac ons are not as
anonymous as some have thought or as easy to hide. This is in connec on
with the BitFloor heist, where $250,000 USD worth of BTC were stolen
from various users.

Hacker Steals Bitcoins
BitFloor breached, hacker makes off with $250,000 in Bitcoins:
h p://www.techspot.com/news/50043-bi loor-breached-hacker-makes-
off-with-250000-in-bitcoins.html
Bitcoin thieves yet to spend stolen hoard:
h p://www.bbc.com/news/technology-19633980
This ar cle indicates that the transac ons of the stolen keys are being
watched. This is interes ng.

Ransom in Bitcoins
In a separate case, US presiden al candidate Mi Romney’s tax returns
were stolen and the hacker wanted to be paid in $1,000,000 USD payable
to one of two BTC addresses. One would release the tax returns, and the
other would keep the tax returns hidden.
h p://venturebeat.com/2012/09/05/romney-tax-returns-hacked/

Gambling with Bitcoins
A li le over a year ago, a poker web site opened up SealsWithClubs which
allowed people to buy in with BTC. I place this in the underbelly because in
the USA, it is illegal to gamble online. For those of you in countries where
gambling online is legal, this entry may not seem so nega ve. Using BTC
reduces the likelihood that offenders will be caught.
h p://www.pokerscout.com/SiteDetail.aspx?
site=SealswithClubs&ab=1337
Buying Drugs with Bitcoins
Silk Road is selling drugs online in exchange for BTC:
h p://www.forbes.com/sites/andygreenberg/2012/08/06/black-market-
drug-site-silk-road-booming-22-million-in-annual-mostly-illegal-sales/
I think this one speaks for itself.
Appendix A: Other Resources
Now that you know what a Bitcoin is, how to set up your own wallet, fund
your account, earn, spend and transfer BTC to government currency, you’re
all set. There should be no other informa on you need. J Not so. There
is so much more out there than the scope of this book.
The first place I recommend you take a look at is the wiki site:
h ps://en.bitcoin.it/wiki/Main_Page
Look at the Topic Central:

You can see the topics cover much more than this eBook did.

For in-depth technical informa on about the blocks:

h p://blockchain.info/
For a look at charts that show the market trends as a whole:
h p://blockchain.info/charts
Currency Exchange market watch can be found at:
h p://bitcoinwatch.com/
If you are going to get into mining, before you buy anything make sure you
consider the products at Bu erfly Labs:
h p://www.bu erflylabs.com/products/
Their new super computer line of mining rigs is the top of the line and 50
mes faster for the price than any of their compe tors. We only touched
on mining. Make sure you do your homework and plan first. If your
electricity costs are too high, you will not be turning a profit.
Besides the wiki, another great place to get informa on about the Bitcoin
world is through Bitcoin Magazine. This is an online publica on with print
versions available in many Barnes & Noble Book stores.
h p://bitcoinmagazine.net
At the bo om of the list of ar cles, there is a page selector so that you can
scroll to more ar cles. Check the last page, which lists some of the first
stories wri en about wallets which are good.
An Introduc on to Terminology:
Part 1 h p://bitcoinmagazine.net/introduc on-to-bitcoin-terminology
Part 2 h p://bitcoinmagazine.net/introduc on-to-bitcoin-terminology-
part-ii
I highly recommend that you visit the magazine. I’m a subscriber and enjoy
the ar cles.
Appendix B: Bibliography
anonymous. (2012, 9). Bitcoin. Retrieved 9 21, 2012, from Bitcoin wiki: h ps://en.bitcoin.it/wiki/Main_Page
Anonymous. (2012). Browser-based wallet. Retrieved 09 18, 2012, from Bitcoin Wiki:
h ps://en.bitcoin.it/wiki/Browser-based_wallet
Anonymous. (2012, 09). Using bitcoin-otc. Retrieved 09 23, 2012, from Bitcoin-OTC Wiki: h p://wiki.bitcoin-
otc.com/wiki/Using_bitcoin-otc#Trading
Kirk, J. (2012, Sep 4). BitCoin exchange loses $250,0000 a er unencrypted keys stolen. Retrieved Sep 18, 2012,
from PCWorld:
h p://www.pcworld.com/ar cle/261894/bitcoin_exchange_loses_2500000_a er_unencrypted_keys_stolen