The Ultimate Guide to Bitcoin

Michael Miller has written more than 150 non-fiction how-to books over the past two decades, as well as a variety of web articles. His best-selling books include Que’s Absolute Beginner’s Guide to Computer Basics, The Ultimate Digital Music Guide, and Is It Safe? Protecting Your Computer, Your Business, and Yourself Online. Collectively, his books have sold more than 1 million copies worldwide.   Miller has established a reputation for clearly explaining technical topics to nontechnical readers, and for offering useful real-world advice about complicated topics. More information can be found at the author’s website, located at www.molehillgroup.com.

1  Bitcoin: The Future of Currency?   1
Bitcoin in the News   2
What Is Bitcoin?   3
No, Really, What Is Bitcoin?   5
What Famous People Are Saying About Bitcoin   6
Does Bitcoin Really Matter to You?   7


2  Understanding Virtual Currency   9
What Is Currency?   10
What Is Virtual Currency?   11
What Are Digital Currency and Cryptocurrency?   13
Is Bitcoin a Virtual Currency?   14


 

3  A Short History of Bitcoin   17
Virtual Currency Before Bitcoin   18
Then Came Bitcoin   23
Bitcoin Today   32

 

4  How Bitcoin Works   33
Understanding Bitcoins   34
Walking Through Some Typical Bitcoin Transactions   35
Managing Bitcoin Transactions   40
Understanding Bitcoin Denominations   42
Verifying Transactions and Creating New Bitcoins   43
Understanding Bitcoin Encryption   45

 

5  Determining Bitcoin Value   49
Does Bitcoin Have Value?   50
Who (or What) Decides How Much a Bitcoin Is Worth?   52
How Much Is a Bitcoin Worth, Anyway?   53
How Has Bitcoin’s Value Changed Over Time?   54
Where Can You Find the Current Value of Bitcoin?   57

 

6  Should You Use Bitcoin?   61
Who Bitcoin Was Originally Designed For   62
Who Uses Bitcoin Today—and Why   63
Is Bitcoin for You?   67
What Next?   70

 

7  Trading on Bitcoin Exchanges   73
How Bitcoin Exchanges Work   74
How to Choose the Right Exchange   76
Exploring the Big Five Bitcoin Exchanges   77
Discovering Other Popular Exchanges   82
Making a Trade   85

 

8  Storing Bitcoins with a Bitcoin Wallet   89
Understanding Bitcoin Wallets   90
Examining Different Types of Bitcoin Wallets   91
Using a Bitcoin Wallet   97
Securing Your Bitcoin Wallet   98

 

9  Spending Bitcoins   103
Who Accepts Bitcoin Payments?   104
Paying with Bitcoin   108
Converting Bitcoin to Gift Cards   110
Using Bitcoin ATMs   111

 

10  Accepting Bitcoin Payments   115
Should You Accept Bitcoin Payments?   116
Evaluating Bitcoin Payment Processors   117
Accepting Bitcoin on Etsy   120

 

11  Mining Bitcoins   123
What Is Bitcoin Mining?   124
How Bitcoin Mining Works   125
Can You Be a Bitcoin Miner?   129
Joining a Bitcoin Mining Pool   134
Making Money Mining—Or Not   138

 

12  Speculating in Bitcoin   141
How to Speculate in Bitcoin   142
Speculating Is Risky   143
Speculating Can Pay Big Rewards   145
Should You Speculate in Bitcoin?   145
Five Tips for Speculating in Bitcoin   148

 

13  The Many Risks of Using Bitcoin   151
It’s Not Legal Tender   152
It’s Not Backed by Anything or Anybody   152
It’s Not Regulated or Insured   153
You Can’t Get Your Money Back   153
It’s Not Completely Secure   154
It’s Extremely Volatile   155
Some of the Players Are Less Than Upstanding   156
It’s Not Widely Accepted   156
It’s Not Understood   157
Powerful People Don’t Like It   157
It’s an Experiment   158
Bottom Line: You Could Lose Your Money   158

 

14  Exploring Other Virtual Currencies   161
Why Do We Need Even More Virtual Currencies?   162
Evaluating Alternative Virtual Currencies   163
Where Can You Trade All These Virtual Currencies?   172

 

15  Peering into the Future of Bitcoin   175
Scenario #1: Everything Is Awesome!   176
Scenario #2: Realizing Potential   177
Scenario #3: More of the Same   178
Scenario #4: It’s Marginalized   179
Scenario #5: Hell in a Handbasket   180
Which Future Will It Be? 181

 

A  Glossary   183



 

B  Resources   191
Information and Advocacy   191
Pricing and Charts   192
Feeds, Forums, and Message Boards   192
Exchanges   192
Wallets   194
Payment Processors   195
Mining Hardware   195
Mining Software   195
Mining Pools   195
Other Virtual Currencies   196

 

C  How to Read Bitcoin Charts   197
Line Pricing Charts   198
Candlestick Pricing Charts   198
Column Volume Charts   200
Combination Charts   200
Trend Lines and Channels   201

 

D  Donating (and Accepting) Bitcoins for Charity   203
Giving with Bitcoin   203
Accepting Bitcoins for Your Charity   206

 

E  Creating an Unhackable Paper Bitcoin Wallet   207
Understanding Paper Wallets   207
Creating a Paper Wallet   208

 

F  Why Prices Go Down   11



 

G  Bitcoin and Apple Pay   215



 



Index   217