Bitcoin is like fire. It can serve you or burn you with equal speed.
Your best defense is to develop a good mental picture for how Bitcoin works — before attempting to store or transmit significant amounts of money.
Do you learn best by doing?
If so, consider setting up a Bitcoin wallet now to make important concepts less abstract. One of the Best beginner wallets is Electrum. It combines an uncluttered interface with power features. This combination makes Electrum especially useful for beginners who want an easy-to-use wallet that will serve them well over the long term.
Should you decide to set up a wallet now, two articles may be helpful:
Most beginners struggle to learn even the basics of Bitcoin because they skip over one basic fact. Bitcoin is an electronic cash system. This term has a very specific meaning which may not match your current mental picture.
Most people imagine electronic cash to be a synonym for electronic payments. For example, credit cards and banks perform electronic payments by debiting money from one account while simultaneously crediting it to another.
This isn’t how bitcoin works.
The situation is made worse by hundreds of beginner guides that talk about a global transaction “ledger,” further reinforcing the misconception.
The following articles will help replace any misconceptions you may have with a better idea of what Bitcoin transactions are actually doing:
- Bitcoin: Think of It as Electronic Cash
- Five Ways to Lose Money with Bitcoin Change Addresses
- Who Needs Bitcoin Change Addresses Anyway?
Few topics in Bitcoin seem as unapproachable to beginners as cryptography. Fortunately, it’s not as bad as it seems.
Only two basic forms of cryptography are used, but they appear repeatedly and in a variety of contexts. Mastering these forms, even at a high level, will allow you to understand many aspects of Bitcoin’s operation. They are:
- hash functions; and
- digital signatures
For a high-level introduction to the cryptographic techniques used in Bitcoin, see:
- Six Things Bitcoin Users Should Know about Private Keys
- Seven Things Bitcoin Users Should Know about Hash Functions
Putting it All Together
Having created a wallet and learned the basics of electronic cash and cryptography, consider building your understanding of the big picture. Two resources can help:
Where you go next depends on your goals. If you plan to use Bitcoin as a store of value, then you’ll need a solid understanding of cold storage and operational security. If you plan to develop software for Bitcoin, then setting up a node and working with certain software packages might be valuable.
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