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How you get and manage Bitcoin

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This chapter is especially important because there are a few things that you must absolutely be aware of when you buy, own, or keep cryptocurrencies like Bitcoin. The author of this very book lost Bitcoin because he was not careful enough with his private keys. The instructions in this chapter could save your Bitcoins and should, therefore, be taken very seriously!

So-called “wallets” are used within blockchain systems to manage the crypto-units, coins or tokens pertaining to a certain wallet, which contain addresses. It is these addresses to which the results of transactions have been or are assigned. Once again, it sounds complicated, but this time it really is not!

The concept of wallets has become well-established worldwide. A wallet is a place in which one can see the status or content of a certain address in a blockchain. It is through this wallet that one can both send and receive money. Put simply, it is special software, much like an online banking portal, in which you can call up your account balance and carry out payments.

A transaction in a blockchain is always a transfer of the cryptocurrency from one participant to another. Strictly speaking, it is from one address to another. The participants may be sensors or other computer units which can process the transferred data. If the temperature in the room exceeds 29 degrees, you should close the blinds, for example. You might not need a blockchain for that, but this should show what kind of value transfers could take place in our modern world. It is even clearer if you imagine an electric car stopping at a red light and the battery being automatically charged by an induction loop embedded in the road. For this, the car pays the road concerned for 32 seconds of electricity by supplying, for example, 0.00001 BTC from its crypto-wallet. This is a technology which is already being actively tested, so it is no science-fiction scenario. Of course, the participants may also be people who are transferring or receiving money. Or, in our case, transferring or receiving cryptocurrencies like Bitcoin, Ether and others, or perhaps an important medical certificate or identity documentation, which also count as transfer of values.

Bitcoin, Blockchain & Co.

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