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[table="align: center"][tr][td][b]$1000USD =[/b] [img]http://fizzisist.com/priceimg/img/1000[/img][/td][/tr][/table]
[video=youtube;Um63OQz3bjo]http://www.youtube.com/watch?v=Um63OQz3bjo[/video]
[table="align: center"][tr][td][h2]FAQ[/h2][/td][/tr][/table]
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[b]What is Bitcoin?[/b]
Bitcoin is an open source digital currency, backed by no government or central entity.
[b]How is it a currency?[/b]
Because people agree that it is. It isn't very far off from hats on TF2.
[b]How does it function?[/b]
Each person running the official software is a node. Each node receives information about transactions and blocks, and then relays it to other nodes. This is how Bitcoin is decentralized. A person's client, or "wallet" holds their digital coins. They are given an address that is theirs. If the owner of wallet A wanted to send money to an online service, wallet B, they would copy wallet B's bitcoin address, and send a transaction to it using their wallet. So some or all of the money on wallet A would then transfer to wallet B. [url=http://blockchain.info/tx/1d9163217b3fa7140277b455a6bc83774278ad81452a17a367ba5dd2f1f5cb98]Here is an example of a transaction[/url]. Every transaction is view-able, but as you can see the addresses leave no trace as to whom sent it. The address "1Ec9671JzcVid8nmvW3zCKjpb4NvWq3DZk" is gibberish, no personal information is there.
[b]How is a bitcoin "created"?[/b]
Miners start by putting hardware to work on solving an algorithm. When it is solved, the node they are mining on relays the solved "block" to other nodes, and it branches off. Eventually, after enough other blocks were solved, the block becomes "confirmed" and rewards the miner with 25 (previously 50, before reward halving) Bitcoins.
[b]Why does this happen? What is the point of a block?[/b]
The real point of a block is to write transactions to the network. Blocks typically include many hundred to thousands of transactions, and in theory one should be solved somewhere in the world every 10 minutes. By writing a transaction to the network, the transaction itself is also "confirmed", and can not be unwritten. This means that the transaction was considered by the node real, and non-malicious.
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[table="align: center"][tr][td][h2]Mining[/h2][/td][/tr][/table]
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[b]Rewards/Transaction Fees[/b]
The reward from a block goes to the miner for spending the time and electricity to support the network by mining. Eventually, rewards will be so small that mining a transaction-less block will be worth almost nothing. This is where fees come in. Including a fee in a transaction gives your transaction a higher priority. Since transactions can vary in size, a huge transaction that is sending bitcoins to hundreds of addresses will want to use a much larger fee then a tiny transaction. Would you rather sign 100 pages for a penny or 1 page for a penny? Far in the future when block rewards are so small they mean nothing, fees will be used to credit miners. The block rewards are simply to A. Reward the miner for his work early in Bitcoins cycle, and B. to distribute the coins fairly.
[b]Difficulty[/b]
Difficulty is what keeps bitcoin creation consistent. Difficulty is the, well difficulty of how hard it is to solve a block. If more people start mining, more blocks are created faster then intended, so the difficulty increases. So, you can expect 50400 new Bitcoins to be in existence in roughly 14 days because of the difficulty changing every cycle (2016 blocks).
[b]Pools[/b]
Pools are simply multiple miners putting their hashing power together to solve blocks faster. Once a block is solved it is distributed fairly among all the miners. (Example: If there was 3 miners, one with 50Gh/s, and two with 100Gh/s, the two 100Gh/s miners would get 10BTC from each block solved. The 50GH/s miner would get 5BTC each block because he is 1/5th)
Mining at a pool won't make you any richer then mining solo, but it greatly decreases variance. While you could solve 2 blocks in a day by yourself and be 50BTC richer, you could also go 6 months without solving a single one. Pooled mining solves that problem.
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[table="align: center"][tr][td][h2]Where to start?[/h2][/td][/tr][/table]
[table="align: center"][tr][td][b]Client/Wallets[/b][/td][/tr][/table]
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[b]Online[/b]
Online wallets are just that, a bitcoin wallet hosted online. This is the simplest way to get started with bitcoin.
[url=https://blockchain.info/wallet/]Blockchain.info[/url]: Probably one of the most trustworthy and noteworthy bitcoin sites in existence. The wallet is 100% encrypted and only you can locally decrypt it in your browser with your password. They cannot see your transactions, or access your coins themselves.
Exchanges can double as online wallets as well. If you trust an exchange not to steal your coins (mtgox or btc-e are trustworthy in my book) then they can make good online wallets. Though, they lack the features of dedicated online wallets.
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[b]Offline[/b]
Offline wallets are wallets stored on your computer. A few popular wallets are listed below.
[url=https://multibit.org/]Multibit Client[/url]: Multibit is an open-sourced multi-platform bitcoin client that sports many features. It is very light, and only downloads as much as the bitcoin block history as it requires to function. For this reason, you will not be a node. For regular users, this is a fine client to use. For someone planning on running a bitcoin service or trading thousands of dollars/euros worth of coins, see the next choice.
[url=http://bitcoin.org/en/download]Official Client[/url]: While it may seem smart to use the official client, you are also running an entire node, therefore bandwidth, cpu, and storage will be consumed like mad. For a regular user, I wouldn't recommend this client unless you know what you are doing or are in ownership of at least a few dozen bitcoins.
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[table="align: center"][tr][td][b]Obtaining Bitcoins[/b][/td][/tr][/table]
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[b]Buying BTC[/b]
[sub]There is a newbies guide to buying bitcoins [url=https://en.bitcoin.it/wiki/Buying_Bitcoins_(the_newbie_version)]here[/url]. It answers a few questions people always ask about how to go about buying bitcoins.[/sub]
[url=http://bitexchange.net/beta/]BitExchange[/url]: Requires verification, but has support for a Credit/Debit Card. Especially International.
[url=https://www.bitinstant.com/]BitInstant[/url]: A popular method. Bring money to Walmart or a local drug store and come home to bitcoins. Almost exclusively American.
[url=https://www.spendbitcoins.com/buy/]Spend Bitcoins[/url]: Fixed rate AUD/BTC exchange. A tad expensive, but very best choice for Australians.
[b]Selling BTC[/b]
[url=http://fastcash4bitcoins.com/]Fast Cash 4 Bitcoin[/url]: supports Paypal, ACH, Bank Wire, Dwolla, and Check. Probably all around the best place to sell your bitcoins for quick cash.
[b]Exchanges[/b]
[url=https://mtgox.com/]MtGox[/url]: the most popular exchange site. Recommended for Americans and Europeans. Technically International.
[url=https://btc-e.com/]BTC-e[/url]: Another popular exchange. Recommended for Russians especially, Americans, and Europeans. Technically International.
[url=https://www.bitstamp.net/]Bitstamp[/url]: Recommended for Europeans especially. Small Bitcoin exchange. Technically International.
[b]Goods and Services[/b]
[url=https://en.bitcoin.it/wiki/Trade]Bitcoin Wiki[/url]: Thousands of merchants can be found here. Anything from web hosting, to electronics, to professional services like Psychotherapy.
[b]Equities/Investments[/b]
[url=https://btct.co/security]BTC-TC[/url]: A popular exchange.
[url=https://cryptostocks.com/securities]Cryptostocks[/url]: Also has support for Devcoin and Litecoin.
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[b]Mining Software[/b]
[url=https://bitcointalk.org/index.php?topic=31163.0]BitMinter Client[/url]: Simplest miner, very nice GUI, but with a downside (or maybe an upside). It is made for one specific pool. Has some pool specific features built in. See BitMinter in Pools section below.
[url=https://bitcointalk.org/index.php?topic=3878.0]GUI Miner[/url]: If you want to sacrifice some mining speed and customization for a GUI, then try GUI Miner.
[url=https://bitcointalk.org/index.php?topic=28402.0]CGMiner[/url]: This is for people who want to spend time tweaking and finding the perfect settings. Also supports Litecoin (scrypt).
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[b]Pools[/b]
[sub]For complete list of pools and reward methods, see [url=https://en.bitcoin.it/wiki/Comparison_of_mining_pools]the wiki[/url].[/sub]
[url=http://ozco.in/]OzCoin[/url]: My personal favorite. 1-3% fee, and has DGM, PoT, and PPS reward methods. Merged Mining NMC.
[url=http://bitminter.com/]BitMinter[/url]: A PPLNS pool with ZERO fees to mine. Merged Mining NMC.
[url=https://50btc.com/]50Btc[/url]: A PPS pool that has been around a long time. 3% fee. Currently a large part of the network at 7TH/s.
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[b]Reward Methods[/b]
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[b]Prop[/b]. - Proportional. When block is found, the reward is distributed among all workers proportionally to how much shares each of them has found.
[b]PPLNS[/b] - Pay Per Last N Shares. Similar to proportional, but instead of looking at the number of shares in the round, instead looks at the last N shares, regardless of round boundaries.
[b]DGM[/b] - Double Geometric Method. A hybrid between PPLNS and Geometric reward types that enables to operator to absorb some of the variance risk. Operator receives portion of payout on short rounds and returns it on longer rounds to normalize payments.
[b]PPS[/b] - Pay Per Share. Each submitted share is worth certain amount of BTC. Since finding a block requires <current difficulty> shares on average, a PPS method with 0% fee would be 25 BTC divided by <current difficulty>. It is risky for pool operators, hence the fee is highest.
[b]PoT[/b] - Pay On Target. A high variance PPS variant that pays on the difficulty of work returned to pool rather than the difficulty of work served by pool [6]
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