Bitcoin Core has developed to a reliable, fast and feature rich Bitcoin wallet and it is getting more features with every release.
It stores the whole blockchain on the user’s hard drive giving the user Bitcoin how it was designed — free and with a fully validated transaction history stored locally instead of another parties server. It connects directly to other nodes. It’s being known as the first Bitcoin wallet, previously known as Bitcoin-Qt, that matured over the years. There are other clients too which look similar with the same name (see Step 1 for security advice) or a different name. Some are also not malicious wallets that are not made to steal your Bitcoin but are trying to get users to use their wallet to push for specific Bitcoin politics, by increasing their usage statistics. It’s recommended to first stay with Bitcoin Core if you don’t know what the differences are. Do not get fooled by posts and comments telling you otherwise that others are faster or better. There are wars going on discrediting wallets everywhere to get more users using a specific new and “better” wallet. Using different similar clients might support Bitcoin moving in different directions without knowing it, the main full Bitcoin client being used still is Bitcoin Core. For now it may be the best to not go against what the majority is using and staying with this. Bitcoin Core is the most trusted Bitcoin wallet that is around and has ever been since it is the first one. The security aspect relies on the security of the hosts operating system, it’s networked devices and the usage behaviour of devices in the local network. There also are wallet clients that do not need long blockchain downloading time, but this will be covered in other articles with recommendations.
You first need
100+ GB of free space on your hard drive for downloading the whole blockchain transaction history and more for future transactions, which are stored on your hard drive.
Patience
A broadband connection with preferably unlimited traffic
Some USB sticks only used for wallet backups
The will to make your computer clean, secure and take more care of your online browsing behaviour to. Security is needed for this wallet.
Before doing anything make sure your computer and all devices connected to the computer’s network are also free of any infections. It is recommended to use an anti malware scanner like AdwCleaner and anti virus software like Avira Free Antivirus on all computers in your network. For extra personal security of your files it nowadays it is recommended to install Malwarebytes Anti-Ransomware. It is in beta testing and not yet listed on their main product page so new versions may be found in their forums here. Ransomware tries to encrypt all your personal files holds them ransom until you pay the criminals a high fee in Bitcoin. Stay safe.
You can also use different security software, there is no “this is the best”-software. These are just recommendations because they are free.
Make sure to also scan all USB sticks you use on a regular basis.
Getting started
1 Download it from https://bitcoin.org/en/bitcoin-core/ and install it. Do not google it and go from there to download it, you have a high chance to land on a similar or different looking site offering you malicious walltes that steal your Bitcoin. The Bitcoin Core client is available for Windows, Mac OS X, Linux, ARM Linux and Ubuntu. It will automatically create the folders where the blockchain will be downloaded to. If you have an older Bitcoin-Qt or Bitcoin-Core client installed, it simply updates your files. You still should backup your wallet.dat file before upgrading. (See chapter 5 “Backup your wallet”)
2 Start it and grab some coffee, the first loading process will need a lot of time. It downloads all past transactions which are over 100GB. Depending on your computer’s speed and broadband connection the time it needs can vary. Very old computers can need several days or weeks. Newer and faster computers can process it faster. You need patience and it is only needed once. The downloads are being processed by others sharing the blockchain with the network. You also upload blockchain parts to others when you have the client running.
3 Don’t send Bitcoin to it yet, set up your password, by clicking on “Settings” and “Encrypt wallet”. It then asks you to enter your password. Once it has been set up you can not crack or hack it if you lose the set up password. Remember to choose a strong and long password containing upper- and lowercase letters, numbers and special characters. Do not use words or sentences, no matter how secure and unique they seem to you. Also do not store your password in digital form on any computer or phone. Write it down and store the paper safely, make sure you always can access it and it can not be damaged water, fire or getting lost by theft. Without the password you loose full access to your Bitcoin in your wallet forever. After the password has been set up it will shut down. Always let it shut down without aborting the shut down process, never try to kill the wallet task with your task manager, it can result in destroying your wallet and the downloaded blockchain.
4 Start it up again after the shut down. You now have your wallet encrypted and hopefully stored the password safely. No one can now access Bitcoin stored in your wallet without the password, not even a hacker. Only when you expose the password to a device while it is infected. So make absolutely sure you keep your security software running, scan on a regular basis and only enter your wallet passphrase in if your are absolutely sure the computer and all devices connected to it (e.g. networked computers or other devices) are clean too. Otherwise one device can infect the other one within your network.
5 Backup your wallet before sending coins to it. This is important. The wallet file is only meant for the Bitcoin Core wallet client. Go to “File” and “Backup wallet”. It then asks you for the destination of where to save the wallet backup. It is a wallet.dat file which holds all your personal wallet information. It holds your automatically generated unique Bitcoin address and your privatekey. Reusing an address after a transaction is not recommended, since it is a security risk. Send remaining funds after a transaction to a new wallet, which is associated to a new private key.
The privatekey is a technical detail in Bitcoin. A private key is automatically linked to a Bitcoin address and both of them are unique, generated for you. No one can crack or regenerate your privatekey. Keep the private key private! The Bitcoin transaction is always public and visible to everyone on blockchain transaction showing websites. Do never store the private key digitally or even enter it in any device if not necessary. If you have your privatekey (see chapter 6 “Backing up and importing your private key) you can always restore access to all Bitcoin that have been sent to your Bitcoin address with your private key with any wallet that let’s you import a private key. Be aware that hackers can also quickly steal your Bitcoin by only knowing your privatekey, they don’t need your wallet file for that.
The wallet file you backed up is encrypted with your password, and therefore as secure as your chosen password and method of storing the password.
It is recommended to not store it on the same computer where you have Bitcoin Core running. If your hard drive is dead some day you can’t access the original wallet with Bitcoin Core and also not your backed up wallet file.
You can now copy the wallet.dat file to your USB sticks. Remember to do backups on a regular basis! Everytime you generate a new wallet address or change anything in your wallet (importing a new privatekey or anything), you need to back up the wallet.dat file again. To make sure no file get’s corrupted you should backup the file to your USB sticks and save multiple file versions to them, older and newer ones. Also if one USB stick breaks and is not readable anymore, you still have other ones with the same data on them. Make sure to have enough copies! More than 2.
6 Backing up and importing your private key. Since your private key is the universal key to move your Bitcoin away from your Bitcoin address with any wallet, it is needed to also back this up on paper, just as secure as you did with the wallet passphrase. Go to “Help”, “Debugwindow”, “Console”.
First you need to unlock your wallet with your password. And again you need to be sure your system is clean of any infections.
Enter
walletpassphrase yourpassword 10
yourpassword representing the password you set up previously. The 10 represents the amount of minutes you wish to have your wallet unlocked. As long as it is unlocked, the Bitcoin in your wallet can be spend without entering your password again.
Now enter
dumpprivkey yourwalletaddress
yourwalletaddress is the address for receiving Bitcoin you want to get the private key for. You find your your wallet address(es) by going to “File”, “Receiving addresses”. Copy the address (right click, “copy address”). You can then paste the address into the console. It This displays the private key of one address sitting in your wallet, if you have more than one address, you need to do this for every single one. This command can be used to only display the private key of this specific wallet address. And the then displayed private key can only be used to restore access to the Bitcoin sitting in that address. The private key is, just as an address, case sensitive. Check what you write down several times and maybe import it again (see below) to make sure it’s valid. When you have written down your private key backup, click the “x” in the top right corner In the console window to clear everything the console has displayed. If you don’t do this and leave the computer, someone else in your surrounding area could walk to it, open the console again and see all past commands you have entered and also your private key.
If you need to import a private key you need to enter
importprivkey yourprivatekey
Where yourprivatekey represents your private key you have backed up on paper. After executing this command it will take a while to search through the whole blockchain for transactions that may have happened with the address which is linked to the private key you just imported. Let it load. After it’s done you will find your imported address in your address window. (“File”, “Receiving addresses”)
7 Adding addresses of persons or companies you are frequently paying to. Go to “File”, “Sending addresses”. There you can add the description (“label”) and the address of a recipient. Bitcoin addresses can change, especially for private persons, since it is recommended to not reuse the same address twice and send remaining funds after a transaction to a new address, which has a new private key associated to it. Be sure to check if the address is up-to-date. If you send Bitcoin to an address the recipient does not control anymore, the Bitcoin can not be recovered and are lost forever, since there is no way to crack or hack into an address where someone doesn’t have control with their wallet or privatekey anymore. They are then staying in their address destination and can never be accessed, these are “burned” Bitcoin.
Filling your Wallet with Bitcoin
If you have bought Bitcoin from an exchange or a person directly (see this article to see how to do it) you can send Bitcoin to your wallet by going to “File”, “Receiving addresses”, copy the address you want to have your Bitcoin in and paste it in the sending form of your exchange or give it to the person you are buying Bitcoin from. Make sure you have backed up the private key of the address like mentioned earlier. It then may take some confirmation time to have it spendable. You can see if it’s ready to send to the next wallet address by going to “Transactions”, it displays the confirmation status on the left.
Sending your first Bitcoin Transaction
1 Go to “Send” and fill out the forms. The recipients address goes to “Pay to”, you can also click on the contacts button on the right to pull up your saved addresses. If this address is not in your contact book, you can set an address description below at “Label”, it will then be added to your contacts after the transaction has been made.
2 The “Amount” is how many Bitcoin you want to send. You can send 1.00000000 Bitcoin (1 full Bitcoin), but don’t have to. You can also send a portion of your Bitcoin such as 0.10000000 Bitcoin or 0.01000000 Bitcoin.
It doesn’t matter if you type in 0.5, 0.1, 0.10, 0.10000000 or 0.12345678. Any amount is possible and you can leave the zeroes after your amount away. (Currently too small amounts that are less than 0.001 are hard to get pushed through the network)
Type the amount number with the “.” in and without Bitcoin or anything after it. You may want to start with a very small amount representing what you are ok with to lose if it goes wrong, such as an amount representing a dollar or two. Bitcoin has 8 places after the decimal point making it possible to send less than a full Bitcoin. Keep in mind to recheck the amount you entered numerous times before sending, it can not be reverted once it has been send out! The dropdown menu next to the amount’s text field represents the unit it is being displayed. Do not mix this up. It is recommended to have set this dropdown menu to “BTC” to have the regular default unit showing 1.0 as 1 full Bitcoin and e.g. 0.5 as half a Bitcoin. Other units may confuse you at first.
3 The fee is the next thing to set. Your transaction is only being sent out successfully with a fee that matches the current fee requirements. Right now as of writing this the fees are a bit high because of the transaction volume Bitcoin is having. The client recommends you a “normal” fee, resulting in some waiting time until a transaction has been “confirmed” by miners. You can see the little button at “Confirmation time” you can slide to the left and right. With this you can lower and higher the fee. The higher you set it, the sooner your transaction will get confimed. Don’t set it too high. And not too low. No matter what the fee may be, until the transaction volume problem has not been solved in Bitcoin by developers the needed fee can go up and down fast, so you need to expect at least some waiting time. You can also visit https://bitcoinfees.21.co/ to see and calculate the best fee to make sure it goes through, depending on how fast you want it to be fully confirmed. https://bitcoinfees.21.co/ offers good statistics and recommendations.
0 confirmations means it’s basicly not in the recipients wallet yet, 1 confirmation means it’s basicly already there. The fee makes the difference between 0 and 1 or more confirmations and the time you get them. The Bitcoin only reappears in your wallet if your transaction fee was currently too low and the network did “drop” (reject) the transaction. This happens when no miner did give your transaction at least 1 confirmation and it stayed at 0 confirmations for too long. If it has at least 1 confirmation, more confirmations are sure to be followed and it was successful. A transaction can also stay with 0 confirmations for a long time (anywhere between hours, days or weeks). So having it reappear (or having it spendable again) in your wallet if it was unsuccesful can take long waiting times. An amount of Bitcoin that is being sent out can not be spend until the sending process did not get confirmed or rejected. The remaining Bitcoin can be spend meanwhile.
4 Carefully check all entered amounts and the address of the recipient again and then send it out. Click “Send” and it then asks you for your password if your wallet is locked. Enter your password, if you are sure your system is clean of any infections of all kinds. After clicking “OK” the transaction is sent and you can not get the money back.
You just did your transaction and hopefully it went through fast!
There will be an article soon covering the tweaks of Bitcoin Core, speeding it up and handling errors.
This article should be taken as an informational recommendation article. The author can not be held responsible for any financial or technical damages that may result. Use with caution and educate yourself on security. This article also represents no advice on investment or trading. Bitcoin has a highly volatile price, you can lose your invested funds or data on your system fast. And also you can lose your Bitcoin balance based on security affecting things with your system, network and devices since this article can not cover everything of every users different system settings, browsing behaviour, installed 3rd party software and more. Take care of security and be sure that Bitcoin still is in an experimental phase where things can go wrong and software is not perfect. And remember to have fun experimenting around with Bitcoin and to not experiment with what you can not afford to lose.