Demartino - Bitcoin guidebook - how to obtain, invest, and spend the worldÏ¿½ s first d

Copyright 2016 by Ian DeMartino

All rights reserved. No part of this book may be reproduced in any manner without the express written consent of the publisher, except in the case of brief excerpts in critical reviews or articles. All inquiries should be addressed to Skyhorse Publishing, 307 West 36th Street, 11th Floor, New York, NY 10018.

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Library of Congress Cataloging-in-Publication Data is available on file.

Cover design by Rain Saukas

Print ISBN: 978-1-63450-524-6

Ebook ISBN: 978-1-5107-0148-9

Printed in the United States of America

To my parents, Jon and Tamah, for always supporting me.

To my girlfriend, Laura, for teaching me how to work and live.

To my editors, Jon, Erica, Olga, and Joe, for putting up with me.

And to all the freaks and geeks on the Internet for being the worlds greatest teachers.

Thank you.

C ONTENTS

Foreword

This is my first book, so I cant pretend to be an expert on how these things are supposed to go. What I do know is that when you sit down to write a book, you should make sure you know who your audience is. This is true about writing anything, but it is particularly true when you sit down to write 80,000 words. No one wants to look back on all that work and think to themselves, What was it all for?

So I spent some time thinking about whom this book should address. I knew right away it wouldnt be for programmers; I am not a programmer and they understand what is under the hood of Bitcoin better than I, so there is no point in me trying to speak to them. Mastering Bitcoin: Unlocking Digital Cryptocurrencies by Andreas M. Antonopoulos is a much better book for programmers. I also knew it wouldnt be targeted at investors. I have never had the kind of disposable income to get serious about day-trading cryptocurrencies. There are dozens of ebooks by former Wall Street investors and current Bitcoin day traders who have far more experience in that field than I do.

I decided to write the kind of Bitcoin book I would want to read, had I been picking up a book about Bitcoin in 2012, before I started writing about it professionally.

What I would have wanted back then was a book that explained Bitcoin to me in terms that I could understand, but didnt hold back on letting me know what is possible. I also would have wanted to be informed about both the good and the bad of cryptocurrencies. It seems to me that Bitcoin evangelists too often gloss over the negative aspects of the community and with this book I intended on covering everything, warts and all.

One book, BitCon: The Naked Truth About Bitcoin , touched on some of these subjects, but it was rather short and seemed determined to make an ideological point rather than giving an honest look. It was all warts, nothing else.

This book doesnt shy away from the bad things Bitcoin is doing and the pitfalls it faces, but neither does it ignore the light that appears to be just over the metaphorical horizon, giving reason for hope.

By the end of this book I want you, the reader, to be able to discuss Bitcoins ins and outs with anyonefrom its past to its present to its potential future. You wont go from reading this book to programming the next great Bitcoin service, but the next time you hear someone mention Bitcoin at a dinner party, I guarantee you will be able to keep up in the conversation.

This book wont make you excel at any one aspect of Bitcoin. Rather, it is designed to make you a Jack of all trades or a B student in Bitcoin. You will understand it, you will understand how to use it, you will know where it came from, and you will have an idea of where it is going.

However you have obtained this book, I thank you for taking the time to read it and I hope you find it helpful in some way. If you would like to donate to the author, you can do so with the following QR code:

Bitcoin Address: 3Bi1fhng5LfoDzue5MTfGw9PgHNKKgRkVt

Disclaimer: Although I have attempted to make this book as accurate as possible, cryptocurrencies are complex and constantly evolving. So it is worth mentioning right off the bat: do your own researchthings can change from month to month and week to week. I also make no claim to the legitimacy of the companies mentioned in this book, as their status can change at any time.

Keywords

altcoin: Short for alternative cryptocurrency; another cryptocurrency similar to Bitcoin. There are more than a thousand altcoins currently in existence; most are nearly exact copies of more successful cryptocurrencies, but some very innovative ones have been produced as well.

ASIC: Application-specific integrated circuit. A piece of hardware designed to do one thing and one thing only. In the cryptocurrency world, it mines for a specific algorithm (SHA256, Scrypt, etc.).

BFGMiner: The second most-popular Bitcoin-mining software.

Bitcoin/bitcoin: Bitcoin with a capital B refers to Bitcoin the system, the network or the currency as a whole; bitcoin with a lowercase b refers to individual bitcoins, as in, I have five bitcoins.

Bitcoin-Qt: Also called Bitcoin Core, it is the primary implementation of Bitcoin and what all other wallets and services are based on.

Bitcoin XT: An alternative implementation of the Bitcoin code, compatible with the current main implementation of Bitcoin, that was pushed primarily by Gavin Andresen and Mike Hearn. It is used to test new features and entered the public consciousness as a possible replacement for Bitcoin-Qt if the various factions in the block size debate could not reach a compromise. It offered 20MB-sized blocks as a primary feature.

block: Transactions on the blockchain are grouped into blocks, confirmed by miners roughly every 10 minutes. They are currently limited to 1MB in size but that is likely to change in the near future.

blockchain: The decentralized public ledger that makes Bitcoin work. Every transaction and account is kept track of here. Not to be confused with Blockchain.info the website or its parent company, Blockchain. Also used to refer to any upcoming technology that uses a public ledger to keep track of digital value; i.e ., They are developing their own blockchain technology.

block explorer: A website or piece of software that allows users to observe and follow Bitcoin transactions through the blockchain. Can also be used to describe similar systems for altcoins blockchains.

CGMiner: The most popular Bitcoin-mining software.

cold wallet : A wallet on a computer or storage disk that is not connected to the Internet and must be momentarily connected to the Internet and turned into a hot wallet in order to sign transactions. Can then be turned back into a cold wallet.

core developer: Developer of a cryptocurrency who has access to git commits in the sites GitHub page.