What Is A Bitcoin
Bitcoin is held in addresses, and transactions on the public ledger show BTC moving from one or more source addresses to one or more destination addresses. At first glance, each Bitcoin address seems like random numbers and letters in both upper and lowercase.
But don’t worry, you don’t need to memorize, recognize, or type these addresses. If you need to send bitcoin to someone, you will either click a link that has the recipient’s Bitcoin address (and sometimes the amount of BTC) embedded in it, scan a code that contains the destination address, or copy/paste the address into your Bitcoin wallet from an email, website, or other source.
If you ever find yourself manually typing a Bitcoin address into something… STOP. Something is wrong.
One comparison you will hear often is that a Bitcoin address is like a bank account number. I prefer to compare Bitcoin addresses to
reloadable Visa gift cards. Each card has its own number, and none of them has your name on it. You or someone else loads a card with dollars and you spend it wherever debit/credit cards are accepted.
Once you spend it all, you can either load that same card with more money and keep using it, or you can buy a new gift card with a different number and use that one instead. Now imagine you had a wallet full of these debit cards, and the ability to transfer money between them.
You go to the coffee shop and use Card #1 to buy a latte. The drink is $2.50, and the card has $25.00 on it. After the transaction, you move the remaining balance, $22.50, to Card #2.
Later on, you use Card #2 to buy a magazine for $15.00. After this transaction (or, with Bitcoin, as PART of the transaction) you put the remaining $7.50 onto Card #3. This chain of transactions continues until your balance reaches zero. This is how you use Bitcoin.
Each card is a Bitcoin address, and you manage the addresses with a Bitcoin wallet that allows you to make transactions and shift balances between them. Depending on the wallet, leftover funds from a transaction (the change) will return to the original Bitcoin address or be sent to a new address that is generated automatically.
What luallet should I use?
There are a lot of Bitcoin wTallets to choose from. Some platforms (such as Android) have more choices than others, but wallets for your smartphone have nearly identical feature sets. Desktop wallets some additional features, but tend not to be as user-friendly. I recommend a mobile wrallet for beginners. I am partial to Mycelium on Android and Breadwallet on iOS.
Electrum is a good desktop wallet. If you’re using another wrallet, make sure it is storing data and performing the transactions on your device, not just serving as a front-end to a wallet service based in the cloud.
If you’re not sure how to tell, here’s a hint: If you can go to a website and type a username and password to access your BTC outside of the app… don’t use that service. Avoid web-based wallets.