Professional Documents
Culture Documents
Bitcoin
Professional
Study
Guide
Terry
Woltman
2015
Study
guide
for
the
key
questions
covered
by
the
CryptoCurrency
Certification
Consortium
Certified
Bitcoin
Professional
Examination.
T e r r y
W o l t m a n
2 0 1 5
v 1 . 0
Acknowledgments
I
very
much
want
to
thank
those
that
helped
review
and
edit
this
guide.
As
well,
I
want
to
thank
the
Bitcoin
community
and
industry
for
the
width
and
breadth
of
information
available
that
allowed
me
to
even
put
this
guide
together
in
the
first
place.
And
finally,
a
thank
you
to
CryptoCurrency
Certification
Consortium
team
for
putting
together
a
program
where
Bitcoin
professionals
can
certify
their
knowledge.
Introduction
When
I
first
took
the
Certified
Bitcoin
Professional
examination,
I
was
concerned
that
even
though
I
had
dove
deeply
into
learning
as
much
as
possible
about
Bitcoin,
I
may
have
misunderstood
key
topics
or
have
gaps
in
my
knowledge
that
would
lead
me
to
not
pass
the
test.
Since
the
exam
is
timed,
one
must
have
the
understanding
to
pass
the
test
in
the
allotted
time
and
have
reference
documents
at
hand
to
quickly
review
concepts
you
may
have
missed
or
need
immediate
clarification
on.
What
this
guide
isnt:
This
guide
is
not
a
beginners
intro
to
Bitcoin.
I
have
had
to
assume
the
reader
has
a
base
level
of
knowledge
to
start
from.
You
should
have
had
a
wallet
of
some
type,
been
able
to
find
or
buy
some
bitcoin
and
maybe
even
transfer
some
around.
If
you
are
just
starting
out,
I
would
suggest
doing
some
initial
learning
before
attempting
this
guide
or
the
CBP
examination
here:
https://en.bitcoin.it/wiki/Introduction
https://en.bitcoin.it/wiki/Getting_started
https://en.bitcoin.it/wiki/FAQ
This
guide
is
also
not
a
definitive
guide
to
Bitcoin.
It
has
been
written
to
cover
most
of
the
topics
you
can
expect
in
the
CryptoCurrency
Certification
Consortiums
Certified
Bitcoin
Professional
examination.
I
have
tried
to
include
links
to
more
in-
depth
information
where
appropriate
so
that
you
can
learn
more,
though
it
should
not
be
required
for
the
test.
Contents
History
of
Money
and
Ledger-based
Economics
..........................................................................
5
Centralized
Ledgers
.............................................................................................................................
5
Functions
of
currency
.........................................................................................................................
5
Distributed
Consensus
.......................................................................................................................
6
History
of
Bitcoin
..................................................................................................................................
6
Price
Derivation
....................................................................................................................................
7
Basic
Cryptography
..................................................................................................................................
8
Some
Cryptography
Terminology
Basics
...................................................................................
8
Hash
Functions
......................................................................................................................................
8
Symmetric
and
Asymmetric
Encryption
....................................................................................
9
Digital
Signatures
.................................................................................................................................
9
Bitcoin
Basics
............................................................................................................................................
10
Bitcoin
Community
............................................................................................................................
10
Bitcoin
Addresses
and
Keys
...........................................................................................................
10
Bitcoin
Transactions
.........................................................................................................................
11
Bitcoin
Blockchain
Ledger
..............................................................................................................
12
bitcoin
the
Unit
....................................................................................................................................
13
Bitcoin
the
Network
..........................................................................................................................
14
Bitcoin
Improvement
Proposal
(BIP)
.......................................................................................
14
Buying
and
Selling
bitcoin
..............................................................................................................
14
Blockchain
Explorers
........................................................................................................................
15
Mining
...........................................................................................................................................................
16
Purpose
and
Function
.......................................................................................................................
16
Bitcoin
Nodes
.......................................................................................................................................
16
Proof
of
Work
Algorithm
.................................................................................................................
17
The
Difficulty
Metric
..........................................................................................................................
18
Mining
Hardware
................................................................................................................................
19
Mining
Pools
.........................................................................................................................................
19
Wallets,
Clients
and
Key
Management
...........................................................................................
20
Wallet
Types
(Bitcoin
Clients)
.....................................................................................................
20
Hierarchical
Deterministic
Wallets
(BIP0032)
......................................................................
21
Passphrase-protected
private
key
(BIP0038)
.......................................................................
21
Back-up
...................................................................................................................................................
21
Using
Bitcoin
as
a
Merchant
...........................................................................................................
22
Bitcoin
Payment
Processors
..........................................................................................................
22
Payment
Protocol
(BIP0070)
........................................................................................................
22
About
the
Author
.....................................................................................................................................
23
Glossary
.......................................................................................................................................................
24
Additional
Resources
.............................................................................................................................
24
About
the
Certified
Bitcoin
Professional
A
Certified
Bitcoin
Professional
is
knowledgeable
about
the
Bitcoin
blockchain,
Bitcoin
transactions,
and
how
the
Bitcoin
network
operates.
CBPs
are
able
to
apply
Bitcoin
technology
to
their
professional
area
of
expertise
and
understand
privacy
aspects,
double-spending,
and
other
issues
that
relate
to
the
currency.
-
CryptoCurrency
Certification
Consortium
The
Certified
Bitcoin
Professional
examination
comprises
75
questions
and
is
to
be
completed
in
less
than
the
timed
20
minutes.
Questions
are
in
a
true/false
or
multiple
choice
format
covering
topics
such
as
the
History
of
Money,
Ledgers
and
Bitcoin;
Basic
Cryptology;
Client
and
Key
Management
and
Security;
Key
Bitcoin
Improvement
Proposals
(BIPs);
Mining,
Distributed
Consensus,
the
Bitcoin
Blockchain
and
more.
To
apply
for,
and
take
the
exam,
please
visit
the
CryptoCurrency
Certification
Consortium
examination
website
at:
https://cryptoconsortium.org/certifications/CBP
Disclaimers
Neither
the
author,
nor
anyone
that
assisted
with
the
creation,
editing
or
revision
of
this
guide
has
any
affiliation
with
the
CryptoCurrency
Certification
Consortium
or
the
Certified
Bitcoin
Professional.
As
well,
this
guide
does
not
guarantee
you
will
pass
the
Certified
Bitcoin
Professional
examination,
but
should
help
you
better
prepare
and
have
access
to
a
reference
should
you
need
a
quick
refresher
on
a
topic
covered
by
the
examination.
We
cannot
guarantee
that
every
question
asked
in
the
examination
will
have
been
covered
by
this
material
as
CryptoCurrency
Certification
Consortium
may
update
their
examination
without
prior
notification.
We
have
not
been
permitted
special
access
to
the
questions
or
topics
that
the
exam
covers,
using
only
publically
available
information
on
topics
that
will
covered.
Centralized Ledgers
A
centralized
ledger
is
an
account
book
or
database
for
recording
historical
transactions
between
parties.
It
can
take
the
form
of
accounting
books
or
an
order
book,
like
you
would
find
on
an
exchange.
It
tracks
the
ownership
of
an
asset
through
time
as
controlled
by
an
entity
that
can
make
arbitrary
updates
and
changes
to
the
system.
Examples
of
centralized
ledgers
would
be
products
by
Oracle
or
SAP
for
the
management
of
customer
deposit
accounts
held
by
a
bank
or
a
general
accounting
ledger
utilized
within
a
corporation
to
track
revenue
and
expenditures.
Functions
of
currency
Money
is
probably
as
old
as
human
culture,
providing
an
accounting
of
value
transfer
between
persons.
Since
it
is
almost
impossible
to
trade
a
cow
for
a
chicken
due
to
disparate
values
of
each
(and
need
for
each),
humanity
has
long
had
a
need
for
an
arbitrary
method
to
account
for
who
owes
what
to
whom.
From
this
we
see
the
emergence
of
currencies
that
allowed
people
to
freely
trade
between
each
other
via
a
vehicle
that
can
provide
for
an
equalized
value.
Money
abstracts
the
value
from
the
goods
or
services
to
better
facilitate
trade.
Many
items
have
been
used
as
currency
throughout
history
from
shells
to
beads
to
coins.
It
is
believed
that
paper
currency
was
first
used
in
China,
evolving
from
previously
used
promissory
notes
that
were
traded
between
people,
a
theory
that
continues
today
as
all
fiat
is
an
IOU
to
all
others
who
use
the
system
to
accept
the
value
of
the
currency
with
an
agreed
on
equal
value
of
goods
or
services.
Money
generally
requires
several
key
properties
to
function
as
a
usable
currency:
1. Medium
of
exchange.
2. Unit
of
account.
3. Store
of
value.
4. Method
of
settling
debt.
Distributed
Consensus
Distributed
Consensus
in
Bitcoin
removes
the
need
for
trust
from
centralized
ledgers
(such
as
banks
and
governments),
instead
allowing
the
currency
to
function
as
a
wholly
independent
entity,
but
this
is
not
without
issues.
Take
for
example
the
process
of
securing
transactions
on
the
blockchain.
To
achieve
security
and
reliability,
even
though
there
are
those
that
would
wish
to
harm
or
defraud
the
network,
the
blockchain
requires
nodes
to
agree
on
some
data
value
during
computation.
Bitcoin
solves
this
problem
via
the
Proof
of
Work
algorithms
that
build
the
blockchain.
By
utilizing
the
work
of
hashing
transactions
into
a
blockchain,
everyone
on
the
network
can
validate
the
consensus
of
the
blockchain
by
simply
following
the
longest
chain,
and
hence,
the
chain
with
the
most
work
invested.
Learn
more:
https://socrates1024.s3.amazonaws.com/consensus.pdf
History
of
Bitcoin
The
idea
of
a
digital
based
currency
system
has
been
around
for
quite
some
time.
Some
precursors
to
Bitcoin
are
issuer
based
ecash
systems
and
distributed
digital
protocols,
such
as
hashcash,
bit-gold
and
others.
Satoshi
Nakamoto,
building
on
the
work
and
ideas
of
those
systems
that
came
before,
first
released
Bitcoin
to
the
world
in
November
2008
via
a
whitepaper
entitled
Bitcoin:
A
Peer-to-Peer
Electronic
Cash
System.
The
paper
outlines
the
methods
of
using
a
peer-to-peer
network
to
generate
what
is
described
as
"a
system
for
electronic
transactions
without
relying
on
trust."
In
January
2009
the
Bitcoin
network
was
launched
with
the
release
of
the
first
Bitcoin
reference
client
and
the
issuance
of
the
first
bitcoin
via
the
Genesis
Block.
Satoshi
Nakamoto
is
an
obvious
pseudonym
for
a
person,
or
group
of
persons,
that
initially
designed
and
developed
the
ideas
and
first
implementations
of
the
Bitcoin
protocol
and
Bitcoin-Qt
client.
Their
true
identity
remains
a
mystery
today,
though
some
people
have
put
forth
possible
candidates
such
as
Nick
Szabo,
Hal
Finney
or
even
Dorian
Nakamoto,
a
man
whos
life
was
rudely
interrupted
by
a
tragically
mistaken
(and
surprisingly
adamant)
Newsweek
reporter
named
Leah
McGrath
Goodman.
These
people
have
all
denied
that
they
are
Satoshi.
Download
Bitcoin
the
whitepaper:
https://bitcoin.org/bitcoin.pdf
Price
Derivation
Bitcoins
exchange
rate
is
like
any
other
currency
in
that
it
fluctuates
in
value
relative
to
all
other
currencies.
Bitcoin
has
had
drastic
price
volatility
in
the
past,
though
it
seems
to
have
somewhat
stabilized
recently.
Since
there
is
no
single
centralized
market,
and
bitcoin
exchanges
never
close,
its
value
is
constantly
changing.
Every
time
a
trade
occurs
on
a
public
exchange,
the
buyer
and
seller
agree
to
a
price
and
it
is
recorded
for
all
to
see
as
the
latest
price.
Some
services
then
use
this
public
price
as
spot
rate.
It
is
possible
to
trade
bitcoin
privately
without
public
notification.
Bitcoin
is
a
truly
floating
currency
in
that
there
is
no
centralized
system
for
pegging
the
price
or
government
controlled
centralized
banks
that
can
print
or
loan
more
to
manipulate
the
money
supply.
The
issuance
of
total
units
is
restricted
by
the
protocol
to
no
more
than
21
million
bitcoin
ever
being
produced.
Bitcoin
is
valued
through
market
supply
and
demand.
Basic
Cryptography
Some
Cryptography
Terminology
Basics
Bitcoin
uses
various
cryptographic
methods
to
accomplish
its
needs,
thus
you
will
need
a
basic
understanding
of
a
handful
of
terms,
methods
and
key
functions.
Encryption
is
the
process
of
encoding
plaintext
messages
into
ciphertext.
The
process
of
turning
ciphertext
back
into
plaintext
is
called
decryption.
Cryptography
deals
with
the
creation
of
encryption
methods.
Cryptoanalysis
deals
with
decrypting
ciphertext
without
knowing
the
encryption
key
(the
private
secret),
in
other
words:
trying
to
crack
encryption.
Cryptology
is
a
branch
of
mathematics
that
covers
both
cryptography
and
cryptoanalysis.
Cryptographic
algorithm,
or
cipher,
is
a
mathematical
function
that
takes
plaintext
and
the
private
encryption
key
to
produce
ciphertext
as
the
output
(and
vice
versa).
Hash
Functions
A
cryptographic
hash
function
must
be
considered
practically
impossible
to
reverse,
such
as
to
extract
the
input
data
from
its
hash
value
alone.
A
hash
function
takes
in
data
and
outputs
digital
data
of
fixed
size.
This
will
create
a
small
checksum
that
can
prove
that
the
source
material
has
not
changed
during
transmission
or
over
time,
as
even
a
minor
change
to
the
input
data
will
change
the
resulting
hash
drastically.
Hash
functions
have
four
main
properties:
1.
2.
3.
4.
Computationally
easy
to
generate
the
hash
value
for
any
given
message.
Impractical
to
reversely
generate
the
message
from
its
hash.
Impossible
to
change
the
input
data
without
also
changing
the
hash.
Massively
improbable
to
have
different
messages
with
the
same
hash.
Digital
Signatures
A
digital
signature
is
a
method
for
proving
the
authenticity
of
a
digital
message
or
document,
such
as
an
output
transaction
in
Bitcoin.
A
valid
digital
signature
proves
that
the
message
was
created
by
the
holder
of
a
specific
private
key,
and
that
the
information
was
not
altered
in
transmission.
Digital
signatures
are
used
for
software
download
verification,
financial
transactions
(such
as
Bitcoin
transactions)
and
where
ever
it
is
important
to
detect
tampering
of
data.
Bitcoin
Basics
Bitcoin
Community
Bitcoin
can
be
most
easily
accessed
on
smartphones
and
laptops,
so
Bitcoin
users
usually
use
the
Internet
to
transact
with
the
Bitcoin
network
and
each
other,
although
other
methods
can
and
have
been
used.
Bitcoin
clients
work
similar
to
traditional
currency
eWallets
in
that
they
can
be
used
to
buy
and
sell
goods
and
services
or
send
money
to
friends
and
family,
with
some
services
even
using
the
network
to
send
encrypted
messages
to
each
other
and
store
hashes
of
important
data
and
documents.
Some
resources
where
you
can
interact
directly
with
other
Bitcoin
users
are:
10
There
are
some
rules
defined
by
the
protocol
on
how
addresses
are
displayed.
Most
Bitcoin
addresses
are
34
characters,
though
it
is
possible
to
have
ones
that
are
shorter
(down
to
26
characters)
and
still
be
valid.
The
address
will
consist
of
random
alphanumeric
characters,
with
the
exception
of
the
uppercase
"O",
number
"0",
uppercase
"I",
and
the
lowercase
"l".
These
are
not
used
to
prevent
confusion,
as
they
can
look
similar
to
each
other
in
certain
fonts.
Designated
parts
of
a
Bitcoin
address
are
used
as
a
checksum
so
that
any
errors
can
be
found
and
rejected
by
the
client
before
bitcoin
are
lost.
Bitcoin
addresses
can
be
created
that
require
a
more
than
1
private
key.
These
multisig
addresses
can
be
seen
in
Bitcoin
addresses
that
start
with
a
3
instead
of
the
standard
1.
Multisig
addresses
can
be
crafted
with
a
required
2-of-3
signing
keys
to
be
valid,
meaning
2/3rd
of
the
keys
used
to
create
the
address
must
sign
any
transactions
for
it
to
be
valid.
Some
clients
allow
the
creation
of
a
wide
range
of
multisig
keys,
from
1-of-2
to
7-of-13
and
anything
in
between.
Learn
more:
https://en.bitcoin.it/wiki/Address
Bitcoin
Transactions
A
Bitcoin
transaction
is
made
up
of
one
or
more
inputs,
which
are
one
or
more
previous
outputs
to
an
address
and
include
a
proof
of
ownership,
which
are
one
or
more
inputs,
which
are
one
or
more
outputs
back
through
the
blockchain
to
the
beginning
of
the
network.
An
input
is
the
technical
way
of
saying
bitcoin
that
you
have
received
and
is
currently
available
to
be
spent
from
your
wallet.
These
inputs
could
have
been
received
by
various
Bitcoin
addresses
tied
to
a
private
key,
so
in
order
to
spend
them
the
client
will
need
to
select
which
inputs
to
combine
together
to
cover
the
amount
being
requested
to
send.
Similarly,
the
outputs
are
where
the
bitcoin
will
be
sent.
Usually
there
will
be
at
least
2
outputs
created,
though
it
is
possible
to
create
a
transaction
that
has
many
recipients.
This
allows
you
to
package
multiple
payments
together
into
a
single
transaction.
Of
these
two
outputs,
one
will
be
the
address
you
intend
to
send
bitcoin
to
and
the
other
a
change
address.
A
change
address
is
required,
as
all
associated
inputs
must
be
spent
during
the
transaction.
For
example,
if
you
had
a
bill
for
$5
but
only
had
a
single
$10
note,
you
will
receive
change
back
in
the
form
of
$5.
In
Bitcoin,
if
you
have
an
input
of
1
bitcoin,
but
only
wish
to
spend
0.5
bitcoin,
there
must
be
an
address
under
your
control
for
the
network
to
return
the
remaining
0.5
bitcoin
change
to
you.
Your
wallet
will
generally
handle
this
automatically,
so
dont
be
surprised
if
you
see
that
your
bitcoin
has
all
been
spent!
Your
wallet
will
show
the
returned
balance
as
the
transaction
is
confirmed
by
the
network.
11
As
well,
you
will
likely
want
to
include
a
transaction
fee
(mining
fee)
on
any
transaction
you
transmit
to
the
network.
Since
May
2013
the
default
fee
to
send
a
Bitcoin
transaction
is
0.0001
bitcoin,
though
there
are
cases
where
a
transaction
may
qualify
to
be
included
in
the
blockchain
with
no
fee,
or
may
require
a
higher
fee
if
the
output
is
over
a
certain
size
(in
kilobytes,
not
value).
This
fee
has
changed
in
the
past
as
the
exchange
rate
of
bitcoin
has
become
stronger
and
will
likely
change
further
in
the
future.
Learn
more:
https://en.bitcoin.it/wiki/Transaction_fees
Since
Bitcoin
transactions
are
not
encrypted
by
design,
they
must
be
signed
by
the
associated
private
key
that
was
used
to
generate
the
public
key,
proving
ownership
of
the
bitcoin
on
the
blockchain
in
a
way
that
can
be
verified
by
anyone
on
the
network.
In
other
words,
spending
comprises
signing
a
transaction
that
transfers
the
bitcoin
from
previous
transaction(s)
to
a
new
a
bitcoin
address(s).
Learn
more:
https://en.bitcoin.it/wiki/Transaction
12
Abbreviation
BTC
/
XBT
dBTC
cBTC
mBTC
BTC
/
bit
-
-
Value
1
0.1
0.01
0.001
0.000001
0.0000001
0.00000001
Generally
only
BTC,
bit
and
Satoshi
are
referenced
in
everyday
usage.
XBT
is
popular
on
exchanges
as
it
follows
the
standard
naming
standards
of
non-government
backed
assets;
Gold
for
example
is
XAU
and
silver
is
XAG.
Bit
has
become
somewhat
popular
recently
as
it
is
100
Satoshi
and
easily
represented
in
the
standard
1.00
format
(2
decimal
places
only),
like
dollars
and
cents.
For
example,
one
bit
can
be
written
as
1.00,
but
has
an
actual
value
of
0.000001
BTC.
A
short
note
about
the
bitcoin
symbol:
Generally,
Bitcoin
is
symbolized
as
B (a B with
2 vertical lines through it), but there have been complaints within the community that it is
too similar to the Thai Baht symbol
and
does not render well in many fonts and screens.
There
has
been
a
vocal
group
within
the
community
that
is
working
to
use
the
symbol as the official symbol, which has been picked up by several prominent services in
the ecosystem.
13
Learn
more:
https://en.bitcoin.it/wiki/Bitcoin_Improvement_Proposals
14
Wherever
you
happen
to
be,
there
are
many
resources
for
finding
a
local
exchange,
and
failing
that,
there
are
resources
like
Localbitcoins
for
setting
up
person-to-
person
trades.
Blockchain
Explorers
A
blockchain
browser
(also
called
"blockchain
explorer")
is
an
application
or
site
that
lets
you
search
and
navigate
every
transaction
within
a
blockchain,
generally
all
the
way
back
to
the
genesis
block,
or
the
first
block
of
a
blockchain
that
initialized
the
network.
These
sites
are
useful
for
viewing
transactions
and
verifying
amounts
held
by
addresses;
tracking
histories
of
inputs
and
outputs;
monitoring
for
transaction
inclusion
in
a
block
and
checking
the
hash
rate
and
other
statistics
of
the
network.
15
Mining
Purpose
and
Function
Mining
is
the
breakthrough
that
makes
Bitcoin
possible.
It
is
the
process
of
adding
blocks
(transaction
records)
to
Bitcoin's
public
distributed
ledger
of
historical
transactions
(blockchain)
so
that
nodes
can
reach
a
distributed
consensus
about
the
state
of
the
network.
In
addition
to
generating
the
validated
chain
of
blocks,
mining
is
also
the
method
in
which
new
bitcoin
are
released
to
the
market
via
the
block
reward.
The
reward
is
the
incentive
that
attracts
miners
to
secure
the
network.
When
a
block
is
solved,
the
miner
may
assign
themselves
all
associated
fees
and
also
award
themselves
a
specific
number
of
bitcoin
which
is
agreed
upon
by
everyone
in
the
network
as
determined
in
the
protocol
(this
is
called
a
coinbase
transaction).
Currently
the
block
reward
is
25
bitcoin,
but
halves
every
210,000
blocks
(~4
years),
with
the
next
halving
to
occur
sometime
in
mid
2016.
As
the
number
of
awarded
bitcoin
the
miners
are
set
to
create
in
each
block
decreases,
the
transaction
fees
should
theoretically
make
up
a
larger
and
larger
portion
of
mining
income,
with
the
reward
becoming
less
and
less
until
such
a
date
that
the
miners
are
incentivized
almost
entirely
from
fees
rather
than
block
awards.
Mining
is
completed
via
a
method
called
Proof
Of
Work,
which
is
an
economic
disincentive
meant
to
increase
the
costs
of
denial
of
service
attacks
and
other
service
abuses
by
requiring
some
work,
usually
processing
by
a
computer,
from
all
participants,
good
or
bad.
A
key
feature
of
proof
of
work
is
its
asymmetry,
meaning
the
work
must
be
a
difficult
computational
problem
that
costs
real
resources
to
complete
(in
this
case,
equipment
and
electricity),
but
trivial
for
the
nodes
and
other
participants
on
the
network
to
verify.
Bitcoin
Nodes
In
addition
to
mining,
full
nodes
are
an
important
part
of
the
network.
Nodes
are
not
incentivized
like
miners.
Anyone
that
operates
the
Bitcoin
reference
client
is
acting
as
a
node.
Nodes
do
things
like
validate
transaction
syntax,
relay
transactions
and
new
blocks
to
the
network,
watch
for
double-spend
transactions
and
maintain
copies
of
the
blockchain
for
transmission
to
new
clients
or
nodes
that
request
it.
The
blockchain
is
distributed
globally
by
full
nodes
using
a
peer-to-peer
file
sharing
technology
similar
to
the
BitTorrent
protocol.
Setting
up
a
full
node
can
be
a
fun
and
rewarding
way
to
inexpensively
help
secure
and
participate
in
the
bitcoin
network.
16
17
18
Mining
Hardware
Since
the
launch
of
Bitcoin,
many
different
computing
platforms
have
been
used
to
mine
bitcoin.
CPU
Mining:
The
early
Bitcoin-Qt
client
allowed
users
to
use
their
CPU
to
mine.
With
the
usage
of
faster
technologies
to
mine
bitcoin,
the
option
was
therefore
removed
from
the
core
Bitcoin
client's
user
interface.
GPU
Mining:
Graphics
Processing
Unit
mining
uses
the
math
processors
on
modern
graphics
cards
to
perform
hashing
and
is
drastically
faster
and
more
efficient
than
CPU
mining.
GPU
mining
is
no
longer
profitable
as
ASIC
mining
has
become
far
more
efficient.
Many
of
the
GPU
mining
rigs
were
converted
to
mine
for
other
cryptocurrencies,
such
as
Litecoin
and
Dogecoin.
FPGA
Mining:
Field-Programmable
Gate
Array
mining
is
an
efficient
and
fast
way
to
mine,
comparable
to
GPU
mining
and
drastically
outperforming
CPU
mining.
Like
with
GPU
mining
though,
these
units
are
no
longer
profitable
to
mine
Bitcoin.
ASIC
Mining:
An
Application-Specific
Integrated
Circuit
is
a
microchip
designed
and
manufactured
for
a
singular
purpose.
ASICs
consume
much
less
electricity
per
GHS
than
any
of
the
other
previous
technologies
used
to
mine
bitcoin.
ASICs
designed
for
use
in
mining
Bitcoin,
being
application
specific,
can
only
be
used
for
bitcoin
or
other
SHA256
based
Cryptocurrencies.
Mining
Services
(Cloud
mining):
Cloud
mining
providers
sell
mining
contracts
that
specify
the
mining
services
and
performance
of
their
service,
generally
backed
by
ASICs
that
the
cloud
mining
provider
owns
or
rents
themselves.
Often
these
contracts
are
sold
on
a
GHS
(gigahash
per
second)
basis
for
a
set
period
of
time.
For
example:
10GHS
for
1
month.
Mining
Pools
Due
to
the
high
competition
within
mining
and
the
diminishing
and
highly
sporadic
returns
of
being
able
to
mine
alone,
mining
pools
were
created
to
reduce
the
variance
in
finding
a
block,
providing
more
stable
and
predictable
rewards
to
individual
miners.
The
pool
provides
all
the
work
(transactions
and
nonces)
to
the
individual
miners
and
when
a
block
is
found
the
reward
is
distributed
on
the
basis
of
how
many
hashes
each
miner
contributed
towards
finding
that
block
as
a
percentage
of
the
total
hashing
power
of
the
pool.
19
20
document.
Storing
bitcoin
on
paper
wallets
is
not
particularly
safe
unless
very
strict
security
precautions
are
undertaken
during
their
initial
preparation
and
subsequent
storage.
Learn
more:
https://bitcoin.org/en/choose-your-wallet
No
software
is
perfect
and
from
time
to
time
there
may
be
security
vulnerabilities
found
in
your
Bitcoin
client
as
well.
Be
sure
to
keep
your
client
updated
with
the
latest
bug
fixes,
especially
when
a
new
vulnerability
is
discovered.
Back-up
Just
like
any
important
information
stored
on
your
computer,
it
is
imperative
to
back-up
your
wallet
files.
You
can
do
this
in
most
wallet
software
by
either
creating
a
digital
or
paper
back-up.
It
is
always
a
good
idea
to
create
your
back-up
via
a
BIP0038
compliant
method
with
a
strong
password.
Ensure
that
you
store
your
back-up
in
a
safe
location,
whether
that
is
on
an
external
hard
drive
or
in
a
safety
deposit
box
(or
both).
Some
clients
(such
as
Bitcoin
Core)
have
known
issues
with
change
addresses
and
back-up
files,
so
make
sure
to
back-up
your
wallet
again
after
every
90-100
transactions
as
needed.
Generally,
HD
wallets
do
not
have
this
issue.
Learn
more:
https://en.bitcoin.it/wiki/Securing_your_wallet
Learn
more:
https://bitcoin.org/en/secure-your-wallet
21
Bitcoin
In
Commerce
Using
Bitcoin
as
a
Merchant
Bitcoin
puts
the
power
of
financial
transactions
into
the
hands
of
the
merchant,
no
longer
requiring
them
to
rely
on
overpriced
and
unnecessary
bank
solutions,
nor
the
necessity
to
gain
permission
from
traditional
payment
processors.
Accepting
bitcoin
as
a
merchant
can
be
as
simple
as
having
customers
send
payment
directly
to
a
Bitcoin
address
of
your
choice.
Merchant
howto:
https://en.bitcoin.it/wiki/Merchant_Howto
22
Terry
Woltman
is
Founder
and
CEO
of
BitcoinATM
sales
and
service
company
BitcoinATM360.
He
has
been
involved
in
Bitcoin
since
October
2013
and
has
worked
on
several
Bitcoin
related
projects,
such
as
Philippines
Bitcoin
portal
ManilaBitcoin.com
and
his
latest
project,
RideTheBubble.com,
a
site
of
consolidated
Bitcoin
news,
information
and
resources.
Previous
to
his
work
in
Bitcoin,
he
worked
on
next
generation
wireless
networks,
building
the
first
national
4G
deployment
in
the
United
States.
Terry
received
his
CryptoCurrency
Certification
Consortium
-
Certified
Bitcoin
Professional
(CBP)
certification
in
January
2015:
#0d7893
To
contact
the
author:
http://ridethebubble.com/members/terry/
This
guide,
and
any
future
updates
are
available
at:
http://ridethebubble.com/downloads/
If
you
have
found
this
guide
helpful,
you
can
donate
$5
here:
1LfexEtQx2RcSPU5eH5SqwFFGkiAtxvjnc
23
Glossary
For
terms,
see:
http://ridethebubble.com/glossary/
Additional Resources
CryptoCurrency
Certification
Consortium
Certified
Bitcoin
Professional
https://cryptoconsortium.org/certifications/CBP
Mastering
Bitcoin
by
Andreas
M.
Antonopoulos
http://shop.oreilly.com/product/0636920032281.do
https://github.com/aantonop/bitcoinbook/blob/develop/ch01.asciidoc
Bitcoin
Wiki
https://en.bitcoin.it/wiki/Main_Page
Bitcointalk
forum
https://bitcointalk.org/
Coindesk
http://coindesk.com/
Bitcoin:
A
Peer-to-Peer
Electronic
Cash
System,
Satoshi
Nakamoto
https://bitcoin.org/bitcoin.pdf
Bitcoin
Core
(Bitcoin-Qt)
download
https://bitcoin.org/en/download
Find
Bitcoin
meetups
http://bitcoin.meetup.com/
Princeton
University:
BTC-Tech:
Bitcoin
and
Cryptocurrency
Technologies
https://piazza.com/princeton/spring2015/btctech/resources
Bitcoin
Protocol
documentation
https://en.bitcoin.it/wiki/Protocol_documentation
24