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Decoded
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[FAQ] 7 Answers to the Most Common Bitcoin Queries

Sun Dec 25, 2016 12:56 pm

Due to the excessive amount of questions made by newbies here and on bitcointalk of the same group of questions, I've compiled a list of the top 5
most common bitcoin problems and questions, and their solutions. Feel free to contribute whatever you can, and if you found this post informative, please click the "thumbs up" at the bottom of my post.

Each point will be in detail, with a quick summary, labelled TL;DR.

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1. I'm interested in using Bitcoin. What wallet should I use?

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This is one of the most common questions asked to me in real life, and asked on the forum. The thing is, it's entirely your choice, but there are key things you should know. Most people will go for the normal "full" wallets, like Bitcoin Core, Bitcoin Classic or Bitcoin Unlimited. These wallets act the same in essence, but downloading the latter two signifies that you support their respective forks, or communities. I'll get to this on a later point. Newbies usually choose these wallets because they are the main ones featured on bitcoin.org, or wallet.bitcoin.com.

What people are not informed about is that they will be required to download the whole blockchain, a public ledger of all bitcoin transactions in history. The blockchain is currently almost 100 gigabytes in size. If you don't want to download this huge package, a full wallet isn't for you. Try an SPV wallet (One that connects to other computers to retrieve snippets of the blockchain live when you need it, meaning no download and fast speeds) like Electrum, or a multisig client (An SPV wallet, but with additional security, because you need multiple access keys to use it, meaning it's harder for a hacker to gain access to your bitcoin) like Greenaddress or BitGo.

A comprehensive guide to the huge world of bitcoin wallets can be found here - Bitcoin Wallets - Which one is the best for you?

TL;DR: For a regular user, the best choice would to use a SPV wallet like Electrum or a multisig wallet like Greenbits or BitGo. Normal Full wallets require a 100GB download to work properly. Check the link above for an explanation of the different types of wallets.


2. My wallet has a loading bar at the bottom that is going very slowly. It says "Synchronising with network". Is it broken?

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Nope. Your wallet is simply synchronising the blockchain, trying to catch up to every other device on the network, so it knows every single transaction that has passed. The aim of the bitcoin network is for everyone to be equal, and no one has no power above anybody else. The blockchain is currently just below 100 gigabytes in size, which will take a couple of hours to a couple of days to download, based on your download speed.

If you don't want your computer to download such a file, then try installing a SPV or multisig wallet, like stated above. More info can be found here.

TL;DR: Nope. If you are receiving this message, then you are running a full wallet, like mentioned above. It requires a huge 100 gigabyte download to function to it's full capability. Try using a SPV or Multisig wallet.

3. I've been scammed/I want to scam someone. Can I refund my bitcoin transaction?

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I'm sad (Or happy, if you want to scam someone) to say this, but you can't refund a transaction once it has been sent.

Depending on the wallet that you are using, you could try to double-spend the transaction, basically by sending the same bitcoin but in a different transaction. Since the network is not able to decide which transaction was sent first, because transactions are relayed through each node of the network, meaning that a transaction that was actually sent first could have been received later than a transaction sent after, all transactions are put into a pool, which is then mined according to the transaction fee. The higher the fee, the higher chance of being confirmed.

A guide for this on a full bitcoin client can be found here.

4. What is a Bitcoin "fork"?

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When it comes to coding, a "fork" is when someone uses existing code of an application, program, etc and changes it. It is as if this someone is creating a fork in the road. There is the original, then the fork.

In Bitcoin terms, a fork is the same way. Some people want to make a change with Bitcoin, so they take the source code, make changes to it, then publish it. This is what Bitcoin Classic, Bitcoin Unlimited and Bitcoin XT are. For an easier transition, most forks run exactly the same as the normal Bitcoin client, until a specified percentage of Bitcoin users are using the fork, then the changes become active.

A recent fork happened with Ethereum, after a huge back occured. Some proposed a hard fork that returned Ethereum back to the state it was before the hack, and some didn't want to change. So the latter became Ethereum Classic, and the former, just Ethereum. This is an example of a fork not going so well.

TL;DR: A Bitcoin fork is when some people decide to create their own version of Bitcoin, and push it out to the community. If everyone agrees, then they all move over and apply the changes.

5. How do I earn Bitcoin fast?

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This is a question that triggers about everyone who knows a decent bit about Bitcoin. Bitcoin is an asset. Like gold, like cash, like anything of value. Sure, you can find a couple of cents on the street, like you can find a faucet online that pays you a whopping "500 satoshi an hour". If there was a way that you could magically make Bitcoin out of thin air, then everyone would be doing it, and Bitcoin wouldn't be worth what it is today.

TL;DR: Bitcoin is like anything else that you own that is worth money. You can't just get it. You have to earn it. Work for it. Whatever you can do to get money, you can do to get Bitcoin.

6. I've heard that bitcoin is illegal. Is this true?

Not in the slightest. Bitcoin is just like any other currency or asset, but in a purely digital form. The popular misconception that bitcoin is illegal is due to badly worded facts by the media, or even that the people writing the articles don't know a thing about the words they are typing.

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A misconception like this could have originated from Bitcoin being used within the dark web, through illicit trades on sites like The Silk Road. The thing is, bitcoin is used less than other forms of payment there, like cash or trading something else of value. It's just that bitcoin is new and people don't understand it fully.

TL;DR: No. Bitcoin is perfectly legal, like cash or gold. In fact, it is used less in illicit trade that the mentioned payment method. Bitcoin is just being targeted by the media due to the low common knowledge of it.

7. Is Bitcoin anonymous? If so, isn't that bad?

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Bitcoin is not anonymous, but pseudo-anonymous, meaning it boasts "fake anonymity". Compared to the traditional form of privacy, where a person's information (In bitcoin's case, transactions and your identity) are kept secret from everyone, except for the service provider, who has access to your information and supposedly keeps it safe. You are relying on that third party not to cheat you.
With bitcoin's current privacy model, the transactions are public, so everyone can see that money is being transferred, but your identity is kept secret, since no ID is tied to any transaction or bitcoin address, unless you choose so. This means that you can be open or anonymous. It's your choice.

The problem with this is that if you release your identity to a third party (for example, you send Apple a bitcoin transaction for an iPad, which they will ship to you), that third party can see where your bitcoin has come from, and trace the bitcoin. But only from that bitcoin address. This is why some people never reuse bitcoin addresses.

TL;DR: No. Bitcoin uses a different type of anonymity, what people call "pseudo-anonimity" or "fake-anonymity". All your transactions are kept public, however no identity is linked to them. If you don't release your identity, then you are totally anonymous.

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This is an informative guide made for new Bitcoiners. Feel free to share any info by posting in the thread, and sharing this thread with others. If you found this helpful, please click the thumbs up button just below.
Last edited by Decoded on Mon Dec 26, 2016 11:42 am, edited 2 times in total.
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Re: [FAQ] 5 Answers to the Most Common Bitcoin Queries

Sun Dec 25, 2016 2:04 pm

Excellent post Decoded, I can already see that this will be a great post for beginners to get started on, very informative thank you.
I especially like the TL;DR addition.

It's top quality posts like these that are going to have a good chance of winning the 4btc prize on offer.
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