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But you’ll need a wallet

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As we mention earlier, it’s the wallet that sends messages to the blockchain. But it’s more than that. The wallet is where everything begins as far as your Bitcoin is concerned. When you create a wallet file, the wallet software creates a private key. That private key is used to create a public key, and the public key is used to create an address. The address has never before existed in the blockchain and still doesn’t exist in the blockchain yet.

After you have an address, you have a way to store Bitcoin. You can give the address to someone from whom you’re buying Bitcoin or to an exchange, for example, and they can send the Bitcoin to that address — in other words, they send a message to the blockchain saying, “Send x amount of Bitcoin from address x to address y.” Now the address exists in the blockchain, and it has Bitcoin associated with it.

A wallet program is a messaging program that stores your keys and addresses in a wallet file. The wallet program does these primary things:

 It retrieves data from the blockchain about your transactions and balance.

 It stores your private and public keys.

 It sends messages to the blockchain transferring your crypto from your addresses to other addresses, such as when you make a purchase using your Bitcoin.

 It uses your public keys to create addresses you can give to other people when they need to send Bitcoin to you.

There’s lots more to find out about wallets; you can discover more about them in Chapter 4.

Here’s a quick summary and an image (see Figure 2-4) to reiterate the wallet’s role and to help you put it all together:

1 Bitcoin is stored in the blockchain.

2 Your Bitcoin is associated with an address in the blockchain.

3 That address is mathematically associated with a public key.

4 The public key is mathematically associated with a private key.

5 Those keys are stored in your wallet.


FIGURE 2-4: The Bitcoin is associated with an address in the blockchain; the address is derived from the public key, which is associated with a private key … which is kept safe in a wallet.

Bitcoin For Dummies

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