Bitcoin Wiki - User contributions [en]

How to set up a secure offline savings wallet

2015-11-04T00:40:46Z

Forever: /* Notes */

== Why Set up an Offline Savings Wallet? ==

Modern operating systems are getting more and more complex. The flip side of all this complexity is that they generally have a large [http://en.wikipedia.org/wiki/Attack_surface attack surface] and constantly leak information without the user’s knowledge or consent. No matter how many precautions you take, your [[wallet]]s will never be 100% safe on a computer that is connected to the internet.
Because bitcoins are stored directly on your computer and because they are real money, the motivation for sophisticated and targeted attacks against your system is higher than in the pre-bitcoin era, when only large organizations normally had to worry about such attacks.

The bitcoin ecosystem is still very young and unfortunately not many user friendly and highly secure wallets have been developed yet.
Today these two ways are best to secure your bitcoins against theft:

1. using a [[hardware wallet]] such as [[TREZOR]] that has basically two functions - it keeps your bitcoins in an offline storage and when connected to a computer, it enables a highly secure way of spending as well (immune to viruses, hackers and keyloggers).

2. creating an offline [[cold storage]] which is useful for storing bitcoins, but has its limitations and security risks when you decide to spend the coins

This guide will instruct you on how to create an offline wallet, a wallet that never even touches the internet in its plaintext form. This security measure is also referred to as being an air gap. For all practical purposes, this wallet is safe from all online threats, such as viruses and hackers. It is however still exposed to offline threats, such as [http://en.wikipedia.org/wiki/Hardware_keylogger hardware keyloggers], extortion, or people looking over your shoulder.

The below procedure may seem tedious, but remember that security almost always comes at the cost of convenience. When you deposit money at a bank, you let them worry about security. Bitcoins, however, are stored on '''your''' computer and that means '''you''' are fully responsible for securing them.

== How to Deposit Funds ==

# Sign up for a few different cloud drive accounts such as Dropbox or Google drive.
# Create a strong and unique passphrase offline (manually). This passphrase should be TRUELY random. [http://world.std.com/~reinhold/diceware.html Diceware] is a good way of generating the passphrase. It should be at least 12 words long.
# Never use this passphrase elsewhere, especially not on the web.
# '''Do not forget this passphrase'''. Recite it several times a day. It is easy to overestimate your ability to remember a passphrase several months in the future. To be on the safe side, write it down and store the piece of paper in a safe deposit box.
# Download [https://bitcoin.org/en/download Bitcoin-Core Linux binary] and save it on a USB drive.
# '''Verify''' the software's release signatures from an alternative device and internet connection (eg. your smartphone). This makes sure you are not using a malicious program that poses as the bona fide bitcoin-core client.
# Shut down your computer, and boot [http://www.ubuntu.com/ Ubuntu] (or Linux distribution of you choice) from a [http://www.ubuntu.com/download/ubuntu/download liveCD]. This will not affect your current operating system.
# '''Disconnect machine from the internet'''. Unplug any network cables and disable wireless. Verify that wireless is disabled in the icon on the upper right corner (Ubuntu). Double check that machine is disconnected by opening the web browser.
# Run bitcoin while disconnected to the internet. The client will show 0 connections and 0 blocks, but it will still generate a wallet.dat file and a bitcoin address.
# Encrypt your wallet using the strong and unique password from step 2 above. (Bitcoin Client > Settings > Encrypt wallet)
# Copy wallet.dat (found in hidden folder .bitcoin in your home directory) to USB drive.
# Save bitcoin address to a text file and copy it to USB drive.
# Shut down system and turn off computer. Before switching your computer on again, remove all power sources for about 1 minute. Physically remove battery from laptop.
# Backup encrypted wallet.dat file in several places:
#*Send it to your 5 best friends by email attachment and ask them to save it for you.
#*Save it on your cloud drive accounts created in step 1.
#*Save it on several USB drives and CDs and store them in different geographic locations.
#Send bitcoins to the address saved on the USB drive. Double check in the [[Bitcoin Block Explorer|block explorer]] that they have been sent or you can add Watch Bitcoin Address in [https://blockchain.info/wallet/ BlockChain Wallet].

==How to Retrieve Funds ==

#Boot from Ubuntu liveCD, as in step 5 above.
#Insert USB drive.
#Run bitcoin client and close it again.
#Replace wallet.dat in ~/.bitcoin directory with wallet.dat from USB drive.
#Connect to the internet.
#Restart bitcoin client.
#Wait for blocks to download (optional).
#Send bitcoins.

==How to Setup Watch Bitcoin Address==

Watch Bitcoin address is a way for you to check your cold storage balance online without exposing your private key.
#Create an wallet account at https://blockchain.info/wallet/
#Go to import/export.
#At "Add Watch Only Bitcoin Address", add your bitcoin address.
#Wait for the balance to synch.
#You can also download the mobile version at [https://play.google.com/store/apps/details?id=piuk.blockchain.android Google Play], [https://itunes.apple.com/us/app/blockchain-bitcoin-wallet/id493253309?mt=8 Apple Store]

==Notes==

*This procedure is only secure if you perform steps 1-15 in this '''exact order'''.

*If you're a non-technical user that can't perform the steps above, use an [[Paper wallet|in-browser paper wallet generator]] to create paper wallets (read below for more caveats and info).

*Perform one or two trial runs of the above procedure with a few bitcents, and make sure that you know how to successfully retrieve them, before making a bulk transfer.

*Every time you retrieve bitcoins from your savings wallet, create a fresh savings wallet by repeating the above procedure, and send all your remaining savings balance there.

*There is more than one way to do it. Similar procedures have been suggested on the forums [http://forum.bitcoin.org/index.php?topic=17240.0 here] and [http://forum.bitcoin.org/?topic=5194.0 here].

*Beware that even savings wallets have limited lifetimes. New, backwards incompatible versions of bitcoin might come out in future, [http://en.wikipedia.org/wiki/Advanced_Encryption_Standard AES] might be broken, [http://en.wikipedia.org/wiki/Bit_rot bit rot] might destroy your wallets, etc. Pay attention to updates in the Bitcoin world and update to fresh savings wallets every couple of years, or as needed.

* See [[How to import private keys]] for an alternative way of retrieve your coins.

==Alternatives ==

[[Paper wallet|'''Paper wallets''']] can also be used to create offline bitcoin savings accounts. While paper wallets are much easier to generate, they are not generally encrypted which means you cannot guard against accidental loss by distributing copies to online services and friends. Instead, paper wallets must be kept safe like jewels or cash. Looking forward, support for [[BIP 0038|BIP-38]] encryption is growing fast and it is expected that paper wallet generators will soon include options for generating ''encrypted paper wallets'' that can be duplicated and widely distributed for safekeeping.

==See Also==

* [[Cold storage]]
* [http://codinginmysleep.com/bitcoin-cold-storage-in-plain-english Bitcoin Cold Storage In Plain English] by David Perry
* [https://www.youtube.com/watch?v=DQumISxkJsQ Electrum offline transactions tutorial]

[[Category:Instructional]]
[[Category:Security]]

How to set up a secure offline savings wallet

2015-11-04T00:39:24Z

Forever: /* How to Deposit Funds */

== Why Set up an Offline Savings Wallet? ==

Modern operating systems are getting more and more complex. The flip side of all this complexity is that they generally have a large [http://en.wikipedia.org/wiki/Attack_surface attack surface] and constantly leak information without the user’s knowledge or consent. No matter how many precautions you take, your [[wallet]]s will never be 100% safe on a computer that is connected to the internet.
Because bitcoins are stored directly on your computer and because they are real money, the motivation for sophisticated and targeted attacks against your system is higher than in the pre-bitcoin era, when only large organizations normally had to worry about such attacks.

The bitcoin ecosystem is still very young and unfortunately not many user friendly and highly secure wallets have been developed yet.
Today these two ways are best to secure your bitcoins against theft:

1. using a [[hardware wallet]] such as [[TREZOR]] that has basically two functions - it keeps your bitcoins in an offline storage and when connected to a computer, it enables a highly secure way of spending as well (immune to viruses, hackers and keyloggers).

2. creating an offline [[cold storage]] which is useful for storing bitcoins, but has its limitations and security risks when you decide to spend the coins

This guide will instruct you on how to create an offline wallet, a wallet that never even touches the internet in its plaintext form. This security measure is also referred to as being an air gap. For all practical purposes, this wallet is safe from all online threats, such as viruses and hackers. It is however still exposed to offline threats, such as [http://en.wikipedia.org/wiki/Hardware_keylogger hardware keyloggers], extortion, or people looking over your shoulder.

The below procedure may seem tedious, but remember that security almost always comes at the cost of convenience. When you deposit money at a bank, you let them worry about security. Bitcoins, however, are stored on '''your''' computer and that means '''you''' are fully responsible for securing them.

== How to Deposit Funds ==

# Sign up for a few different cloud drive accounts such as Dropbox or Google drive.
# Create a strong and unique passphrase offline (manually). This passphrase should be TRUELY random. [http://world.std.com/~reinhold/diceware.html Diceware] is a good way of generating the passphrase. It should be at least 12 words long.
# Never use this passphrase elsewhere, especially not on the web.
# '''Do not forget this passphrase'''. Recite it several times a day. It is easy to overestimate your ability to remember a passphrase several months in the future. To be on the safe side, write it down and store the piece of paper in a safe deposit box.
# Download [https://bitcoin.org/en/download Bitcoin-Core Linux binary] and save it on a USB drive.
# '''Verify''' the software's release signatures from an alternative device and internet connection (eg. your smartphone). This makes sure you are not using a malicious program that poses as the bona fide bitcoin-core client.
# Shut down your computer, and boot [http://www.ubuntu.com/ Ubuntu] (or Linux distribution of you choice) from a [http://www.ubuntu.com/download/ubuntu/download liveCD]. This will not affect your current operating system.
# '''Disconnect machine from the internet'''. Unplug any network cables and disable wireless. Verify that wireless is disabled in the icon on the upper right corner (Ubuntu). Double check that machine is disconnected by opening the web browser.
# Run bitcoin while disconnected to the internet. The client will show 0 connections and 0 blocks, but it will still generate a wallet.dat file and a bitcoin address.
# Encrypt your wallet using the strong and unique password from step 2 above. (Bitcoin Client > Settings > Encrypt wallet)
# Copy wallet.dat (found in hidden folder .bitcoin in your home directory) to USB drive.
# Save bitcoin address to a text file and copy it to USB drive.
# Shut down system and turn off computer. Before switching your computer on again, remove all power sources for about 1 minute. Physically remove battery from laptop.
# Backup encrypted wallet.dat file in several places:
#*Send it to your 5 best friends by email attachment and ask them to save it for you.
#*Save it on your cloud drive accounts created in step 1.
#*Save it on several USB drives and CDs and store them in different geographic locations.
#Send bitcoins to the address saved on the USB drive. Double check in the [[Bitcoin Block Explorer|block explorer]] that they have been sent or you can add Watch Bitcoin Address in [https://blockchain.info/wallet/ BlockChain Wallet].

==How to Retrieve Funds ==

#Boot from Ubuntu liveCD, as in step 5 above.
#Insert USB drive.
#Run bitcoin client and close it again.
#Replace wallet.dat in ~/.bitcoin directory with wallet.dat from USB drive.
#Connect to the internet.
#Restart bitcoin client.
#Wait for blocks to download (optional).
#Send bitcoins.

==How to Setup Watch Bitcoin Address==

Watch Bitcoin address is a way for you to check your cold storage balance online without exposing your private key.
#Create an wallet account at https://blockchain.info/wallet/
#Go to import/export.
#At "Add Watch Only Bitcoin Address", add your bitcoin address.
#Wait for the balance to synch.
#You can also download the mobile version at [https://play.google.com/store/apps/details?id=piuk.blockchain.android Google Play], [https://itunes.apple.com/us/app/blockchain-bitcoin-wallet/id493253309?mt=8 Apple Store]

==Notes==

*This procedure is only secure if you perform steps 1-13 in this '''exact order'''.

*If you're a non-technical user that can't perform the steps above, use an [[Paper wallet|in-browser paper wallet generator]] to create paper wallets (read below for more caveats and info).

*Perform one or two trial runs of the above procedure with a few bitcents, and make sure that you know how to successfully retrieve them, before making a bulk transfer.

*Every time you retrieve bitcoins from your savings wallet, create a fresh savings wallet by repeating the above procedure, and send all your remaining savings balance there.

*There is more than one way to do it. Similar procedures have been suggested on the forums [http://forum.bitcoin.org/index.php?topic=17240.0 here] and [http://forum.bitcoin.org/?topic=5194.0 here].

*Beware that even savings wallets have limited lifetimes. New, backwards incompatible versions of bitcoin might come out in future, [http://en.wikipedia.org/wiki/Advanced_Encryption_Standard AES] might be broken, [http://en.wikipedia.org/wiki/Bit_rot bit rot] might destroy your wallets, etc. Pay attention to updates in the Bitcoin world and update to fresh savings wallets every couple of years, or as needed.

* See [[How to import private keys]] for an alternative way of retrieve your coins.

==Alternatives ==

[[Paper wallet|'''Paper wallets''']] can also be used to create offline bitcoin savings accounts. While paper wallets are much easier to generate, they are not generally encrypted which means you cannot guard against accidental loss by distributing copies to online services and friends. Instead, paper wallets must be kept safe like jewels or cash. Looking forward, support for [[BIP 0038|BIP-38]] encryption is growing fast and it is expected that paper wallet generators will soon include options for generating ''encrypted paper wallets'' that can be duplicated and widely distributed for safekeeping.

==See Also==

* [[Cold storage]]
* [http://codinginmysleep.com/bitcoin-cold-storage-in-plain-english Bitcoin Cold Storage In Plain English] by David Perry
* [https://www.youtube.com/watch?v=DQumISxkJsQ Electrum offline transactions tutorial]

[[Category:Instructional]]
[[Category:Security]]

How to set up a secure offline savings wallet

2015-11-04T00:38:35Z

Forever: /* How to Deposit Funds */

== Why Set up an Offline Savings Wallet? ==

Modern operating systems are getting more and more complex. The flip side of all this complexity is that they generally have a large [http://en.wikipedia.org/wiki/Attack_surface attack surface] and constantly leak information without the user’s knowledge or consent. No matter how many precautions you take, your [[wallet]]s will never be 100% safe on a computer that is connected to the internet.
Because bitcoins are stored directly on your computer and because they are real money, the motivation for sophisticated and targeted attacks against your system is higher than in the pre-bitcoin era, when only large organizations normally had to worry about such attacks.

The bitcoin ecosystem is still very young and unfortunately not many user friendly and highly secure wallets have been developed yet.
Today these two ways are best to secure your bitcoins against theft:

1. using a [[hardware wallet]] such as [[TREZOR]] that has basically two functions - it keeps your bitcoins in an offline storage and when connected to a computer, it enables a highly secure way of spending as well (immune to viruses, hackers and keyloggers).

2. creating an offline [[cold storage]] which is useful for storing bitcoins, but has its limitations and security risks when you decide to spend the coins

This guide will instruct you on how to create an offline wallet, a wallet that never even touches the internet in its plaintext form. This security measure is also referred to as being an air gap. For all practical purposes, this wallet is safe from all online threats, such as viruses and hackers. It is however still exposed to offline threats, such as [http://en.wikipedia.org/wiki/Hardware_keylogger hardware keyloggers], extortion, or people looking over your shoulder.

The below procedure may seem tedious, but remember that security almost always comes at the cost of convenience. When you deposit money at a bank, you let them worry about security. Bitcoins, however, are stored on '''your''' computer and that means '''you''' are fully responsible for securing them.

== How to Deposit Funds ==

# Sign up for a few different cloud drive accounts such as Dropbox or Google drive.
# Create a strong and unique passphrase offline (manually). This passphrase should be TRUELY random. [http://world.std.com/~reinhold/diceware.html Diceware] is a good way of generating the passphrase. It should be at least 12 words long.
# Never use this passphrase elsewhere, especially not on the web.
# '''Do not forget this passphrase'''. Recite it several times a day. It is easy to overestimate your ability to remember a password several months in the future. To be on the safe side, write it down and store the piece of paper in a safe deposit box.
# Download [https://bitcoin.org/en/download Bitcoin-Core Linux binary] and save it on a USB drive.
# '''Verify''' the software's release signatures from an alternative device and internet connection (eg. your smartphone). This makes sure you are not using a malicious program that poses as the bona fide bitcoin-core client.
# Shut down your computer, and boot [http://www.ubuntu.com/ Ubuntu] (or Linux distribution of you choice) from a [http://www.ubuntu.com/download/ubuntu/download liveCD]. This will not affect your current operating system.
# '''Disconnect machine from the internet'''. Unplug any network cables and disable wireless. Verify that wireless is disabled in the icon on the upper right corner (Ubuntu). Double check that machine is disconnected by opening the web browser.
# Run bitcoin while disconnected to the internet. The client will show 0 connections and 0 blocks, but it will still generate a wallet.dat file and a bitcoin address.
# Encrypt your wallet using the strong and unique password from step 2 above. (Bitcoin Client > Settings > Encrypt wallet)
# Copy wallet.dat (found in hidden folder .bitcoin in your home directory) to USB drive.
# Save bitcoin address to a text file and copy it to USB drive.
# Shut down system and turn off computer. Before switching your computer on again, remove all power sources for about 1 minute. Physically remove battery from laptop.
# Backup encrypted wallet.dat file in several places:
#*Send it to your 5 best friends by email attachment and ask them to save it for you.
#*Save it on your cloud drive accounts created in step 1.
#*Save it on several USB drives and CDs and store them in different geographic locations.
#Send bitcoins to the address saved on the USB drive. Double check in the [[Bitcoin Block Explorer|block explorer]] that they have been sent or you can add Watch Bitcoin Address in [https://blockchain.info/wallet/ BlockChain Wallet].

==How to Retrieve Funds ==

#Boot from Ubuntu liveCD, as in step 5 above.
#Insert USB drive.
#Run bitcoin client and close it again.
#Replace wallet.dat in ~/.bitcoin directory with wallet.dat from USB drive.
#Connect to the internet.
#Restart bitcoin client.
#Wait for blocks to download (optional).
#Send bitcoins.

==How to Setup Watch Bitcoin Address==

Watch Bitcoin address is a way for you to check your cold storage balance online without exposing your private key.
#Create an wallet account at https://blockchain.info/wallet/
#Go to import/export.
#At "Add Watch Only Bitcoin Address", add your bitcoin address.
#Wait for the balance to synch.
#You can also download the mobile version at [https://play.google.com/store/apps/details?id=piuk.blockchain.android Google Play], [https://itunes.apple.com/us/app/blockchain-bitcoin-wallet/id493253309?mt=8 Apple Store]

==Notes==

*This procedure is only secure if you perform steps 1-13 in this '''exact order'''.

*If you're a non-technical user that can't perform the steps above, use an [[Paper wallet|in-browser paper wallet generator]] to create paper wallets (read below for more caveats and info).

*Perform one or two trial runs of the above procedure with a few bitcents, and make sure that you know how to successfully retrieve them, before making a bulk transfer.

*Every time you retrieve bitcoins from your savings wallet, create a fresh savings wallet by repeating the above procedure, and send all your remaining savings balance there.

*There is more than one way to do it. Similar procedures have been suggested on the forums [http://forum.bitcoin.org/index.php?topic=17240.0 here] and [http://forum.bitcoin.org/?topic=5194.0 here].

*Beware that even savings wallets have limited lifetimes. New, backwards incompatible versions of bitcoin might come out in future, [http://en.wikipedia.org/wiki/Advanced_Encryption_Standard AES] might be broken, [http://en.wikipedia.org/wiki/Bit_rot bit rot] might destroy your wallets, etc. Pay attention to updates in the Bitcoin world and update to fresh savings wallets every couple of years, or as needed.

* See [[How to import private keys]] for an alternative way of retrieve your coins.

==Alternatives ==

[[Paper wallet|'''Paper wallets''']] can also be used to create offline bitcoin savings accounts. While paper wallets are much easier to generate, they are not generally encrypted which means you cannot guard against accidental loss by distributing copies to online services and friends. Instead, paper wallets must be kept safe like jewels or cash. Looking forward, support for [[BIP 0038|BIP-38]] encryption is growing fast and it is expected that paper wallet generators will soon include options for generating ''encrypted paper wallets'' that can be duplicated and widely distributed for safekeeping.

==See Also==

* [[Cold storage]]
* [http://codinginmysleep.com/bitcoin-cold-storage-in-plain-english Bitcoin Cold Storage In Plain English] by David Perry
* [https://www.youtube.com/watch?v=DQumISxkJsQ Electrum offline transactions tutorial]

[[Category:Instructional]]
[[Category:Security]]

How to set up a secure offline savings wallet

2015-11-04T00:37:53Z

Forever: /* How to Deposit Funds */ added release signature info

== Why Set up an Offline Savings Wallet? ==

Modern operating systems are getting more and more complex. The flip side of all this complexity is that they generally have a large [http://en.wikipedia.org/wiki/Attack_surface attack surface] and constantly leak information without the user’s knowledge or consent. No matter how many precautions you take, your [[wallet]]s will never be 100% safe on a computer that is connected to the internet.
Because bitcoins are stored directly on your computer and because they are real money, the motivation for sophisticated and targeted attacks against your system is higher than in the pre-bitcoin era, when only large organizations normally had to worry about such attacks.

The bitcoin ecosystem is still very young and unfortunately not many user friendly and highly secure wallets have been developed yet.
Today these two ways are best to secure your bitcoins against theft:

1. using a [[hardware wallet]] such as [[TREZOR]] that has basically two functions - it keeps your bitcoins in an offline storage and when connected to a computer, it enables a highly secure way of spending as well (immune to viruses, hackers and keyloggers).

2. creating an offline [[cold storage]] which is useful for storing bitcoins, but has its limitations and security risks when you decide to spend the coins

This guide will instruct you on how to create an offline wallet, a wallet that never even touches the internet in its plaintext form. This security measure is also referred to as being an air gap. For all practical purposes, this wallet is safe from all online threats, such as viruses and hackers. It is however still exposed to offline threats, such as [http://en.wikipedia.org/wiki/Hardware_keylogger hardware keyloggers], extortion, or people looking over your shoulder.

The below procedure may seem tedious, but remember that security almost always comes at the cost of convenience. When you deposit money at a bank, you let them worry about security. Bitcoins, however, are stored on '''your''' computer and that means '''you''' are fully responsible for securing them.

== How to Deposit Funds ==

# Sign up for a few different cloud drive accounts such as Dropbox or Google drive.
# Create a strong and unique passphrase offline (manually). This passphrase should be TRUELY random. [http://world.std.com/~reinhold/diceware.html Diceware] is a good way of generating the passphrase. It should be at least 12 words long.
# Never use this passphrase elsewhere, especially not on the web.
# '''Do not forget this passphrase'''. Recite it several times a day. It is easy to overestimate your ability to remember a password several months in the future. To be on the safe side, write it down and store the piece of paper in a safe deposit box.
# Download [http://www.bitcoin.org/ Bitcoin-Core Linux binary] and save it on a USB drive.
# '''Verify''' the software's release signatures from an alternative device and internet connection (eg. your smartphone). This makes sure you are not using a malicious program that poses as the bona fide bitcoin-core client.
# Shut down your computer, and boot [http://www.ubuntu.com/ Ubuntu] (or Linux distribution of you choice) from a [http://www.ubuntu.com/download/ubuntu/download liveCD]. This will not affect your current operating system.
# '''Disconnect machine from the internet'''. Unplug any network cables and disable wireless. Verify that wireless is disabled in the icon on the upper right corner (Ubuntu). Double check that machine is disconnected by opening the web browser.
# Run bitcoin while disconnected to the internet. The client will show 0 connections and 0 blocks, but it will still generate a wallet.dat file and a bitcoin address.
# Encrypt your wallet using the strong and unique password from step 2 above. (Bitcoin Client > Settings > Encrypt wallet)
# Copy wallet.dat (found in hidden folder .bitcoin in your home directory) to USB drive.
# Save bitcoin address to a text file and copy it to USB drive.
# Shut down system and turn off computer. Before switching your computer on again, remove all power sources for about 1 minute. Physically remove battery from laptop.
# Backup encrypted wallet.dat file in several places:
#*Send it to your 5 best friends by email attachment and ask them to save it for you.
#*Save it on your cloud drive accounts created in step 1.
#*Save it on several USB drives and CDs and store them in different geographic locations.
#Send bitcoins to the address saved on the USB drive. Double check in the [[Bitcoin Block Explorer|block explorer]] that they have been sent or you can add Watch Bitcoin Address in [https://blockchain.info/wallet/ BlockChain Wallet].

==How to Retrieve Funds ==

#Boot from Ubuntu liveCD, as in step 5 above.
#Insert USB drive.
#Run bitcoin client and close it again.
#Replace wallet.dat in ~/.bitcoin directory with wallet.dat from USB drive.
#Connect to the internet.
#Restart bitcoin client.
#Wait for blocks to download (optional).
#Send bitcoins.

==How to Setup Watch Bitcoin Address==

Watch Bitcoin address is a way for you to check your cold storage balance online without exposing your private key.
#Create an wallet account at https://blockchain.info/wallet/
#Go to import/export.
#At "Add Watch Only Bitcoin Address", add your bitcoin address.
#Wait for the balance to synch.
#You can also download the mobile version at [https://play.google.com/store/apps/details?id=piuk.blockchain.android Google Play], [https://itunes.apple.com/us/app/blockchain-bitcoin-wallet/id493253309?mt=8 Apple Store]

==Notes==

*This procedure is only secure if you perform steps 1-13 in this '''exact order'''.

*If you're a non-technical user that can't perform the steps above, use an [[Paper wallet|in-browser paper wallet generator]] to create paper wallets (read below for more caveats and info).

*Perform one or two trial runs of the above procedure with a few bitcents, and make sure that you know how to successfully retrieve them, before making a bulk transfer.

*Every time you retrieve bitcoins from your savings wallet, create a fresh savings wallet by repeating the above procedure, and send all your remaining savings balance there.

*There is more than one way to do it. Similar procedures have been suggested on the forums [http://forum.bitcoin.org/index.php?topic=17240.0 here] and [http://forum.bitcoin.org/?topic=5194.0 here].

*Beware that even savings wallets have limited lifetimes. New, backwards incompatible versions of bitcoin might come out in future, [http://en.wikipedia.org/wiki/Advanced_Encryption_Standard AES] might be broken, [http://en.wikipedia.org/wiki/Bit_rot bit rot] might destroy your wallets, etc. Pay attention to updates in the Bitcoin world and update to fresh savings wallets every couple of years, or as needed.

* See [[How to import private keys]] for an alternative way of retrieve your coins.

==Alternatives ==

[[Paper wallet|'''Paper wallets''']] can also be used to create offline bitcoin savings accounts. While paper wallets are much easier to generate, they are not generally encrypted which means you cannot guard against accidental loss by distributing copies to online services and friends. Instead, paper wallets must be kept safe like jewels or cash. Looking forward, support for [[BIP 0038|BIP-38]] encryption is growing fast and it is expected that paper wallet generators will soon include options for generating ''encrypted paper wallets'' that can be duplicated and widely distributed for safekeeping.

==See Also==

* [[Cold storage]]
* [http://codinginmysleep.com/bitcoin-cold-storage-in-plain-english Bitcoin Cold Storage In Plain English] by David Perry
* [https://www.youtube.com/watch?v=DQumISxkJsQ Electrum offline transactions tutorial]

[[Category:Instructional]]
[[Category:Security]]

How to set up a secure offline savings wallet

2015-11-04T00:31:02Z

Forever: /* How to Deposit Funds */ Better passphrase method

== Why Set up an Offline Savings Wallet? ==

Modern operating systems are getting more and more complex. The flip side of all this complexity is that they generally have a large [http://en.wikipedia.org/wiki/Attack_surface attack surface] and constantly leak information without the user’s knowledge or consent. No matter how many precautions you take, your [[wallet]]s will never be 100% safe on a computer that is connected to the internet.
Because bitcoins are stored directly on your computer and because they are real money, the motivation for sophisticated and targeted attacks against your system is higher than in the pre-bitcoin era, when only large organizations normally had to worry about such attacks.

The bitcoin ecosystem is still very young and unfortunately not many user friendly and highly secure wallets have been developed yet.
Today these two ways are best to secure your bitcoins against theft:

1. using a [[hardware wallet]] such as [[TREZOR]] that has basically two functions - it keeps your bitcoins in an offline storage and when connected to a computer, it enables a highly secure way of spending as well (immune to viruses, hackers and keyloggers).

2. creating an offline [[cold storage]] which is useful for storing bitcoins, but has its limitations and security risks when you decide to spend the coins

This guide will instruct you on how to create an offline wallet, a wallet that never even touches the internet in its plaintext form. This security measure is also referred to as being an air gap. For all practical purposes, this wallet is safe from all online threats, such as viruses and hackers. It is however still exposed to offline threats, such as [http://en.wikipedia.org/wiki/Hardware_keylogger hardware keyloggers], extortion, or people looking over your shoulder.

The below procedure may seem tedious, but remember that security almost always comes at the cost of convenience. When you deposit money at a bank, you let them worry about security. Bitcoins, however, are stored on '''your''' computer and that means '''you''' are fully responsible for securing them.

== How to Deposit Funds ==

# Sign up for a few different cloud drive accounts such as Dropbox or Google drive.
# Create a strong and unique passphrase offline (manually). This passphrase should be TRUELY random. [http://world.std.com/~reinhold/diceware.html Diceware] is a good way of generating the passphrase. It should be at least 12 words long.
# Never use this passphrase elsewhere, especially not on the web.
# '''Do not forget this passphrase'''. Recite it several times a day. It is easy to overestimate your ability to remember a password several months in the future. To be on the safe side, write it down and store the piece of paper in a safe deposit box.
# Download [http://www.bitcoin.org/ Bitcoin-Core Linux binary] and save it on a USB drive.
# Shut down your computer, and boot [http://www.ubuntu.com/ Ubuntu] (or Linux distribution of you choice) from a [http://www.ubuntu.com/download/ubuntu/download liveCD]. This will not affect your current operating system.
# '''Disconnect machine from the internet'''. Unplug any network cables and disable wireless. Verify that wireless is disabled in the icon on the upper right corner (Ubuntu). Double check that machine is disconnected by opening the web browser.
# Run bitcoin while disconnected to the internet. The client will show 0 connections and 0 blocks, but it will still generate a wallet.dat file and a bitcoin address.
# Encrypt your wallet using the strong and unique password from step 2 above. (Bitcoin Client > Settings > Encrypt wallet)
# Copy wallet.dat (found in hidden folder .bitcoin in your home directory) to USB drive.
# Save bitcoin address to a text file and copy it to USB drive.
# Shut down system and turn off computer. Before switching your computer on again, remove all power sources for about 1 minute. Physically remove battery from laptop.
# Backup encrypted wallet.dat file in several places:
#*Send it to your 5 best friends by email attachment and ask them to save it for you.
#*Save it on your cloud drive accounts created in step 1.
#*Save it on several USB drives and CDs and store them in different geographic locations.
#Send bitcoins to the address saved on the USB drive. Double check in the [[Bitcoin Block Explorer|block explorer]] that they have been sent or you can add Watch Bitcoin Address in [https://blockchain.info/wallet/ BlockChain Wallet].

==How to Retrieve Funds ==

#Boot from Ubuntu liveCD, as in step 5 above.
#Insert USB drive.
#Run bitcoin client and close it again.
#Replace wallet.dat in ~/.bitcoin directory with wallet.dat from USB drive.
#Connect to the internet.
#Restart bitcoin client.
#Wait for blocks to download (optional).
#Send bitcoins.

==How to Setup Watch Bitcoin Address==

Watch Bitcoin address is a way for you to check your cold storage balance online without exposing your private key.
#Create an wallet account at https://blockchain.info/wallet/
#Go to import/export.
#At "Add Watch Only Bitcoin Address", add your bitcoin address.
#Wait for the balance to synch.
#You can also download the mobile version at [https://play.google.com/store/apps/details?id=piuk.blockchain.android Google Play], [https://itunes.apple.com/us/app/blockchain-bitcoin-wallet/id493253309?mt=8 Apple Store]

==Notes==

*This procedure is only secure if you perform steps 1-13 in this '''exact order'''.

*If you're a non-technical user that can't perform the steps above, use an [[Paper wallet|in-browser paper wallet generator]] to create paper wallets (read below for more caveats and info).

*Perform one or two trial runs of the above procedure with a few bitcents, and make sure that you know how to successfully retrieve them, before making a bulk transfer.

*Every time you retrieve bitcoins from your savings wallet, create a fresh savings wallet by repeating the above procedure, and send all your remaining savings balance there.

*There is more than one way to do it. Similar procedures have been suggested on the forums [http://forum.bitcoin.org/index.php?topic=17240.0 here] and [http://forum.bitcoin.org/?topic=5194.0 here].

*Beware that even savings wallets have limited lifetimes. New, backwards incompatible versions of bitcoin might come out in future, [http://en.wikipedia.org/wiki/Advanced_Encryption_Standard AES] might be broken, [http://en.wikipedia.org/wiki/Bit_rot bit rot] might destroy your wallets, etc. Pay attention to updates in the Bitcoin world and update to fresh savings wallets every couple of years, or as needed.

* See [[How to import private keys]] for an alternative way of retrieve your coins.

==Alternatives ==

[[Paper wallet|'''Paper wallets''']] can also be used to create offline bitcoin savings accounts. While paper wallets are much easier to generate, they are not generally encrypted which means you cannot guard against accidental loss by distributing copies to online services and friends. Instead, paper wallets must be kept safe like jewels or cash. Looking forward, support for [[BIP 0038|BIP-38]] encryption is growing fast and it is expected that paper wallet generators will soon include options for generating ''encrypted paper wallets'' that can be duplicated and widely distributed for safekeeping.

==See Also==

* [[Cold storage]]
* [http://codinginmysleep.com/bitcoin-cold-storage-in-plain-english Bitcoin Cold Storage In Plain English] by David Perry
* [https://www.youtube.com/watch?v=DQumISxkJsQ Electrum offline transactions tutorial]

[[Category:Instructional]]
[[Category:Security]]

How to set up a secure offline savings wallet

2015-11-04T00:14:09Z

Forever: Updated obsolete info

== Why Set up an Offline Savings Wallet? ==

Modern operating systems are getting more and more complex. The flip side of all this complexity is that they generally have a large [http://en.wikipedia.org/wiki/Attack_surface attack surface] and constantly leak information without the user’s knowledge or consent. No matter how many precautions you take, your [[wallet]]s will never be 100% safe on a computer that is connected to the internet.
Because bitcoins are stored directly on your computer and because they are real money, the motivation for sophisticated and targeted attacks against your system is higher than in the pre-bitcoin era, when only large organizations normally had to worry about such attacks.

The bitcoin ecosystem is still very young and unfortunately not many user friendly and highly secure wallets have been developed yet.
Today these two ways are best to secure your bitcoins against theft:

1. using a [[hardware wallet]] such as [[TREZOR]] that has basically two functions - it keeps your bitcoins in an offline storage and when connected to a computer, it enables a highly secure way of spending as well (immune to viruses, hackers and keyloggers).

2. creating an offline [[cold storage]] which is useful for storing bitcoins, but has its limitations and security risks when you decide to spend the coins

This guide will instruct you on how to create an offline wallet, a wallet that never even touches the internet in its plaintext form. This security measure is also referred to as being an air gap. For all practical purposes, this wallet is safe from all online threats, such as viruses and hackers. It is however still exposed to offline threats, such as [http://en.wikipedia.org/wiki/Hardware_keylogger hardware keyloggers], extortion, or people looking over your shoulder.

The below procedure may seem tedious, but remember that security almost always comes at the cost of convenience. When you deposit money at a bank, you let them worry about security. Bitcoins, however, are stored on '''your''' computer and that means '''you''' are fully responsible for securing them.

== How to Deposit Funds ==

# Sign up for a few different cloud drive accounts such as Dropbox or Google drive.
# Create a strong and unique password offline (manually). This password should be at least 20 characters long; it should contain numbers, upper and lower case letters, and symbols. It should be as random as possible, ie it should look something like this: Zr%8qL03&cvwS9@05AatdP71. Never use this password elsewhere.
# '''Do not forget this password'''. Recite it several times a day. It is easy to overestimate your ability to remember a password several months in the future. To be on the safe side, write it down and store the piece of paper in a safe deposit box.
# Download [http://www.bitcoin.org/ Bitcoin-Core Linux binary] and save it on a USB drive.
# Shut down your computer, and boot [http://www.ubuntu.com/ Ubuntu] (or Linux distribution of you choice) from a [http://www.ubuntu.com/download/ubuntu/download liveCD]. This will not affect your current operating system.
# '''Disconnect machine from the internet'''. Unplug any network cables and disable wireless. Verify that wireless is disabled in the icon on the upper right corner (Ubuntu). Double check that machine is disconnected by opening the web browser.
# Run bitcoin while disconnected to the internet. The client will show 0 connections and 0 blocks, but it will still generate a wallet.dat file and a bitcoin address.
# Encrypt your wallet using the strong and unique password from step 2 above. (Bitcoin Client > Settings > Encrypt wallet)
# Copy wallet.dat (found in hidden folder .bitcoin in your home directory) to USB drive.
# Save bitcoin address to a text file and copy it to USB drive.
# Shut down system and turn off computer. Before switching your computer on again, remove all power sources for about 1 minute. Physically remove battery from laptop.
# Backup encrypted wallet.dat file in several places:
#*Send it to your 5 best friends by email attachment and ask them to save it for you.
#*Save it on your cloud drive accounts created in step 1.
#*Save it on several USB drives and CDs and store them in different geographic locations.
#Send bitcoins to the address saved on the USB drive. Double check in the [[Bitcoin Block Explorer|block explorer]] that they have been sent or you can add Watch Bitcoin Address in [https://blockchain.info/wallet/ BlockChain Wallet].

==How to Retrieve Funds ==

#Boot from Ubuntu liveCD, as in step 5 above.
#Insert USB drive.
#Run bitcoin client and close it again.
#Replace wallet.dat in ~/.bitcoin directory with wallet.dat from USB drive.
#Connect to the internet.
#Restart bitcoin client.
#Wait for blocks to download (optional).
#Send bitcoins.

==How to Setup Watch Bitcoin Address==

Watch Bitcoin address is a way for you to check your cold storage balance online without exposing your private key.
#Create an wallet account at https://blockchain.info/wallet/
#Go to import/export.
#At "Add Watch Only Bitcoin Address", add your bitcoin address.
#Wait for the balance to synch.
#You can also download the mobile version at [https://play.google.com/store/apps/details?id=piuk.blockchain.android Google Play], [https://itunes.apple.com/us/app/blockchain-bitcoin-wallet/id493253309?mt=8 Apple Store]

==Notes==

*This procedure is only secure if you perform steps 1-13 in this '''exact order'''.

*If you're a non-technical user that can't perform the steps above, use an [[Paper wallet|in-browser paper wallet generator]] to create paper wallets (read below for more caveats and info).

*Perform one or two trial runs of the above procedure with a few bitcents, and make sure that you know how to successfully retrieve them, before making a bulk transfer.

*Every time you retrieve bitcoins from your savings wallet, create a fresh savings wallet by repeating the above procedure, and send all your remaining savings balance there.

*There is more than one way to do it. Similar procedures have been suggested on the forums [http://forum.bitcoin.org/index.php?topic=17240.0 here] and [http://forum.bitcoin.org/?topic=5194.0 here].

*Beware that even savings wallets have limited lifetimes. New, backwards incompatible versions of bitcoin might come out in future, [http://en.wikipedia.org/wiki/Advanced_Encryption_Standard AES] might be broken, [http://en.wikipedia.org/wiki/Bit_rot bit rot] might destroy your wallets, etc. Pay attention to updates in the Bitcoin world and update to fresh savings wallets every couple of years, or as needed.

* See [[How to import private keys]] for an alternative way of retrieve your coins.

==Alternatives ==

[[Paper wallet|'''Paper wallets''']] can also be used to create offline bitcoin savings accounts. While paper wallets are much easier to generate, they are not generally encrypted which means you cannot guard against accidental loss by distributing copies to online services and friends. Instead, paper wallets must be kept safe like jewels or cash. Looking forward, support for [[BIP 0038|BIP-38]] encryption is growing fast and it is expected that paper wallet generators will soon include options for generating ''encrypted paper wallets'' that can be duplicated and widely distributed for safekeeping.

==See Also==

* [[Cold storage]]
* [http://codinginmysleep.com/bitcoin-cold-storage-in-plain-english Bitcoin Cold Storage In Plain English] by David Perry
* [https://www.youtube.com/watch?v=DQumISxkJsQ Electrum offline transactions tutorial]

[[Category:Instructional]]
[[Category:Security]]

Category:History

2013-04-01T15:52:35Z

Forever: /* 2013 */

== Important milestones of the Bitcoin project ==
=== 2008 ===
{| style="text-align: left"
|-
! width="8em" | August 18
|| Domain name "bitcoin.org" registered<ref>[https://bitcointalk.org/index.php?topic=103369.msg1135218#msg1135218 According to theymos], Satoshi registered bitcoin.org via https://www.anonymousspeech.com/ which allows to anonymously register domains.</ref>.
|-
! October 31
|| [http://article.gmane.org/gmane.comp.encryption.general/12588/ Bitcoin design paper] published
|-
! November 09
|| Bitcoin project registered at SourceForge.net
|}

=== 2009 ===
{| style="text-align: left"
|-
! width="8em" | January 3
|| [http://www.BlockExplorer.com/b/0 Genesis block] established at 18:15:05 GMT
|-
! January 11
|| Bitcoin v0.1 released and announced on the [http://www.mail-archive.com/cryptography@metzdowd.com/msg10152.html cryptography mailing list]
|-
! January 12
|| First Bitcoin transaction, [http://www.BlockExplorer.com/b/170 in block 170] - from [[Satoshi]] to Hal Finney<ref>[http://bitcointalk.org/index.php?topic=91806.msg1012234#msg1012234 Earliest Block With A Spend]</ref>.
|-
! October 5
|| Exchange rates [http://newlibertystandard.wetpaint.com/page/2009+Exchange+Rate published] by New Liberty Standard. $1 = 1,309.03 BTC (and [[User:theymos|theymos]] thought NLS was overcharging<ref>[http://bitcointalk.org/index.php?topic=104287.msg1143955#msg1143955 Historical Price Data for 2009]</ref>)
|-
! October 9
|| #bitcoin-dev channel registered on freenode IRC.
|-
! December 16
|| Bitcoin v0.2 released
|-
! December 30
|| First difficulty increase at 06:11:04 GMT
|}

=== 2010 ===
{| style="text-align: left"
|-
! width="8em" | February 6
|| [[Bitcoin Market]] established
|-
! May 21
|| laszlo first to buy pizza with Bitcoins agreeing upon paying 10,000 BTC for ~$25 worth of pizza courtesy of jercos<ref>[https://bitcointalk.org/index.php?topic=137.msg1195#msg1195 bitcointalk post] where laszlo confirmed having bought pizza</ref>
|-
! July 7
|| Bitcoin v0.3 released
|-
! July 11
|| Bitcoin v0.3 release mentioned on slashdot<ref>[http://news.slashdot.org/story/10/07/11/1747245/Bitcoin-Releases-Version-03 slashdot] metiones Bitcoin</ref>, bringing a large influx of new bitcoin users.
|-
! July 12
|| Beginning of a 10x increase in exchange value over a 5 day period, from about $0.008/BTC to $0.08/BTC
|-
! July 17
|| [[MtGox]] established
|-
! July 18
|| ArtForz generated his first block after establishing his personal OpenCL GPU hash farm
|-
! August 15
|| Bug in the bitcoin code allows a bad transaction into block 74638. Users quickly adopt fixed code and the "good" block chain overtook the bad one at a block height of 74691, 53 blocks later ([[Incidents#Value_overflow]]).
|-
! September 14
|| jgarzik [https://bitcointalk.org/index.php?topic=133.msg12921#msg12921 offered] 10,000 BTC (valued at ~$600-650) to puddinpop to open source their windows-based CUDA client
|-
! September 14
|| Block [http://blockexplorer.com/b/79764 79,764] is first to be mined using split allocation of the generation reward.
|-
! September 18
|| puddinpop [https://bitcointalk.org/index.php?topic=133.msg13135#msg13135 released] source to their windows-based CUDA client under MIT license
|-
! September 29
|| kermit [https://bitcointalk.org/index.php?topic=1306.0 discovered] a microtransactions exploit which precipitated the Bitcoin v0.3.13 release
|-
! October 01
|| First public OpenCL miner released
|-
! October 04
|| Original Bitcoin History wiki page (this page) established (ooh so meta) on Bitcoin.org's wiki.
|-
! October 07
|| Exchange rate started climbing up from $0.06/BTC after several flat months.
|-
! October 16
|| First recorded escrowed bitcoin trade conducted, between nanotube and Diablo-D3, escrowed by theymos.
|-
! October 17
|| [[Bitcoin_OTC|#bitcoin-otc]] trading channel established on freenode IRC.
|-
! October 28
|| First bitcoin short sale transaction initiated, with a loan of 100 BTC by nanotube to [[User:Kiba|kiba]], facilitated by the [[Bitcoin-otc|#bitcoin-otc]] market.
|-
! November 6
|| The [https://bitcointalk.org/index.php?topic=1672 Bitcoin economy passed US $1 million]. The MtGox price touched USD $0.50/BTC.
|-
! December 7
|| Bitcoind was compiled for the Nokia N900 mobile computer by doublec. The following day, ribuck sent him 0.42 BTC in the first portable-to-portable Bitcoin transaction.
|-
! December 9
|| The generation difficulty passed 10,000.
|-
|
|| First bitcoin call option contract sold, from nanotube to [[User:Sgornick|sgornick]], via the [[Bitcoin-otc|#bitcoin-otc]] market.
|-
! December 16
|| [http://mining.bitcoin.cz/ Bitcoin Pooled Mining], operated by slush, found its first block
|}

=== 2011 ===
{| style="text-align: left"
|-
! width="8em" | January 2
|| [[Tonal Bitcoin]] units standardized.
|-
! January 8
|| [[History of Bitcoin]] page (this page) created after replicating from original Bitcoin History page on Bitcoin.org.
|-
|
|| Bitcoin Pooled Mining reached a total of 10,000 Mhash/s
|-
! January 27
|| Largest numeric value ever traded for bitcoins thus far occurred on this date. Three currency bills from Zimbabwe, known as Zimdollars, were traded on [[Bitcoin-otc|#bitcoin-otc]] at the rate of 4 BTC for each of the one-hundred trillion dollar ($100,000,000,000,000) Zimbabwe notes<ref>Serial numbers for Zimdollars sold: AA1669317, AA1669318 and AA1669319</ref>
|-
! January 28
|| Block 105000 was generated. This means that 5.25 million bitcoins have been generated, which is just over one-quarter of the eventual total of nearly 21 million.
|-
! February 9
|| Bitcoin reached parity with the US dollar, touching $1 per BTC at [[MtGox]].
|-
! February 10
|| Bitcoin.org website struggles to handle [https://bitcointalk.org/index.php?topic=3444.0 traffic] resulting from mentions on Slashdot<ref>[http://news.slashdot.org/story/11/02/10/189246/Online-Only-Currency-BitCoin-Reaches-Dollar-Parity Online-Only Currency BitCoin Reaches Dollar Parity]</ref>, Hacker News and Twitter following the news that parity had been reached.
|-
! February 14
|| A vehicle was, for the first time, offered in exchange for a certain number of bitcoins<ref>[https://bitcointalk.org/index.php?topic=3485.0 Car for Sale - Australia]</ref>.
|-
! March 6
|| Total Bitcoin network computation speed for a short time reached a new high of almost 900Ghash/sec, dropping to 500Ghash/sec soon after. Some speculate that this was due to some supercomputer or bot-net that joined the network ([http://bitcoin.atspace.com/mysteryminer.html mystery miner]).
|-
! March 18
|| BTC/USD exchange rate reaches a 6-week low point at almost $0.70/BTC, after what appeared to be a short burst of, possibly automated, BTC sales at progressively lower prices. BTC price had been declining since the February 9 high.
|-
! March 25
|| Difficulty decreased nearly 10%. A decrease has only occurred once before, and this decrease of nearly 10% was the largest.
|-
! March 27
|| The first market for exchanging bitcoins to and from the British Pound Sterling BTC/GBP, [[Britcoin]], opens.
|-
! March 31
|| The first market for exchanging bitcoins to and from Brazilian Reals, [[Bitcoin Brazil]], opens.
|-
! April 5
|| The first market for exchanging bitcoins to and from the Polish złoty, [[BitMarket.eu]], opens.
|-
! April 12
|| First bitcoin put option contract sold via the [[Bitcoin-otc|#bitcoin-otc]] market.
|-
! April 16
|| TIME does [http://techland.time.com/2011/04/16/online-cash-bitcoin-could-challenge-governments/ an article on Bitcoin].
|-
! April 23
|| BTC/USD exchange rate reaches and passes parity with the Euro (EUR) on [[MtGox]] exchange.
|-
|
|| BTC/USD exchange rate reaches and passes parity with the British Sterling Pound (GBP) on [[MtGox]] exchange.
|-
|
|| Value of the Bitcoin money stock at current exchange rate passes $10 million USD threshold.
|-
! April 27
|| [[VirWoX]] opens first market to trade bitcoins against a virtual currency on BTC/SL (Second Life Lindens) exchange.
|-
! April 30
|| The generation difficulty passed 100,000.
|-
! June 2
|| The exchange rate at [[MtGox]] touched 10 USD per BTC.
|-
! June 3
|| [[Tonal Bitcoin]] reached parity with the US cent, touching 1¢ per TBC at [[Bitcoin Market]].
|-
! June 8
|| The [[MtGox]] exchange rate peaked at 31.91 USD, at a "market capitalization" of about $206 M [http://bitcoin.stackexchange.com/questions/2047/market-capitalization-over-time].
|-
! June 12
|| The [[MtGox]] exchange rate briefly dropped to near 10 USD four days after the peak, in its largest percentage price retreat to date.
|-
! June 13
|| Forum user allinvain claimed to have had [http://forum.bitcoin.org/index.php?topic=16457.0 25,000 BTC stolen] from his Bitcoin wallet (approx. USD equivalent $375,000).
|-
! June 19
|| The MtGox database was compromised and the user table was leaked, containing details of 60,000 usernames, email addresses and password hashes, some of which were based on a highly vulnerable hashing algorithm.
|-
! June 19
|| Someone was able to access an admin account at MtGox and issue sell orders for hundreds of thousands of fake bitcoins, forcing the MtGox price down from $17.51 per bitcoin to $0.01. MtGox announced that these trades would be reversed. Trading was halted at MtGox for 7 days (and also briefly at TradeHill and Britcoin while their security was reviewed).
|-
! June 19
|| Some of the users on the leaked MtGox database had used the same username at MyBitcoin and had their passwords hacked. About 600 of them had their balance [http://forum.bitcoin.org/index.php?topic=22221.msg279396#msg279396 stolen from their MyBitcoin accounts]. One user lost over 2000 BTC.
|-
! June 20
|| The EFF announced that it was no longer accepting Bitcoin donations due to legal uncertainties.
|-
! June 24
|| The generation difficulty passed 1,000,000 with Block [http://blockexplorer.com/b/133056 133056].
|-
! July 19
|| "Let it go on record that at 4:05pm CET [19 July 2011], my manager Tadek was the first person in the world to receive [testnet] Bitcoins via NFC ;)" - Mike Hearn
|-
! July 22
|| [[BitCoins Mobile]], the first Bitcoin application for iPad was released by [http://www.intervex.net Intervex Digital].
|-
! July 30
|| [http://pastebin.com/raw.php?i=BUB3dygQ Tribute to Len Sassaman] included in the blockchain<ref>[http://bitcointalk.org/index.php?topic=33618.msg420597#msg420597 A Tribute to Len "rabbi" Sassama]</ref>.
|-
! August 20
|| First Bitcoin Conference and World Expo held, in NYC.<ref>[http://bitcoinme.com/index.php/conference/ New York Conference 2011]</ref>
|-
! August 23
|| [[P2Pool]], the first P2P decentralized pool, mines its first Bitcoin mainnet block (Block [http://blockexplorer.com/b/142312 142,312]).
|-
! August 30
|| Difficulty adjustment at block [http://blockexplorer.com/b/143136 143,136] marks the first back-to-back drop.
|-
! November 15
|| First CVE (CVE-2011-4447) assigned to a Bitcoin client exploit.
|-
! November 25
|| First European Bitcoin Conference in Prague, Czech Rep.<ref>[http://bitgroups.org/ Prague Conference 2011]</ref>
|-
! December 12
|| Largest amount of fees, to-date, in a single transaction, and most fees in a single block. A [http://blockexplorer.com/tx/1d7749c65c90c32f5e2c036217a2574f3f4403da39174626b246eefa620b58d9 transaction] paid 171 BTC in fees in [http://blockexplorer.com/b/157235 block 157235]<ref>[http://bitcointalk.org/index.php?topic=88423.msg973509#msg973509 Largest fee ever?]</ref>.
|}

=== 2012 ===
{| style="text-align: left"
|-
! width="8em" | March 1
|| Largest theft of bitcoins to-date occurred (near 50K BTC) after security breach at web host Linode.
|-
! width="8em" | April 1
|| Pay-to-script-hash ([[P2SH]]) as defined through [[BIP 0016]] goes live.
|-
! May 08
|| A single service, [[SatoshiDICE]] becomes responsible for over half the transaction volume on the Bitcoin blockchain.
|-
! June 3
|| Largest block (most transactions), to-date (June 3), is [http://BlockExplorer.com/b/181919 block 181919] with 1322 transactions<ref>[http://bitcointalk.org/index.php?topic=85353.msg939859#msg939859 Largest block to date]</ref>.
|-
! July 22
|| One millionth topic reply was posted on the unofficial [[Bitcoin Forum]] <ref>[https://bitcointalk.org/index.php?topic=94608.0 Topic about one millionth forum post]</ref>.
|-
! September 15-16
|| Bitcoin Conference in London <ref>[http://bitcoin2012.com/ London Conference 2012]</ref>.
|-
! September 27
|| Formation of the [[Bitcoin Foundation]].
|-
! November 28
|| Halving day. [http://blockexplorer.com/b/210000 Block 210,000] is the first with a block reward subsidy of only 25 BTC.
|-
! December 6
|| First Bitcoin exchange [https://bitcointalk.org/index.php?topic=129461.0 licensed "as a bank" in europe] (actually a PSP which is like a bank, without debt-money issuing).
|}

=== 2013 ===
{| style="text-align: left"
|-
! width="8em" | February 19
|| Bitcoin Client v0.8 released featuring improved download speed and [https://en.wikipedia.org/wiki/Bloom_filter Bloom Filtering]
|-
! February 28
|| The [[MtGox]] exchange rate broke the June 8 2011 peak of 31.91 USD. The first all time high since 601 days
|-
! March 12
|| A previously undiscovered protocol rule results in a [http://bitcoin.org/chainfork.html hard fork of the 0.8.0 reference client].
|-
! April 1
|| Bitcoin price breaks 100 USD on [[MtGox]] and other major exchanges.
|-
|}

==See Also==

* [[Bitcoin Firsts]]
* [[Press]]

==References==
<references />

Myths

2013-03-26T16:13:58Z

Forever: /* Bitcoin was hacked */

Let's clear up some common Bitcoin misconceptions.

== Bitcoin is just like all other digital currencies; nothing new ==

Nearly all other digital currencies are centrally controlled. This means that:
* They can be printed at the subjective whims of the controllers
* They can be destroyed by attacking the central point of control
* Arbitrary rules can be imposed upon their users by the controllers

Being decentralized, Bitcoin solves all of these problems.

== Bitcoins don't solve any problems that fiat currency and/or gold doesn't solve ==

Unlike gold, bitcoins are:
* Easy to transfer
* Easy to secure
* Easy to verify
* Easy to granulate

Unlike fiat currencies, bitcoins are:
* Predictable and limited in [[Controlled_Currency_Supply|supply]]
* Not controlled by a central authority (such as [http://en.wikipedia.org/wiki/Federal_Reserve The United States Federal Reserve])
* Not debt-based

Unlike electronic fiat currency systems, bitcoins are:
* Potentially anonymous
* Freeze-proof
* Faster to transfer
* Cheaper to transfer

== Bitcoin is backed by processing power ==

It is not correct to say that Bitcoin is "backed by" processing power. A currency being "backed" means that it is pegged to something else via a central party at a certain exchange rate yet you cannot exchange bitcoins for the computing power that was used to create them. Bitcoin is in this sense not backed by anything. It is a currency in its own right. Just as gold is not backed by anything, the same applies to Bitcoin.

The Bitcoin currency is ''created'' via processing power, and the integrity of the block chain is ''protected'' by the existence of a network of powerful computing nodes from certain [[Weaknesses#Attacker_has_a_lot_of_computing_power|attacks]].

== Bitcoins are worthless because they aren't backed by anything ==

One could argue that gold isn't backed by anything either. Bitcoins have properties resulting from the system's design that allows them to be subjectively valued by individuals. This valuation is demonstrated when individuals freely exchange for or with bitcoins. Please refer to the [http://en.wikipedia.org/wiki/Subjective_theory_of_value Subjective Theory of Value].

See also: the "[[#Bitcoin_is_backed_by_processing_power|Bitcoin is backed by processing power]]" myth.

== The value of bitcoins are based on how much electricity and computing power it takes to mine them ==

This statement is an attempt to apply to Bitcoin the [http://en.wikipedia.org/wiki/Labor_theory_of_value labor theory of value], which is generally accepted as false. Just because something takes X resources to create does not mean that the resulting product will be worth X. It can be worth more, or less, depending on the utility thereof to its users.

In fact the causality is the reverse of that (this applies to the labor theory of value in general). The cost to mine bitcoins is based on how much they are worth. If bitcoins go up in value, more people will mine (because [[Mining|mining]] is profitable), thus [[difficulty]] will go up, thus the cost of mining will go up. The inverse happens if bitcoins go down in value. These effects balance out to cause mining to always cost an amount proportional to the value of bitcoins it produces.

== Bitcoins have no intrinsic value (unlike some other things) ==

It is true that bitcoins have no intrinsic value, in the [http://en.wikipedia.org/wiki/Intrinsic_value_%28numismatics%29 numismatic sense], in other words, value in any realm outside of being used as a medium of exchange.

However, while some tangible commodities do have intrinsic value, that value is generally much less than its trading price. Consider for example that gold, if it were not used as an inflation-proof store of value, but rather only for its industrial uses, would certainly not be worth what it is today, since the industrial requirements for gold are far smaller than the available supply thereof.

While historically intrinsic value, as well as other attributes like divisibility, fungibility, scarcity, durability, helped establish certain commodities as mediums of exchange, it is certainly not a prerequisite. While bitcoins lack 'intrinsic value' in this sense, they make up for it in spades by possessing the other qualities necessary to make it a good medium of exchange, equal to or better than [http://en.wikipedia.org/wiki/Commodity_money commodity money].

Value is ultimately determined by what people are willing to trade for - by supply and demand.

== Bitcoins are illegal because they're not legal tender ==

Chickens aren't legal tender either, but bartering with chickens is not illegal.

There are a [http://en.wikipedia.org/wiki/Local_currency number of currencies] in existence that are not official government-backed currencies. A currency is, after all, nothing more than a convenient unit of account. While national laws may vary from country to country, and you should certainly check the laws of your jurisdiction, in general trading in any commodity, including digital currency like Bitcoin, [http://en.wikipedia.org/wiki/BerkShares BerkShares], game currencies like WoW gold, or Linden dollars, is not illegal.

== Bitcoin is a form of domestic terrorism because it only harms the economic stability of the USA and its currency ==

http://en.wikipedia.org/wiki/Definitions_of_terrorism#United_States according to this, you need to do violent activities to be considered a terrorist for legal purposes. Recent off-the-cuff remarks by politicians have no basis in law or fact.

Also, Bitcoin isn't domestic to the US or any other country. It's a worldwide community. See this map of Bitcoin nodes
https://bitcointalk.org/?topic=2346.0

== Bitcoin will only enable tax evaders which will lead to the eventual downfall of civilization ==

Cash transactions hold the same level of anonymity but are still taxed successfully. It is up to you to follow the applicable state laws in your home country, or face the consequences.

While it may be easy to transfer bitcoins anonymously, ''spending'' them anonymously on tangibles is just as hard as spending any other kind of money anonymously. Tax evaders are often caught because their lifestyle and assets are inconsistent with their reported income, and not necessarily because government is able to follow their money.

== Bitcoins can be printed/minted by anyone and are therefore worthless ==

Bitcoins are not printed/minted. Instead, [[Blocks]] are computed by miners and for their efforts they are awarded a specific amount of bitcoins and transaction fees paid by others. See [[Mining]] for more information on how this process works.

== Bitcoins are worthless because they're based on unproven cryptography ==

SHA256 and ECDSA which are used in Bitcoin are well-known industry standard algorithms. SHA256 is endorsed and used by the US Government and is standardized (FIPS180-3 Secure Hash Standard). If you believe that these algorithms are untrustworthy then you should not trust Bitcoin, credit card transactions or any type of electronic bank transfer. Bitcoin has a sound basis in well understood cryptography.

== Early adopters are unfairly rewarded ==

Early adopters are rewarded for taking the higher risk with their time and money. This argument is akin to saying that people who buy stock at a company IPO (Initial Public Offering) are unfairly rewarded. This argument also depends on bitcoin early adopters using bitcoins to store rather than transfer value. The daily trade on the exchanges (as of Jan 2012) indicates that smaller transactions are becoming the norm, indicating trade rather than investment.

In more pragmatic terms, "fairness" is an arbitrary concept that is improbable to be agreed upon by a large population. Establishing "fairness" is no goal of Bitcoin, as this would be impossible.

By starting to mine or acquire bitcoins today, you too can become an early adopter.

== 21 million coins isn't enough; doesn't scale ==

One Bitcoin is divisible down to eight decimal places. There are really 2,099,999,997,690,000 (just over 2 quadrillion) maximum possible atomic units in the bitcoin design.

The value of "1 BTC" represents 100,000,000 of these. In other words, each is divisible by up to 10^8.

As the value of the unit of 1 BTC grows too large to be useful for day to day transactions, people can start dealing in smaller [[Units|units]], such as milli-bitcoins (mBTC) or micro-bitcoins (μBTC).

== Bitcoins are stored in wallet files, just copy the wallet file to get more coins! ==

No, your wallet contains your secret keys, giving you the rights to spend your bitcoins. Think of it like having bank details stored in a file. If you give your bank details (or bitcoin wallet) to someone else, that doesn't double the amount of money in your account. You can spend your money or they can spend your money, but not both.

== Lost coins can't be replaced and this is bad ==

Bitcoins are divisible to 0.00000001, so there being fewer bitcoins remaining is not a problem for the currency itself. If you lose your coins, all other coins will go up in value a little. Consider it a donation to all other bitcoin users.

A related question is: Why don't we have a mechanism to replace lost coins? The answer is that it is impossible to distinguish between a 'lost' coin and one that is simply sitting unused in someone's wallet.

== It's a giant ponzi scheme ==
In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy.

A ponzi scheme is a zero sum game. In a ponzi scheme, early adopters can only profit at the expense of late adopters, and the late adopters always lose. Bitcoin has an expected win-win outcome. Early and present adopters profit from the rise in value as Bitcoins become better understood and in turn demanded by the public at large. All adopters benefit from the usefulness of a reliable and widely-accepted decentralized peer-to-peer currency.

== Finite coins plus lost coins means deflationary spiral ==
As deflationary forces may apply, economic factors such as hoarding are offset by human factors that may lessen the chances that a [[Deflationary spiral]] will occur.

== Bitcoin can't work because there is no way to control inflation ==

Inflation is simply a rise of prices over time, which is generally the result of the devaluing of a currency. This is a function of supply and demand. Given the fact that the supply of bitcoins is fixed at a certain amount, unlike fiat money, the only way for inflation to get out of control is for demand to disappear. Temporary inflation is possible with a rapid adoption of Fractional Reserve Banking but will stabilize once a substantial number of the 21 million "hard" bitcoins are stored as reserves by banks.

Given the fact that Bitcoin is a distributed system of currency, if demand were to decrease to almost nothing, the currency would be doomed anyway.

The key point here is that Bitcoin as a currency can't be inflated by any single person or entity, like a government, as there's no way to increase supply past a certain amount.

Indeed, the most likely scenario, as Bitcoin becomes more popular and demand increases, is for the currency to increase in value, or deflate, until demand stabilizes.

== The Bitcoin community consists of anarchist/conspiracy theorist/gold standard 'weenies' ==

The members of the community vary in their ideological stances.

== Anyone with enough computing power can take over the network ==

CONFIRMED, see [[Weaknesses]].

That said, as the network grows, it becomes harder and harder for a single entity to do so. Already the Bitcoin network's computing power is quite ahead of the world's fastest supercomputers, together.

What an attacker can do once the network is taken over is quite limited. Under no circumstances could an attacker create counterfeit coins, fake transactions, or take anybody else's money. An attacker's capabilities are limited to taking back their own money that they very recently spent, and preventing other people's transactions from receiving confirmations. Such an attack would be very costly in resources, and for such meager benefits there is little rational economic incentive to do such a thing.

Furthermore, this attack scenario would only be feasible for as long as it was actively underway. As soon as the attack stopped, the network would resume normal operation.

== Bitcoin violates governmental regulations ==

There is no known governmental regulation which disallows the use of Bitcoin.

See also: the "[[#Bitcoins_are_illegal_because_they.27re_not_legal_tender|Bitcoins are illegal because they're not legal tender]]" myth.

== Fractional reserve banking is not possible ==

It is possible. See the main article, [[Fractional Reserve Banking and Bitcoin]]

== Point of sale with bitcoins isn't possible because of the 10 minute wait for confirmation ==

It is true that transactions [[FAQ#Why_do_I_have_to_wait_10_minutes_before_I_can_spend_money_I_received.3F|can]] sometimes take tens of minutes to become ''confirmed''. Despite this, retailers can accept unconfirmed transactions with very little risk by simply 'listening' on the network for a double-spend transaction, or partnering with a company that provides this service. After a head start of merely several seconds, the original transaction would reach so much of the Bitcoin network that a fraudulent double-spend transaction would almost certainly be fruitless. An attacker would have to commit easily-detectable fraud, in person, several hundred or several thousand times, before one of these low-value double-spend attempts would likely succeed.

An attacker could work around the necessity of sending out a second fraudulent transaction to the Bitcoin network by attempting to [[Mining|solo-mine]] an attack block containing the attack transaction himself - temporarily withholding the block with the rest of the network - and then execute the fraudulent purchase within seconds, or minutes at most, of mining the attack block, before broadcasting the attack block. However, the cost of such an activity would dramatically outweigh the value of anything typically offered without a confirmation wait for several reasons.

First, mining a block (attack or otherwise) entitles the miner to a valuable block reward, and because the attack involves temporarily withholding the block from the network, the attacker would put himself in the likely position of his block becoming [[Stale block|stale]], which would result in forfeiture of the entire reward. Most solo miners solve less than one block per month, so this would represent the loss of proceeds of potentially several weeks of mining.

Second, it is not possible for a solo miner to know exactly when his mining activity will yield a block, and because the attack must be carried out within seconds or minutes of successfully mining a block, the attacker will not be able to know or plan in advance the brief window when the attack would be likely to succeed. While it may be easy for a determined attacker to get low-value items that are sold and delivered online instantly without waiting for confirmations (such as downloads), this unpredictability and the briefness of the opportunity would make it extremely difficult to commit any kind of fraud where real-life interaction is required, such as visiting a merchant or taking possession of goods. Petty shoplifting would be far simpler. Even if an attacker went forward with this attack, the retailer would be notified of the fraud the moment the attack block is released seconds later.

In short, the 10-minute wait for confirmation is only practically necessary when delivering goods of value that significantly exceed the block reward an attacker would have to risk to perform an attack and where recourse after delivery is practically nonexistent, such as money transfers.

== After 21 million coins are mined, no one will generate new blocks ==

When operating costs can't be covered by the block creation bounty, which will happen some time before the total amount of BTC is reached, miners will earn some profit from [[transaction fees]]. However unlike the block reward, there is [http://bitcoin.stackexchange.com/questions/876/how-much-will-transaction-fees-eventually-be/895#895 no coupling between transaction fees and the need for security], so there is less of a guarantee that the amount of [[Mining|mining]] being performed will be sufficient to maintain the network's security.

== Bitcoin has no built-in chargeback mechanism, and this isn't good ==

'''Why some people think this is bad''': Chargebacks are useful for limiting fraud. The person handling your money has a responsibility to prevent fraud. If you buy something on eBay and the seller never ships it, PayPal takes funds from the seller's account and gives you back the money. This strengthens the eBay economy, because people recognize that their risk is limited and are more willing to purchase items from risky sellers.

'''Why it's actually a good thing''': Bitcoin is designed such that your money is yours and yours alone. Allowing chargebacks implies that it is possible for another entity to take your money from you. You can have either total ownership rights of your money, or fraud protection, but not both. That said, nothing inherent in the dollar or euro or any other currency is necessary for chargebacks to be possible, and likewise, nothing prevents the creation of PayPal-like services denominated in Bitcoin that provide chargebacks or fraud protection.

The statement "The person handling your money has a responsibility to prevent fraud" is still true; the power has been shifted into your own hands. Fraud will always exist. It's up to you to only send bitcoins to trusted entities. It is possible to trust an online identity without ever knowing their physical identity; see the [http://wiki.bitcoin-otc.com/wiki/OTC_Rating_System OTC Web of Trust].

== Quantum computers would break Bitcoin's security ==

While ECDSA is indeed not secure under quantum computing, quantum computers don't yet exist and probably won't for a while.
The DWAVE system often written about in the press is, even if all their claims are true, not a quantum computer of a kind that could be used for cryptography.
Bitcoin's security, when used properly with a new address on each transaction, depends on more than just ECDSA: Cryptographic hashes are much stronger than ECDSA under QC.
Bitcoin's security was designed to be upgraded in a forward compatible way and could be [http://en.wikipedia.org/wiki/Post-quantum_cryptography upgraded] if this were considered an imminent threat.

See the implications of quantum computers on public key cryptography here http://en.wikipedia.org/wiki/Quantum_computer#Potential

The ''risk'' of quantum computers is also there for financial institutions, like banks, because they heavily rely on cryptography when doing transactions.

== [[Mining|Bitcoin mining]] is a waste of energy and harmful for ecology ==

No more so than the wastefulness of mining gold out of the ground, melting it down and shaping it into bars, and then putting it back underground again. Not to mention the building of big fancy buildings, the waste of energy printing and minting all the various fiat currencies, the transportation thereof in armored cars by no less than two security guards for each who could probably be doing something more productive, etc.

As far as mediums of exchange go, Bitcoin is actually quite economical of resources, compared to others.

'''Economic Argument 1'''

[[Mining|Bitcoin mining]] is a highly competitive, dynamic, almost [http://en.wikipedia.org/wiki/Perfect_market perfect], market. Mining rigs can be set up and dismantled almost anywhere in the world with relative ease. Thus, market forces are constantly pushing mining activity to ''places'' and ''times'' where the marginal price of electricity is low or zero. These electricity products are cheap for a reason. Often it’s because the electricity is difficult (and wasteful) to transport, difficult to store, or because there is low demand and high supply. Using electricity in this way is a lot less wasteful than simply plugging a mining rig into the mains indiscriminately.

For example, Iceland produces an excess of cheap electricity from renewable sources, but it has no way of exporting electricity because of its remote location. It is conceivable that at some point in future Bitcoin mining will only be profitable in places like Iceland, and unprofitable in places like central Europe, where electricity comes mostly from nuclear and fossil sources.

Market forces could even push mining into innovative solutions that have an effective electricity consumption of ''zero''. Mining always produces heat equivalent to the energy consumed - for example, 1000 watts of mining equipment produces the same amount of heat as a 1000 watt heating element used in an electric space heater, hot tub, water heater, or similar appliance. Someone already in a willing position to incur the cost of electricity for its heat value alone could run mining equipment specially designed to mine bitcoins while capturing and utilizing the heat produced, without incurring any energy costs beyond what they already intended to spend on heating.

'''Economic Argument 2'''

When the environmental costs of mining are considered, they need to be weighed up against the benefits. If you question Bitcoin on the grounds that it consumes electricity, then you should also ask questions like this: Will Bitcoin promote economic growth by freeing up trade? Will this speed up the rate of technological innovation? Will this lead to faster development of green technologies? Will Bitcoin enable new, border crossing [http://en.wikipedia.org/wiki/Smart_grid smart grid] technologies? …

Dismissal of Bitcoin because of its costs, while ignoring its benefits, is a dishonest argument. In fact, any environmental argument of this type is dishonest, not just pertaining to Bitcoin. Along similar lines, it could be argued that wind turbines are bad for the environment because making the steel structure consumes energy.

== Shopkeepers can't seriously set prices in bitcoins because of the volatile exchange rate ==

Your assumption is that bitcoins must be sold immediately to cover operating expenses. If the shopkeeper's back-end expenses were transacted in bitcoins as well, then the exchange rate would be irrelevant. Larger adoption of Bitcoin would make prices [http://en.wikipedia.org/wiki/Sticky_%28economics%29 sticky]. Future volatility is expected to decrease, as the size and depth of the market grows.

In the meantime, many merchants simply regularly pull the latest market rates from the exchanges and automatically update the prices on their websites. Also you might be able to buy a put option in order to sell at a fixed rate for a given amount of time. This would protect you from drops in price and simplify your operations for that time period.

== Like Flooz and e-gold, bitcoins serve as opportunities for criminals and will be shut down ==

* Visa, MasterCard, PayPal, and cash all serve as opportunities for criminals as well, but society keeps them around due to their recognized net benefit.
* Hopefully Bitcoin will grow to the point where no single organization can disrupt the network, or would be better served by helping it.
* Terrorists fly aircraft into buildings, but the governments have not yet abolished consumer air travel. Obviously the public good outweighs the possible bad in their opinion.
* Criminal law differs between jurisdictions.

== Bitcoins will be shut down by the government just like Liberty Dollars were ==

Liberty Dollars started as a commercial venture to establish an alternative US currency, including physical banknotes and coins, backed by precious metals. This, in and of itself, is not illegal. They were prosecuted under counterfeiting laws because the silver coins allegedly resembled US currency.

Bitcoins do not resemble the currency of the US or of any other nation in any way, shape, or form. The word "dollar" is not attached to them in any way. The "$" symbol is not used in any way.

Bitcoins have no representational similarity whatsoever to US dollars.

Of course, actually 'shutting down' Liberty Dollars was as easy as arresting the head of the company and seizing the offices and the precious metals used as backing. The decentralized Bitcoin, with no leader, no servers, no office, and no tangible asset backing, does not have the same vulnerability.

== Bitcoin is not decentralized because the developers can dictate the software's behavior ==

The Bitcoin protocol was originally defined by Bitcoin's inventor, [[Satoshi Nakamoto]], and this protocol has now been widely accepted as the standard by the community of miners and users.

Though the developers of the original Bitcoin client still exert influence over the Bitcoin community, their power to arbitrarily modify the protocol is very limited. Since the release of Bitcoin v0.3, changes to the protocol have been minor and always in agreement with community consensus.

Protocol modifications, such as increasing the block award from 25 to 50 BTC, are not compatible with clients already running in the network. If the developers were to release a new client that the majority of miners perceives as corrupt, or in violation of the project’s aims, that client would simply not catch on, and the few users who do try to use it would find that their transactions get rejected by the network.

There are also other [[:Category:Clients|Bitcoin clients made by other developers]] that adhere to the Bitcoin protocol. As more developers create alternative clients, less power will lie with the developers of the original Bitcoin client.

== Bitcoin is a pyramid scheme ==

Bitcoin is nearly opposite of a pyramid scheme in a mathematical sense. Because Bitcoins are algorithmically made scarce, no exponential benefit is derived from introducing new users to use of it. There is a quantitative benefit in having additional interest or demand, but this is in no way exponential.

== Bitcoin was hacked ==

In the history of Bitcoin, there has never been an attack on the [[block chain]] that resulted in stolen money from a confirmed output. Neither has there ever been a reported theft resulting directly from a vulnerability in the [[Original Bitcoin client|original Bitcoin client]], or a vulnerability in the protocol. Bitcoin is secured by standard cryptographic functions. These functions have been peer reviewed by cryptography experts and are considered unlikely to be breakable in the foreseeable future.

It is safe to say that the currency itself has never been 'hacked'. However, several major ''websites'' using the currency have been hacked, often resulting in high profile Bitcoin heists. These heists are misreported in some media as hacks on Bitcoin itself. An analogy: Just because someone stole US dollars from a supermarket till, doesn’t mean that the US dollar as a currency has been 'hacked'.

Most bitcoin thefts are the result of inadequate [[Securing your wallet|wallet security]]. In response to the wave of thefts in 2011 and 2012, the community has developed risk-mitigating measures such as [[Wallet_encryption|wallet encryption]], support for [[BIP_0011|multiple signatures]], [[How_to_set_up_a_secure_offline_savings_wallet|offline wallets]], [[Paper_wallet|paper wallets]], and [[Hardware_wallet|hardware wallets]]. As these measures gain adoption by merchants and users, it is expected that the number of thefts will drop.

[[de:Mythen]]

Myths

2013-03-26T08:28:11Z

Forever: this myth keeps coming up in reader comments, so I'm going to add it here

Let's clear up some common Bitcoin misconceptions.

== Bitcoin is just like all other digital currencies; nothing new ==

Nearly all other digital currencies are centrally controlled. This means that:
* They can be printed at the subjective whims of the controllers
* They can be destroyed by attacking the central point of control
* Arbitrary rules can be imposed upon their users by the controllers

Being decentralized, Bitcoin solves all of these problems.

== Bitcoins don't solve any problems that fiat currency and/or gold doesn't solve ==

Unlike gold, bitcoins are:
* Easy to transfer
* Easy to secure
* Easy to verify
* Easy to granulate

Unlike fiat currencies, bitcoins are:
* Predictable and limited in [[Controlled_Currency_Supply|supply]]
* Not controlled by a central authority (such as [http://en.wikipedia.org/wiki/Federal_Reserve The United States Federal Reserve])
* Not debt-based

Unlike electronic fiat currency systems, bitcoins are:
* Potentially anonymous
* Freeze-proof
* Faster to transfer
* Cheaper to transfer

== Bitcoin is backed by processing power ==

It is not correct to say that Bitcoin is "backed by" processing power. A currency being "backed" means that it is pegged to something else via a central party at a certain exchange rate yet you cannot exchange bitcoins for the computing power that was used to create them. Bitcoin is in this sense not backed by anything. It is a currency in its own right. Just as gold is not backed by anything, the same applies to Bitcoin.

The Bitcoin currency is ''created'' via processing power, and the integrity of the block chain is ''protected'' by the existence of a network of powerful computing nodes from certain [[Weaknesses#Attacker_has_a_lot_of_computing_power|attacks]].

== Bitcoins are worthless because they aren't backed by anything ==

One could argue that gold isn't backed by anything either. Bitcoins have properties resulting from the system's design that allows them to be subjectively valued by individuals. This valuation is demonstrated when individuals freely exchange for or with bitcoins. Please refer to the [http://en.wikipedia.org/wiki/Subjective_theory_of_value Subjective Theory of Value].

See also: the "[[#Bitcoin_is_backed_by_processing_power|Bitcoin is backed by processing power]]" myth.

== The value of bitcoins are based on how much electricity and computing power it takes to mine them ==

This statement is an attempt to apply to Bitcoin the [http://en.wikipedia.org/wiki/Labor_theory_of_value labor theory of value], which is generally accepted as false. Just because something takes X resources to create does not mean that the resulting product will be worth X. It can be worth more, or less, depending on the utility thereof to its users.

In fact the causality is the reverse of that (this applies to the labor theory of value in general). The cost to mine bitcoins is based on how much they are worth. If bitcoins go up in value, more people will mine (because [[Mining|mining]] is profitable), thus [[difficulty]] will go up, thus the cost of mining will go up. The inverse happens if bitcoins go down in value. These effects balance out to cause mining to always cost an amount proportional to the value of bitcoins it produces.

== Bitcoins have no intrinsic value (unlike some other things) ==

It is true that bitcoins have no intrinsic value, in the [http://en.wikipedia.org/wiki/Intrinsic_value_%28numismatics%29 numismatic sense], in other words, value in any realm outside of being used as a medium of exchange.

However, while some tangible commodities do have intrinsic value, that value is generally much less than its trading price. Consider for example that gold, if it were not used as an inflation-proof store of value, but rather only for its industrial uses, would certainly not be worth what it is today, since the industrial requirements for gold are far smaller than the available supply thereof.

While historically intrinsic value, as well as other attributes like divisibility, fungibility, scarcity, durability, helped establish certain commodities as mediums of exchange, it is certainly not a prerequisite. While bitcoins lack 'intrinsic value' in this sense, they make up for it in spades by possessing the other qualities necessary to make it a good medium of exchange, equal to or better than [http://en.wikipedia.org/wiki/Commodity_money commodity money].

Value is ultimately determined by what people are willing to trade for - by supply and demand.

== Bitcoins are illegal because they're not legal tender ==

Chickens aren't legal tender either, but bartering with chickens is not illegal.

There are a [http://en.wikipedia.org/wiki/Local_currency number of currencies] in existence that are not official government-backed currencies. A currency is, after all, nothing more than a convenient unit of account. While national laws may vary from country to country, and you should certainly check the laws of your jurisdiction, in general trading in any commodity, including digital currency like Bitcoin, [http://en.wikipedia.org/wiki/BerkShares BerkShares], game currencies like WoW gold, or Linden dollars, is not illegal.

== Bitcoin is a form of domestic terrorism because it only harms the economic stability of the USA and its currency ==

http://en.wikipedia.org/wiki/Definitions_of_terrorism#United_States according to this, you need to do violent activities to be considered a terrorist for legal purposes. Recent off-the-cuff remarks by politicians have no basis in law or fact.

Also, Bitcoin isn't domestic to the US or any other country. It's a worldwide community. See this map of Bitcoin nodes
https://bitcointalk.org/?topic=2346.0

== Bitcoin will only enable tax evaders which will lead to the eventual downfall of civilization ==

Cash transactions hold the same level of anonymity but are still taxed successfully. It is up to you to follow the applicable state laws in your home country, or face the consequences.

While it may be easy to transfer bitcoins anonymously, ''spending'' them anonymously on tangibles is just as hard as spending any other kind of money anonymously. Tax evaders are often caught because their lifestyle and assets are inconsistent with their reported income, and not necessarily because government is able to follow their money.

== Bitcoins can be printed/minted by anyone and are therefore worthless ==

Bitcoins are not printed/minted. Instead, [[Blocks]] are computed by miners and for their efforts they are awarded a specific amount of bitcoins and transaction fees paid by others. See [[Mining]] for more information on how this process works.

== Bitcoins are worthless because they're based on unproven cryptography ==

SHA256 and ECDSA which are used in Bitcoin are well-known industry standard algorithms. SHA256 is endorsed and used by the US Government and is standardized (FIPS180-3 Secure Hash Standard). If you believe that these algorithms are untrustworthy then you should not trust Bitcoin, credit card transactions or any type of electronic bank transfer. Bitcoin has a sound basis in well understood cryptography.

== Early adopters are unfairly rewarded ==

Early adopters are rewarded for taking the higher risk with their time and money. This argument is akin to saying that people who buy stock at a company IPO (Initial Public Offering) are unfairly rewarded. This argument also depends on bitcoin early adopters using bitcoins to store rather than transfer value. The daily trade on the exchanges (as of Jan 2012) indicates that smaller transactions are becoming the norm, indicating trade rather than investment.

In more pragmatic terms, "fairness" is an arbitrary concept that is improbable to be agreed upon by a large population. Establishing "fairness" is no goal of Bitcoin, as this would be impossible.

By starting to mine or acquire bitcoins today, you too can become an early adopter.

== 21 million coins isn't enough; doesn't scale ==

One Bitcoin is divisible down to eight decimal places. There are really 2,099,999,997,690,000 (just over 2 quadrillion) maximum possible atomic units in the bitcoin design.

The value of "1 BTC" represents 100,000,000 of these. In other words, each is divisible by up to 10^8.

As the value of the unit of 1 BTC grows too large to be useful for day to day transactions, people can start dealing in smaller [[Units|units]], such as milli-bitcoins (mBTC) or micro-bitcoins (μBTC).

== Bitcoins are stored in wallet files, just copy the wallet file to get more coins! ==

No, your wallet contains your secret keys, giving you the rights to spend your bitcoins. Think of it like having bank details stored in a file. If you give your bank details (or bitcoin wallet) to someone else, that doesn't double the amount of money in your account. You can spend your money or they can spend your money, but not both.

== Lost coins can't be replaced and this is bad ==

Bitcoins are divisible to 0.00000001, so there being fewer bitcoins remaining is not a problem for the currency itself. If you lose your coins, all other coins will go up in value a little. Consider it a donation to all other bitcoin users.

A related question is: Why don't we have a mechanism to replace lost coins? The answer is that it is impossible to distinguish between a 'lost' coin and one that is simply sitting unused in someone's wallet.

== It's a giant ponzi scheme ==
In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy.

A ponzi scheme is a zero sum game. In a ponzi scheme, early adopters can only profit at the expense of late adopters, and the late adopters always lose. Bitcoin has an expected win-win outcome. Early and present adopters profit from the rise in value as Bitcoins become better understood and in turn demanded by the public at large. All adopters benefit from the usefulness of a reliable and widely-accepted decentralized peer-to-peer currency.

== Finite coins plus lost coins means deflationary spiral ==
As deflationary forces may apply, economic factors such as hoarding are offset by human factors that may lessen the chances that a [[Deflationary spiral]] will occur.

== Bitcoin can't work because there is no way to control inflation ==

Inflation is simply a rise of prices over time, which is generally the result of the devaluing of a currency. This is a function of supply and demand. Given the fact that the supply of bitcoins is fixed at a certain amount, unlike fiat money, the only way for inflation to get out of control is for demand to disappear. Temporary inflation is possible with a rapid adoption of Fractional Reserve Banking but will stabilize once a substantial number of the 21 million "hard" bitcoins are stored as reserves by banks.

Given the fact that Bitcoin is a distributed system of currency, if demand were to decrease to almost nothing, the currency would be doomed anyway.

The key point here is that Bitcoin as a currency can't be inflated by any single person or entity, like a government, as there's no way to increase supply past a certain amount.

Indeed, the most likely scenario, as Bitcoin becomes more popular and demand increases, is for the currency to increase in value, or deflate, until demand stabilizes.

== The Bitcoin community consists of anarchist/conspiracy theorist/gold standard 'weenies' ==

The members of the community vary in their ideological stances.

== Anyone with enough computing power can take over the network ==

CONFIRMED, see [[Weaknesses]].

That said, as the network grows, it becomes harder and harder for a single entity to do so. Already the Bitcoin network's computing power is quite ahead of the world's fastest supercomputers, together.

What an attacker can do once the network is taken over is quite limited. Under no circumstances could an attacker create counterfeit coins, fake transactions, or take anybody else's money. An attacker's capabilities are limited to taking back their own money that they very recently spent, and preventing other people's transactions from receiving confirmations. Such an attack would be very costly in resources, and for such meager benefits there is little rational economic incentive to do such a thing.

Furthermore, this attack scenario would only be feasible for as long as it was actively underway. As soon as the attack stopped, the network would resume normal operation.

== Bitcoin violates governmental regulations ==

There is no known governmental regulation which disallows the use of Bitcoin.

See also: the "[[#Bitcoins_are_illegal_because_they.27re_not_legal_tender|Bitcoins are illegal because they're not legal tender]]" myth.

== Fractional reserve banking is not possible ==

It is possible. See the main article, [[Fractional Reserve Banking and Bitcoin]]

== Point of sale with bitcoins isn't possible because of the 10 minute wait for confirmation ==

It is true that transactions [[FAQ#Why_do_I_have_to_wait_10_minutes_before_I_can_spend_money_I_received.3F|can]] sometimes take tens of minutes to become ''confirmed''. Despite this, retailers can accept unconfirmed transactions with very little risk by simply 'listening' on the network for a double-spend transaction, or partnering with a company that provides this service. After a head start of merely several seconds, the original transaction would reach so much of the Bitcoin network that a fraudulent double-spend transaction would almost certainly be fruitless. An attacker would have to commit easily-detectable fraud, in person, several hundred or several thousand times, before one of these low-value double-spend attempts would likely succeed.

An attacker could work around the necessity of sending out a second fraudulent transaction to the Bitcoin network by attempting to [[Mining|solo-mine]] an attack block containing the attack transaction himself - temporarily withholding the block with the rest of the network - and then execute the fraudulent purchase within seconds, or minutes at most, of mining the attack block, before broadcasting the attack block. However, the cost of such an activity would dramatically outweigh the value of anything typically offered without a confirmation wait for several reasons.

First, mining a block (attack or otherwise) entitles the miner to a valuable block reward, and because the attack involves temporarily withholding the block from the network, the attacker would put himself in the likely position of his block becoming [[Stale block|stale]], which would result in forfeiture of the entire reward. Most solo miners solve less than one block per month, so this would represent the loss of proceeds of potentially several weeks of mining.

Second, it is not possible for a solo miner to know exactly when his mining activity will yield a block, and because the attack must be carried out within seconds or minutes of successfully mining a block, the attacker will not be able to know or plan in advance the brief window when the attack would be likely to succeed. While it may be easy for a determined attacker to get low-value items that are sold and delivered online instantly without waiting for confirmations (such as downloads), this unpredictability and the briefness of the opportunity would make it extremely difficult to commit any kind of fraud where real-life interaction is required, such as visiting a merchant or taking possession of goods. Petty shoplifting would be far simpler. Even if an attacker went forward with this attack, the retailer would be notified of the fraud the moment the attack block is released seconds later.

In short, the 10-minute wait for confirmation is only practically necessary when delivering goods of value that significantly exceed the block reward an attacker would have to risk to perform an attack and where recourse after delivery is practically nonexistent, such as money transfers.

== After 21 million coins are mined, no one will generate new blocks ==

When operating costs can't be covered by the block creation bounty, which will happen some time before the total amount of BTC is reached, miners will earn some profit from [[transaction fees]]. However unlike the block reward, there is [http://bitcoin.stackexchange.com/questions/876/how-much-will-transaction-fees-eventually-be/895#895 no coupling between transaction fees and the need for security], so there is less of a guarantee that the amount of [[Mining|mining]] being performed will be sufficient to maintain the network's security.

== Bitcoin has no built-in chargeback mechanism, and this isn't good ==

'''Why some people think this is bad''': Chargebacks are useful for limiting fraud. The person handling your money has a responsibility to prevent fraud. If you buy something on eBay and the seller never ships it, PayPal takes funds from the seller's account and gives you back the money. This strengthens the eBay economy, because people recognize that their risk is limited and are more willing to purchase items from risky sellers.

'''Why it's actually a good thing''': Bitcoin is designed such that your money is yours and yours alone. Allowing chargebacks implies that it is possible for another entity to take your money from you. You can have either total ownership rights of your money, or fraud protection, but not both. That said, nothing inherent in the dollar or euro or any other currency is necessary for chargebacks to be possible, and likewise, nothing prevents the creation of PayPal-like services denominated in Bitcoin that provide chargebacks or fraud protection.

The statement "The person handling your money has a responsibility to prevent fraud" is still true; the power has been shifted into your own hands. Fraud will always exist. It's up to you to only send bitcoins to trusted entities. It is possible to trust an online identity without ever knowing their physical identity; see the [http://wiki.bitcoin-otc.com/wiki/OTC_Rating_System OTC Web of Trust].

== Quantum computers would break Bitcoin's security ==

While ECDSA is indeed not secure under quantum computing, quantum computers don't yet exist and probably won't for a while.
The DWAVE system often written about in the press is, even if all their claims are true, not a quantum computer of a kind that could be used for cryptography.
Bitcoin's security, when used properly with a new address on each transaction, depends on more than just ECDSA: Cryptographic hashes are much stronger than ECDSA under QC.
Bitcoin's security was designed to be upgraded in a forward compatible way and could be [http://en.wikipedia.org/wiki/Post-quantum_cryptography upgraded] if this were considered an imminent threat.

See the implications of quantum computers on public key cryptography here http://en.wikipedia.org/wiki/Quantum_computer#Potential

The ''risk'' of quantum computers is also there for financial institutions, like banks, because they heavily rely on cryptography when doing transactions.

== [[Mining|Bitcoin mining]] is a waste of energy and harmful for ecology ==

No more so than the wastefulness of mining gold out of the ground, melting it down and shaping it into bars, and then putting it back underground again. Not to mention the building of big fancy buildings, the waste of energy printing and minting all the various fiat currencies, the transportation thereof in armored cars by no less than two security guards for each who could probably be doing something more productive, etc.

As far as mediums of exchange go, Bitcoin is actually quite economical of resources, compared to others.

'''Economic Argument 1'''

[[Mining|Bitcoin mining]] is a highly competitive, dynamic, almost [http://en.wikipedia.org/wiki/Perfect_market perfect], market. Mining rigs can be set up and dismantled almost anywhere in the world with relative ease. Thus, market forces are constantly pushing mining activity to ''places'' and ''times'' where the marginal price of electricity is low or zero. These electricity products are cheap for a reason. Often it’s because the electricity is difficult (and wasteful) to transport, difficult to store, or because there is low demand and high supply. Using electricity in this way is a lot less wasteful than simply plugging a mining rig into the mains indiscriminately.

For example, Iceland produces an excess of cheap electricity from renewable sources, but it has no way of exporting electricity because of its remote location. It is conceivable that at some point in future Bitcoin mining will only be profitable in places like Iceland, and unprofitable in places like central Europe, where electricity comes mostly from nuclear and fossil sources.

Market forces could even push mining into innovative solutions that have an effective electricity consumption of ''zero''. Mining always produces heat equivalent to the energy consumed - for example, 1000 watts of mining equipment produces the same amount of heat as a 1000 watt heating element used in an electric space heater, hot tub, water heater, or similar appliance. Someone already in a willing position to incur the cost of electricity for its heat value alone could run mining equipment specially designed to mine bitcoins while capturing and utilizing the heat produced, without incurring any energy costs beyond what they already intended to spend on heating.

'''Economic Argument 2'''

When the environmental costs of mining are considered, they need to be weighed up against the benefits. If you question Bitcoin on the grounds that it consumes electricity, then you should also ask questions like this: Will Bitcoin promote economic growth by freeing up trade? Will this speed up the rate of technological innovation? Will this lead to faster development of green technologies? Will Bitcoin enable new, border crossing [http://en.wikipedia.org/wiki/Smart_grid smart grid] technologies? …

Dismissal of Bitcoin because of its costs, while ignoring its benefits, is a dishonest argument. In fact, any environmental argument of this type is dishonest, not just pertaining to Bitcoin. Along similar lines, it could be argued that wind turbines are bad for the environment because making the steel structure consumes energy.

== Shopkeepers can't seriously set prices in bitcoins because of the volatile exchange rate ==

Your assumption is that bitcoins must be sold immediately to cover operating expenses. If the shopkeeper's back-end expenses were transacted in bitcoins as well, then the exchange rate would be irrelevant. Larger adoption of Bitcoin would make prices [http://en.wikipedia.org/wiki/Sticky_%28economics%29 sticky]. Future volatility is expected to decrease, as the size and depth of the market grows.

In the meantime, many merchants simply regularly pull the latest market rates from the exchanges and automatically update the prices on their websites. Also you might be able to buy a put option in order to sell at a fixed rate for a given amount of time. This would protect you from drops in price and simplify your operations for that time period.

== Like Flooz and e-gold, bitcoins serve as opportunities for criminals and will be shut down ==

* Visa, MasterCard, PayPal, and cash all serve as opportunities for criminals as well, but society keeps them around due to their recognized net benefit.
* Hopefully Bitcoin will grow to the point where no single organization can disrupt the network, or would be better served by helping it.
* Terrorists fly aircraft into buildings, but the governments have not yet abolished consumer air travel. Obviously the public good outweighs the possible bad in their opinion.
* Criminal law differs between jurisdictions.

== Bitcoins will be shut down by the government just like Liberty Dollars were ==

Liberty Dollars started as a commercial venture to establish an alternative US currency, including physical banknotes and coins, backed by precious metals. This, in and of itself, is not illegal. They were prosecuted under counterfeiting laws because the silver coins allegedly resembled US currency.

Bitcoins do not resemble the currency of the US or of any other nation in any way, shape, or form. The word "dollar" is not attached to them in any way. The "$" symbol is not used in any way.

Bitcoins have no representational similarity whatsoever to US dollars.

Of course, actually 'shutting down' Liberty Dollars was as easy as arresting the head of the company and seizing the offices and the precious metals used as backing. The decentralized Bitcoin, with no leader, no servers, no office, and no tangible asset backing, does not have the same vulnerability.

== Bitcoin is not decentralized because the developers can dictate the software's behavior ==

The Bitcoin protocol was originally defined by Bitcoin's inventor, [[Satoshi Nakamoto]], and this protocol has now been widely accepted as the standard by the community of miners and users.

Though the developers of the original Bitcoin client still exert influence over the Bitcoin community, their power to arbitrarily modify the protocol is very limited. Since the release of Bitcoin v0.3, changes to the protocol have been minor and always in agreement with community consensus.

Protocol modifications, such as increasing the block award from 25 to 50 BTC, are not compatible with clients already running in the network. If the developers were to release a new client that the majority of miners perceives as corrupt, or in violation of the project’s aims, that client would simply not catch on, and the few users who do try to use it would find that their transactions get rejected by the network.

There are also other [[:Category:Clients|Bitcoin clients made by other developers]] that adhere to the Bitcoin protocol. As more developers create alternative clients, less power will lie with the developers of the original Bitcoin client.

== Bitcoin is a pyramid scheme ==

Bitcoin is nearly opposite of a pyramid scheme in a mathematical sense. Because Bitcoins are algorithmically made scarce, no exponential benefit is derived from introducing new users to use of it. There is a quantitative benefit in having additional interest or demand, but this is in no way exponential.

== Bitcoin was hacked ==

In the history of Bitcoin, there has never been an attack on the [[block chain]] that resulted in stolen money from a confirmed output. Neither has there ever been a reported theft resulting directly from a vulnerability in the [[Original Bitcoin client|original Bitcoin client]], or a vulnerability in the protocol. Bitcoin is secured by standard cryptographic functions. These functions have been peer reviewed by cryptography experts and are considered unlikely to be breakable in the foreseeable future.

It is safe to say that the currency itself has never been 'hacked'. However, several major ''websites'' using the currency have been hacked, often resulting in high profile Bitcoin heists. These heists are misreported in some media as hacks on Bitcoin itself. An analogy: Just because someone stole US dollars from a supermarket till, doesn’t mean that the US dollar as a currency has been 'hacked'.

Most bitcoin thefts are the result of inadequate [[Securing your wallet|wallet security]]. In response to the wave of thefts in 2011 and 2012, the community has developed risk-mitigating measures such as [[Wallet_encryption|wallet encryption]], support for [[BIP_0011|multiple signatures]], and [[How_to_set_up_a_secure_offline_savings_wallet|offline wallets]]. As these measures gain adoption by merchants and users, it is expected that the number of thefts will drop.

[[de:Mythen]]

Myths

2013-03-26T08:14:53Z

Forever:

Myths

2011-11-24T11:39:04Z

Forever: /* Bitcoin will only enable tax evaders which will lead to the eventual downfall of civilization */

Let's clear up some common Bitcoin misconceptions.

== Bitcoin is just like all other digital currencies; nothing new ==

Nearly all other digital currencies are centrally controlled. This means that:
* they can be printed at the subjective whims of the controllers
* they can be destroyed by attacking the central point of control
* arbitrary rules can be imposed upon their users by the controllers

Being decentralized, Bitcoin solves all of these problems.

== Bitcoins don't solve any problems that fiat currency and/or gold doesn't solve ==

Unlike gold, bitcoins are:
* easy to transfer
* easy to secure
* easy to verify
* easy to granulate

Unlike fiat currencies, bitcoins are:
* predictable and limited in [[Controlled_Currency_Supply|supply]]
* not controlled by a central authority(Ex. Fed)

Unlike electronic fiat currency systems, bitcoins are:
* potentially anonymous
* freeze proof
* faster to transfer
* cheaper to transfer

== Bitcoin is backed by processing power ==

It is not correct to say that Bitcoin is backed by processing power. A currency being "backed" by something means that it is pegged to something else via a central party at a certain exchange rate. You cannot exchange bitcoins for the computing power that was used to create them. Bitcoin is in this sense not backed by anything. It is a currency in its own right. Similar to gold - is gold backed by anything? No! It's just gold. The same applies with Bitcoin.

The Bitcoin currency is ''created'' via processing power, and the integrity of the block chain is ''protected'' by the existence of a large network of computing nodes from certain possible [[Weaknesses#Attacker_has_a_lot_of_computing_power|attacks]]. And that is all.

== Bitcoins are worthless because they aren't backed by anything ==

Gold isn't backed by anything either. Bitcoins have properties inherent to its design that are subjectively valued by individuals. This valuation is demonstrated when individuals freely exchange for or with bitcoins. Please refer to the [http://en.wikipedia.org/wiki/Subjective_theory_of_value Subjective Theory of Value]. See also myth [[#Bitcoin_is_backed_by_processing_power|Bitcoin is backed by processing power]].

== Bitcoins value is based on how much electricity and computing power it takes to mine them ==

This statement is an attempt to apply to Bitcoin the [http://en.wikipedia.org/wiki/Labor_theory_of_value labor theory of value], which is generally accepted as false. Just because something takes X resources to create does not mean that the resulting product will be worth X. It can be worth more, or less, depending on the utility thereof to its users.

In fact the causality is the reverse of that (this applies to the labor theory of value in general). The cost to mine Bitcoins is based on how much they are worth. If Bitcoins go up in value, more people will mine (because mining is profitable), thus [[difficulty]] will go up, thus the cost of mining will go up. The inverse happens if bitcoins go down in value. These effects balance out to cause mining to always cost the amount of bitcoins it produces.

== Bitcoins have no intrinsic value (unlike some other things) ==

It is true that bitcoins have no intrinsic value, in the [http://en.wikipedia.org/wiki/Intrinsic_value_%28numismatics%29 numismatic sense], in other words, value in any realm outside of being used as a medium of exchange.

However, while some tangible commodities do have intrinsic value, that value is generally much less than its trading price. Consider for example that gold, if it were not used as an inflation-proof store of value, but rather only for its industrial uses, would certainly not be worth what it is today, since the industrial requirements for gold are far smaller than the available supply thereof.

While historically intrinsic value, as well as other attributes like divisibility, fungibility, scarcity, durability, helped establish certain commodities as mediums of exchange, it is certainly not a prerequisite. While bitcoins lack 'intrinsic value' in this sense, they make up for it in spades by possessing the other qualities necessary to make it a good medium of exchange, equal to or better than [http://en.wikipedia.org/wiki/Commodity_money commodity money].

Value is ultimately determined by what people are willing to trade for - by supply and demand.

== Bitcoins are illegal because they're not legal tender ==

Short answer: chickens aren't legal tender either, but bartering with chickens is not illegal.

There are a [http://en.wikipedia.org/wiki/Local_currency number of currencies] in existence that are not official government-backed currencies. A currency is, after all, nothing more than a convenient unit of account. While national laws may vary from country to country, and you should certainly check the laws of your jurisdiction, in general trading in any commodity, including digital currency like Bitcoin, game currencies like WoW gold or Linden dollars, is not illegal.

== Bitcoin is a form of domestic terrorism because it only harms the economic stability of the USA and its currency ==

http://en.wikipedia.org/wiki/Definitions_of_terrorism#United_States according to this, you need to do violent activities to be considered a terrorist for legal purposes. This has no bearing on politicians and idiotic US attorney's public remarks.

Also, Bitcoin isn't domestic. It's a worldwide community. See this map of Bitcoin nodes
http://forum.bitcoin.org/?topic=2346.0

== Bitcoin will only enable tax evaders which will lead to the eventual downfall of civilization ==

Cash transactions hold the same level of anonymity but are still taxed successfully. It is up to you to follow the applicable state laws in your home country, or face the consequences.

While it may be easy to transfer bitcoins anonymously, ''spending'' them anonymously on tangibles is just as hard as spending any other kind of money anonymously. Tax evaders are often caught because of suspicious purchases, or undeclared assets, not because government is able to follow their money.

== Bitcoins can be printed/minted by anyone and are therefore worthless ==

Bitcoins are not printed/minted. Instead, [[Blocks]] are computed by miners and for their efforts they are awarded a specific amount of bitcoins + transaction fees. See [[Blocks]] for more information on how this process works.

== Bitcoins are worthless because they're based on unproven cryptography ==

SHA256 and ECDSA which are used in Bitcoin are well-known industry standard algorithms. If you believe that these algorithms are untrustworthy then you should not trust Bitcoin, credit card transactions or any type of electronic bank transfer.

== Early adopters are unfairly rewarded ==

Early adopters are rewarded for taking the higher risk with their time and money.

In more pragmatic terms, "fairness" is an arbitrary concept that is improbable to be agreed upon by a large population. Establishing "fairness" is no goal of Bitcoin, as this would be impossible.

The vast majority of the 21 million Bitcoins still have not been distributed. By starting to mine or acquire bitcoins today, you too can become an early adopter.

== 21 million coins isn't enough; doesn't scale ==

One Bitcoin is divisible down to eight decimal places. There are really 2,099,999,997,690,000 (just over 2 quadrillion) maximum possible atomic units in the bitcoin design.

The value of "1 BTC" represents 100,000,000 of these. In other words, each is divisible by up to 10^8.

As the value of the unit of 1 BTC grows too large to be useful for day to day transactions, people can start dealing in smaller [[Units|units]], such as milli-bitcoins (mBTC) or micro-bitcoins (μBTC).

== Bitcoins are stored in wallet files, just copy the wallet file to get more coins! ==

No, your wallet contains your secret keys, giving you the rights to spend your bitcoins. Think of it like having bank details stored in a file. If you give your bank details (or bitcoin wallet) to someone else, that doesn't double the amount of money in your account. You can spend your money or they can spend your money, but not both.

== Lost coins can't be replaced and this is bad ==

Bitcoins are divisible to 0.00000001, so this is not a problem. If you lose your coins, all other coins will go up in value a little. Consider it a donation to all other bitcoin users.

A related question is: Why don't we have a mechanism to replace lost coins? The answer is that it is impossible to distinguish between a 'lost' coin and one that is simply sitting unused in someone's safe.

== It's a giant ponzi scheme ==
In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy.

A ponzi scheme is a zero sum game. Early adopters can only profit at the expense of late adopters. Bitcoin has possible win-win outcomes. Early adopters profit from the rise in value. Late adopters profit from the usefulness of a stable and widely accepted p2p currency.

Not to be confused with the [[Bitcoin randomizer|Bitcoin Randomizer]] which is a game that really is self-described as a Ponzi scheme.

== Finite coins plus lost coins means deflationary spiral ==
As deflationary forces may apply, economic factors such as hoarding are offset by human factors that may lessen the chances that a [[Deflationary spiral]] will occur.

== Bitcoin can't work because there is no way to control inflation ==

Inflation is simply a rise of prices over time, which is generally the result of the devaluing of a currency. This is a function of supply and demand. Given the fact that the supply of bitcoins is fixed at a certain amount, unlike fiat money, the only way for inflation to get out of control is for demand to disappear. Temporary inflation is possible with a rapid adoption of Fractional Reserve Banking but will stabilize once a substantial number of the 21 million "hard" bitcoins are stored as reserves by banks.

Given the fact that Bitcoin is a distributed system of currency, if demand were to decrease to almost nothing, the currency would be doomed anyway.

The key point here is that Bitcoin as a currency can't be inflated by any single person or entity, like a government, as there's no way to increase supply past a certain amount.

Indeed, the most likely scenario, as Bitcoin becomes more popular and demand increases, is for the currency to increase in value, or deflate, until demand stabilizes.

== The Bitcoin community consists of anarchist/conspiracy theorist/gold standard 'weenies' ==

The members of the community vary in their ideological stances.

== Anyone with enough computing power can take over the network ==

CONFIRMED, see [[Weaknesses]].

That said, as the network grows, it becomes harder and harder for a single entity to do so. Already the Bitcoin network's computing power is quite ahead of the world's fastest supercomputers, together.

What an attacker can do once the network is taken over is quite limited. Under no circumstances could an attacker take anybody else's money. An attacker's capabilities are limited to taking back their own money that they very recently spent, and preventing other people's transactions from receiving confirmations. Such an attack would be very costly in resources, and for such meager benefits there is little rational economic incentive to do such a thing.

Furthermore, this attack scenario would only be feasible for as long as it was actively underway. As soon as the attack stopped, the network would resume normal operation.

== Bitcoin violates governmental regulations ==

Name them if you can.

See also the [[Myths#Bitcoins_are_illegal_because_it_s_not_legal_tender|legal tender]] question.

== Fractional reserve banking is not possible ==

Please see the main article, [[Fractional Reserve Banking and Bitcoin]]

== Point of sale with bitcoins isn't possible because of the 10 minute wait for confirmation ==

Transactions [[FAQ#Why_do_I_have_to_wait_10_minutes_before_I_can_spend_money_I_received.3F|can]] take tens of minutes to become ''confirmed'', and this won't change for the foreseeable future. Even after the computing power of the network is orders of magnitude larger than today, the difficulty of generating a block will self-adjust to maintain a target of 6 blocks per hour. Three potential solutions to allow POS transactions are:

'''1.''' For small transactions, simply assume the customer isn't ripping you off. Give the customer his latte immediately after the transaction posts to the network. The transaction should propagate through the network almost instantly, allowing the seller to see the transaction within seconds (albeit with zero confirmations.) The cost of a double-spend attack should make small-scale fraud not worthwhile.

'''2.''' Utilize a [https://bitcointalk.org/index.php?topic=423.msg3819#msg3819 'listening' period] prior to rendering the service or good. This has yet to be formally implemented in the standard Bitcoin client, but would allow a vendor to receive the transaction and then monitor the Bitcoin network for a certain period of time (maybe 10 seconds) for possible double spends. Vendors might utilize specialized payment processors with multiple well-connected nodes for this purpose. As explained by Satoshi, the network nodes only accept the first version of a transaction they receive to incorporate into the block they're trying to generate. When you broadcast a transaction, if someone else broadcasts a double-spend at the same time, it is a race to propagate them to the most nodes first. If one has a slight head start, it will geometrically spread through the network and get many times more nodes. Additionally, a payment "processing" company could blast out the transaction to thousands of nodes instantly and listen for double spend attempts. The probability of the attacker thwarting such a system would be so low that a payment processor could ''guarantee'' payments and eat the cost if a double-spend attempt actually succeeds. If a double-spend attempt is detected, the vendor is notified: no latte, and a call to the police should be put in immediately.

'''3.''' Create a network of transaction hubs. These entities would communicate using a common API. They would float short-term loans between each other to facilitate instant transactions.

Imagine that Alice uses Carol's Clearinghouse as her hub, and Bob uses Dave's Anonymous Exchange. Both Alice and Bob have accounts with their respective hubs, and have already deposited some bitcoins in their accounts. When Alice wants to buy a latte from Bob at a point of sale, Alice tells Carol "I want to send Bob ''x'' bitcoins. He uses Dave's Anonymous Exchange." After checking that Alice's account does contain at least ''x'' bitcoins, Carol sends a message to Dave, saying "Credit Bob's account with ''x'' bitcoins immediately; I'll send you the real bitcoins in the next block." Bob instantly sees his balance increase, and gives Alice her latte.

Optionally, option 3 allows all parties to circumvent use of the block-chain and its associated fees altogether. If Alice and Bob have accounts with Carol and Dave, then Carol and Dave are effectively functioning as banks. Carol and Dave can credit and debit millions of accounts millions of times daily and only "re-balance" money owed at the end of each business day through a single transaction in the Bitcoin block-chain.

Option 3 requires trust. Alice has to trust Carol's Clearinghouse, and the hubs have to trust each other. Due to competition, various hubs could develop with vastly different fee structures, membership requirements, trustability, etc. The advantage of option 3 is that it is instant. The disadvantage of option 3 is that trust is required. If trust is not established, option 2 can be used.

== After 21 million coins are mined, no one will generate new blocks ==

When operating costs can't be covered by the block creation bounty, which will happen some time before the total amount of BTC is reached, miners will earn some profit from [[transaction fees]]. However unlike the block reward, there is [http://bitcoin.stackexchange.com/questions/876/how-much-will-transaction-fees-eventually-be/895#895 no coupling between transaction fees and the need for security], so there is less of a guarantee that the amount of mining being performed will be sufficient to maintain the network's security.

== Bitcoin has no built-in chargeback mechanism, and this isn't good ==

'''Why some people think this is bad''': Chargebacks are useful for limiting fraud. The person handling your money has a responsibility to prevent fraud. If you buy something on eBay and the seller never ships it, PayPal takes funds from the seller's account and gives you back the money. This strengthens the eBay economy, because people recognize that their risk is limited and are more willing to purchase items from risky sellers.

'''Why it's actually a good thing''': Bitcoin is designed such that your money is yours and yours alone. Allowing chargebacks implies that it is possible for another entity to take your money from you. You can have either total ownership rights of your money, or fraud protection, but not both. That said, nothing prevents the creation of services overlayed on top of Bitcoin that provide fraud protection services.

The statement "The person handling your money has a responsibility to prevent fraud" is still true; the power has been shifted into your own hands. Fraud will always exist. It's up to you to only send bitcoins to trusted entities. It is possible to trust an online identity without ever knowing their physical identity; see the [http://wiki.bitcoin-otc.com/wiki/OTC_Rating_System OTC Web of Trust].

== Quantum computers would break Bitcoin's security ==

Yes, but quantum computers don't yet exist and probably won't for a while. Bitcoin's security can be [http://en.wikipedia.org/wiki/Post-quantum_cryptography upgraded] if this were considered an imminent threat.

See the implications of quantum computers on public key cryptography here http://en.wikipedia.org/wiki/Quantum_computer#Potential

The ''risk'' of quantum computers is also there for financial institutions, like banks, because they heavily rely on cryptography when doing transactions.

== Bitcoin mining is a waste of energy and harmful for ecology ==

No more so than the wastefulness of mining gold out of the ground, melting it down and shaping it into bars, and then putting it back underground again. Not to mention the building of big fancy buildings, the waste of energy printing and minting all the various fiat currencies, the transportation thereof in armored cars by no less than two security guards for each who could probably be doing something more productive, etc.

As far as mediums of exchange go, Bitcoin is actually quite economical of resources, compared to others.

'''Economic Argument 1'''

Bitcoin mining is a highly competitive, dynamic, almost [http://en.wikipedia.org/wiki/Perfect_market perfect], market. Mining rigs can be set up and dismantled almost anywhere in the world with relative ease. Thus, market forces are constantly pushing mining activity to ''places'' and ''times'' where the marginal price of electricity is low or zero. These electricity products are cheap for a reason. Often it’s because the electricity is difficult (and wasteful) to transport, difficult to store, or because there is low demand and high supply. Using electricity in this way is a lot less wasteful than simply plugging a mining rig into the mains indiscriminately.

For example, Iceland produces an excess of cheap electricity from renewable sources, but it has no way of exporting electricity because of its remote location. It is conceivable that at some point in future Bitcoin mining will only be profitable in places like Iceland, and unprofitable in places like central Europe, where electricity comes mostly from nuclear and fossil sources.

Market forces could even push mining into innovative solutions that have a ''net'' electricity consumption of ''zero''. For example, electric heaters could come equipped with a cheap CPU instead of a resistance coil.

'''Economic Argument 2'''

When the environmental costs of mining are considered, they need to be weighed up against the benefits. If you question Bitcoin on the grounds that it consumes electricity, then you should also ask questions like this: Will Bitcoin promote economic growth by freeing up trade? Will this speed up the rate of technological innovation? Will this lead to faster development of green technologies? Will Bitcoin enable new, border crossing [http://en.wikipedia.org/wiki/Smart_grid smart grid] technologies? …

Dismissal of Bitcoin because of its costs, while ignoring is benefits, is a dishonest argument. In fact, any environmental argument of this type is dishonest, not just pertaining to Bitcoin. Along similar lines, it could be argued that wind turbines are bad for the environment because making the steel structure consumes energy.

== Shopkeepers can't seriously set prices in bitcoins because of the volatile exchange rate ==

Your assumption is that bitcoins must be sold immediately to cover operating expenses. If the shopkeeper's back-end expenses were transacted in bitcoins as well, then the exchange rate would be irrelevant. Larger adoption of bitcoins would make prices [http://en.wikipedia.org/wiki/Sticky_%28economics%29 sticky]. Future volatility is expected to decrease, as the size and depth of the market grows.

In the meantime, many merchants simply regularly pull the latest market rates from the exchanges and automatically update the prices on their websites. Also you might be able to buy a put option in order to sell at a fixed rate for a given amount of time. This would protect you from drops in price and simplify your operations for that time period.

== Like Flooz and e-gold, bitcoins serve as opportunities for criminals and will be shut down ==

* Hopefully Bitcoin will grow to the point where no single organization can disrupt the network, or would be better served by helping it.
* Terrorists fly aircraft into buildings, but the governments have not yet abolished consumer air travel. Obviously the public good outweighs the possible bad in their opinion.
* Criminal law differs between jurisdictions.

== Bitcoins will be shut down by the government just like Liberty Dollars were ==

Liberty Dollars started as a commercial venture to establish alternative US currency, including physical banknotes and coins, backed by precious metals. This, in and of itself, is not illegal. They were later shut down for counterfeiting and intent to fraud after the coins, which contained less than $1 worth of silver, were put into circulation with the general money supply, supposedly having a value of 1 USD. These actions were encouraged by the makers of Liberty Dollars.

Bitcoins are not necessarily equal in value to dollars or any other currency and no one is saying they are. No member of the public will be tricked into accepting a bitcoin instead of a dollar.

Of course, actually 'shutting down' the decentralized Bitcoin network is rife with its own set of difficult considerations.

== Bitcoin is not decentralized because the developers can dictate the software's behaviour ==

The Bitcoin protocol was originally defined by Bitcoin's inventor, [[Satoshi Nakamoto]], and this protocol has now been widely accepted as the standard by the community of miners and users.

Though the developers of the original Bitcoin client still exert influence over the Bitcoin community, their power to arbitrarily modify the protocol is very limited. Since the release of Bitcoin v0.3, changes to the protocol have been minor and always in agreement with community consensus.

Protocol modifications, such as increasing the block award from 50 to 100 BTC, are not compatible with clients already running in the network. If the developers were to release a new client that the majority of miners perceives as corrupt, or in violation of the project’s aims, that client would simply not catch on, and the few users who do try to use it would find that their transactions get rejected by the network.

There are also other Bitcoin clients made by other groups of developers that adhere to the Bitcoin protocol. As more developers create alternative clients, less power will lie with the developers of the original Bitcoin client.

[[de:Mythen]]

Myths

2011-11-24T11:17:06Z

Forever: /* Bitcoin mining is a waste of energy and harmful for ecology */

Let's clear up some common Bitcoin misconceptions.

== Bitcoin is just like all other digital currencies; nothing new ==

Nearly all other digital currencies are centrally controlled. This means that:
* they can be printed at the subjective whims of the controllers
* they can be destroyed by attacking the central point of control
* arbitrary rules can be imposed upon their users by the controllers

Being decentralized, Bitcoin solves all of these problems.

== Bitcoins don't solve any problems that fiat currency and/or gold doesn't solve ==

Unlike gold, bitcoins are:
* easy to transfer
* easy to secure
* easy to verify
* easy to granulate

Unlike fiat currencies, bitcoins are:
* predictable and limited in [[Controlled_Currency_Supply|supply]]
* not controlled by a central authority(Ex. Fed)

Unlike electronic fiat currency systems, bitcoins are:
* potentially anonymous
* freeze proof
* faster to transfer
* cheaper to transfer

== Bitcoin is backed by processing power ==

It is not correct to say that Bitcoin is backed by processing power. A currency being "backed" by something means that it is pegged to something else via a central party at a certain exchange rate. You cannot exchange bitcoins for the computing power that was used to create them. Bitcoin is in this sense not backed by anything. It is a currency in its own right. Similar to gold - is gold backed by anything? No! It's just gold. The same applies with Bitcoin.

The Bitcoin currency is ''created'' via processing power, and the integrity of the block chain is ''protected'' by the existence of a large network of computing nodes from certain possible [[Weaknesses#Attacker_has_a_lot_of_computing_power|attacks]]. And that is all.

== Bitcoins are worthless because they aren't backed by anything ==

Gold isn't backed by anything either. Bitcoins have properties inherent to its design that are subjectively valued by individuals. This valuation is demonstrated when individuals freely exchange for or with bitcoins. Please refer to the [http://en.wikipedia.org/wiki/Subjective_theory_of_value Subjective Theory of Value]. See also myth [[#Bitcoin_is_backed_by_processing_power|Bitcoin is backed by processing power]].

== Bitcoins value is based on how much electricity and computing power it takes to mine them ==

This statement is an attempt to apply to Bitcoin the [http://en.wikipedia.org/wiki/Labor_theory_of_value labor theory of value], which is generally accepted as false. Just because something takes X resources to create does not mean that the resulting product will be worth X. It can be worth more, or less, depending on the utility thereof to its users.

In fact the causality is the reverse of that (this applies to the labor theory of value in general). The cost to mine Bitcoins is based on how much they are worth. If Bitcoins go up in value, more people will mine (because mining is profitable), thus [[difficulty]] will go up, thus the cost of mining will go up. The inverse happens if bitcoins go down in value. These effects balance out to cause mining to always cost the amount of bitcoins it produces.

== Bitcoins have no intrinsic value (unlike some other things) ==

It is true that bitcoins have no intrinsic value, in the [http://en.wikipedia.org/wiki/Intrinsic_value_%28numismatics%29 numismatic sense], in other words, value in any realm outside of being used as a medium of exchange.

However, while some tangible commodities do have intrinsic value, that value is generally much less than its trading price. Consider for example that gold, if it were not used as an inflation-proof store of value, but rather only for its industrial uses, would certainly not be worth what it is today, since the industrial requirements for gold are far smaller than the available supply thereof.

While historically intrinsic value, as well as other attributes like divisibility, fungibility, scarcity, durability, helped establish certain commodities as mediums of exchange, it is certainly not a prerequisite. While bitcoins lack 'intrinsic value' in this sense, they make up for it in spades by possessing the other qualities necessary to make it a good medium of exchange, equal to or better than [http://en.wikipedia.org/wiki/Commodity_money commodity money].

Value is ultimately determined by what people are willing to trade for - by supply and demand.

== Bitcoins are illegal because they're not legal tender ==

Short answer: chickens aren't legal tender either, but bartering with chickens is not illegal.

There are a [http://en.wikipedia.org/wiki/Local_currency number of currencies] in existence that are not official government-backed currencies. A currency is, after all, nothing more than a convenient unit of account. While national laws may vary from country to country, and you should certainly check the laws of your jurisdiction, in general trading in any commodity, including digital currency like Bitcoin, game currencies like WoW gold or Linden dollars, is not illegal.

== Bitcoin is a form of domestic terrorism because it only harms the economic stability of the USA and its currency ==

http://en.wikipedia.org/wiki/Definitions_of_terrorism#United_States according to this, you need to do violent activities to be considered a terrorist for legal purposes. This has no bearing on politicians and idiotic US attorney's public remarks.

Also, Bitcoin isn't domestic. It's a worldwide community. See this map of Bitcoin nodes
http://forum.bitcoin.org/?topic=2346.0

== Bitcoin will only enable tax evaders which will lead to the eventual downfall of civilization ==

Cash transactions hold the same level of anonymity but are still taxed successfully. It is up to you to follow the applicable state laws in your home country, or face the consequences.

== Bitcoins can be printed/minted by anyone and are therefore worthless ==

Bitcoins are not printed/minted. Instead, [[Blocks]] are computed by miners and for their efforts they are awarded a specific amount of bitcoins + transaction fees. See [[Blocks]] for more information on how this process works.

== Bitcoins are worthless because they're based on unproven cryptography ==

SHA256 and ECDSA which are used in Bitcoin are well-known industry standard algorithms. If you believe that these algorithms are untrustworthy then you should not trust Bitcoin, credit card transactions or any type of electronic bank transfer.

== Early adopters are unfairly rewarded ==

Early adopters are rewarded for taking the higher risk with their time and money.

In more pragmatic terms, "fairness" is an arbitrary concept that is improbable to be agreed upon by a large population. Establishing "fairness" is no goal of Bitcoin, as this would be impossible.

The vast majority of the 21 million Bitcoins still have not been distributed. By starting to mine or acquire bitcoins today, you too can become an early adopter.

== 21 million coins isn't enough; doesn't scale ==

One Bitcoin is divisible down to eight decimal places. There are really 2,099,999,997,690,000 (just over 2 quadrillion) maximum possible atomic units in the bitcoin design.

The value of "1 BTC" represents 100,000,000 of these. In other words, each is divisible by up to 10^8.

As the value of the unit of 1 BTC grows too large to be useful for day to day transactions, people can start dealing in smaller [[Units|units]], such as milli-bitcoins (mBTC) or micro-bitcoins (μBTC).

== Bitcoins are stored in wallet files, just copy the wallet file to get more coins! ==

No, your wallet contains your secret keys, giving you the rights to spend your bitcoins. Think of it like having bank details stored in a file. If you give your bank details (or bitcoin wallet) to someone else, that doesn't double the amount of money in your account. You can spend your money or they can spend your money, but not both.

== Lost coins can't be replaced and this is bad ==

Bitcoins are divisible to 0.00000001, so this is not a problem. If you lose your coins, all other coins will go up in value a little. Consider it a donation to all other bitcoin users.

A related question is: Why don't we have a mechanism to replace lost coins? The answer is that it is impossible to distinguish between a 'lost' coin and one that is simply sitting unused in someone's safe.

== It's a giant ponzi scheme ==
In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy.

A ponzi scheme is a zero sum game. Early adopters can only profit at the expense of late adopters. Bitcoin has possible win-win outcomes. Early adopters profit from the rise in value. Late adopters profit from the usefulness of a stable and widely accepted p2p currency.

Not to be confused with the [[Bitcoin randomizer|Bitcoin Randomizer]] which is a game that really is self-described as a Ponzi scheme.

== Finite coins plus lost coins means deflationary spiral ==
As deflationary forces may apply, economic factors such as hoarding are offset by human factors that may lessen the chances that a [[Deflationary spiral]] will occur.

== Bitcoin can't work because there is no way to control inflation ==

Inflation is simply a rise of prices over time, which is generally the result of the devaluing of a currency. This is a function of supply and demand. Given the fact that the supply of bitcoins is fixed at a certain amount, unlike fiat money, the only way for inflation to get out of control is for demand to disappear. Temporary inflation is possible with a rapid adoption of Fractional Reserve Banking but will stabilize once a substantial number of the 21 million "hard" bitcoins are stored as reserves by banks.

Given the fact that Bitcoin is a distributed system of currency, if demand were to decrease to almost nothing, the currency would be doomed anyway.

The key point here is that Bitcoin as a currency can't be inflated by any single person or entity, like a government, as there's no way to increase supply past a certain amount.

Indeed, the most likely scenario, as Bitcoin becomes more popular and demand increases, is for the currency to increase in value, or deflate, until demand stabilizes.

== The Bitcoin community consists of anarchist/conspiracy theorist/gold standard 'weenies' ==

The members of the community vary in their ideological stances.

== Anyone with enough computing power can take over the network ==

CONFIRMED, see [[Weaknesses]].

That said, as the network grows, it becomes harder and harder for a single entity to do so. Already the Bitcoin network's computing power is quite ahead of the world's fastest supercomputers, together.

What an attacker can do once the network is taken over is quite limited. Under no circumstances could an attacker take anybody else's money. An attacker's capabilities are limited to taking back their own money that they very recently spent, and preventing other people's transactions from receiving confirmations. Such an attack would be very costly in resources, and for such meager benefits there is little rational economic incentive to do such a thing.

Furthermore, this attack scenario would only be feasible for as long as it was actively underway. As soon as the attack stopped, the network would resume normal operation.

== Bitcoin violates governmental regulations ==

Name them if you can.

See also the [[Myths#Bitcoins_are_illegal_because_it_s_not_legal_tender|legal tender]] question.

== Fractional reserve banking is not possible ==

Please see the main article, [[Fractional Reserve Banking and Bitcoin]]

== Point of sale with bitcoins isn't possible because of the 10 minute wait for confirmation ==

Transactions [[FAQ#Why_do_I_have_to_wait_10_minutes_before_I_can_spend_money_I_received.3F|can]] take tens of minutes to become ''confirmed'', and this won't change for the foreseeable future. Even after the computing power of the network is orders of magnitude larger than today, the difficulty of generating a block will self-adjust to maintain a target of 6 blocks per hour. Three potential solutions to allow POS transactions are:

'''1.''' For small transactions, simply assume the customer isn't ripping you off. Give the customer his latte immediately after the transaction posts to the network. The transaction should propagate through the network almost instantly, allowing the seller to see the transaction within seconds (albeit with zero confirmations.) The cost of a double-spend attack should make small-scale fraud not worthwhile.

'''2.''' Utilize a [https://bitcointalk.org/index.php?topic=423.msg3819#msg3819 'listening' period] prior to rendering the service or good. This has yet to be formally implemented in the standard Bitcoin client, but would allow a vendor to receive the transaction and then monitor the Bitcoin network for a certain period of time (maybe 10 seconds) for possible double spends. Vendors might utilize specialized payment processors with multiple well-connected nodes for this purpose. As explained by Satoshi, the network nodes only accept the first version of a transaction they receive to incorporate into the block they're trying to generate. When you broadcast a transaction, if someone else broadcasts a double-spend at the same time, it is a race to propagate them to the most nodes first. If one has a slight head start, it will geometrically spread through the network and get many times more nodes. Additionally, a payment "processing" company could blast out the transaction to thousands of nodes instantly and listen for double spend attempts. The probability of the attacker thwarting such a system would be so low that a payment processor could ''guarantee'' payments and eat the cost if a double-spend attempt actually succeeds. If a double-spend attempt is detected, the vendor is notified: no latte, and a call to the police should be put in immediately.

'''3.''' Create a network of transaction hubs. These entities would communicate using a common API. They would float short-term loans between each other to facilitate instant transactions.

Imagine that Alice uses Carol's Clearinghouse as her hub, and Bob uses Dave's Anonymous Exchange. Both Alice and Bob have accounts with their respective hubs, and have already deposited some bitcoins in their accounts. When Alice wants to buy a latte from Bob at a point of sale, Alice tells Carol "I want to send Bob ''x'' bitcoins. He uses Dave's Anonymous Exchange." After checking that Alice's account does contain at least ''x'' bitcoins, Carol sends a message to Dave, saying "Credit Bob's account with ''x'' bitcoins immediately; I'll send you the real bitcoins in the next block." Bob instantly sees his balance increase, and gives Alice her latte.

Optionally, option 3 allows all parties to circumvent use of the block-chain and its associated fees altogether. If Alice and Bob have accounts with Carol and Dave, then Carol and Dave are effectively functioning as banks. Carol and Dave can credit and debit millions of accounts millions of times daily and only "re-balance" money owed at the end of each business day through a single transaction in the Bitcoin block-chain.

Option 3 requires trust. Alice has to trust Carol's Clearinghouse, and the hubs have to trust each other. Due to competition, various hubs could develop with vastly different fee structures, membership requirements, trustability, etc. The advantage of option 3 is that it is instant. The disadvantage of option 3 is that trust is required. If trust is not established, option 2 can be used.

== After 21 million coins are mined, no one will generate new blocks ==

When operating costs can't be covered by the block creation bounty, which will happen some time before the total amount of BTC is reached, miners will earn some profit from [[transaction fees]]. However unlike the block reward, there is [http://bitcoin.stackexchange.com/questions/876/how-much-will-transaction-fees-eventually-be/895#895 no coupling between transaction fees and the need for security], so there is less of a guarantee that the amount of mining being performed will be sufficient to maintain the network's security.

== Bitcoin has no built-in chargeback mechanism, and this isn't good ==

'''Why some people think this is bad''': Chargebacks are useful for limiting fraud. The person handling your money has a responsibility to prevent fraud. If you buy something on eBay and the seller never ships it, PayPal takes funds from the seller's account and gives you back the money. This strengthens the eBay economy, because people recognize that their risk is limited and are more willing to purchase items from risky sellers.

'''Why it's actually a good thing''': Bitcoin is designed such that your money is yours and yours alone. Allowing chargebacks implies that it is possible for another entity to take your money from you. You can have either total ownership rights of your money, or fraud protection, but not both. That said, nothing prevents the creation of services overlayed on top of Bitcoin that provide fraud protection services.

The statement "The person handling your money has a responsibility to prevent fraud" is still true; the power has been shifted into your own hands. Fraud will always exist. It's up to you to only send bitcoins to trusted entities. It is possible to trust an online identity without ever knowing their physical identity; see the [http://wiki.bitcoin-otc.com/wiki/OTC_Rating_System OTC Web of Trust].

== Quantum computers would break Bitcoin's security ==

Yes, but quantum computers don't yet exist and probably won't for a while. Bitcoin's security can be [http://en.wikipedia.org/wiki/Post-quantum_cryptography upgraded] if this were considered an imminent threat.

See the implications of quantum computers on public key cryptography here http://en.wikipedia.org/wiki/Quantum_computer#Potential

The ''risk'' of quantum computers is also there for financial institutions, like banks, because they heavily rely on cryptography when doing transactions.

== Bitcoin mining is a waste of energy and harmful for ecology ==

No more so than the wastefulness of mining gold out of the ground, melting it down and shaping it into bars, and then putting it back underground again. Not to mention the building of big fancy buildings, the waste of energy printing and minting all the various fiat currencies, the transportation thereof in armored cars by no less than two security guards for each who could probably be doing something more productive, etc.

As far as mediums of exchange go, Bitcoin is actually quite economical of resources, compared to others.

'''Economic Argument 1'''

Bitcoin mining is a highly competitive, dynamic, almost [http://en.wikipedia.org/wiki/Perfect_market perfect], market. Mining rigs can be set up and dismantled almost anywhere in the world with relative ease. Thus, market forces are constantly pushing mining activity to ''places'' and ''times'' where the marginal price of electricity is low or zero. These electricity products are cheap for a reason. Often it’s because the electricity is difficult (and wasteful) to transport, difficult to store, or because there is low demand and high supply. Using electricity in this way is a lot less wasteful than simply plugging a mining rig into the mains indiscriminately.

For example, Iceland produces an excess of cheap electricity from renewable sources, but it has no way of exporting electricity because of its remote location. It is conceivable that at some point in future Bitcoin mining will only be profitable in places like Iceland, and unprofitable in places like central Europe, where electricity comes mostly from nuclear and fossil sources.

Market forces could even push mining into innovative solutions that have a ''net'' electricity consumption of ''zero''. For example, electric heaters could come equipped with a cheap CPU instead of a resistance coil.

'''Economic Argument 2'''

When the environmental costs of mining are considered, they need to be weighed up against the benefits. If you question Bitcoin on the grounds that it consumes electricity, then you should also ask questions like this: Will Bitcoin promote economic growth by freeing up trade? Will this speed up the rate of technological innovation? Will this lead to faster development of green technologies? Will Bitcoin enable new, border crossing [http://en.wikipedia.org/wiki/Smart_grid smart grid] technologies? …

Dismissal of Bitcoin because of its costs, while ignoring is benefits, is a dishonest argument. In fact, any environmental argument of this type is dishonest, not just pertaining to Bitcoin. Along similar lines, it could be argued that wind turbines are bad for the environment because making the steel structure consumes energy.

== Shopkeepers can't seriously set prices in bitcoins because of the volatile exchange rate ==

Your assumption is that bitcoins must be sold immediately to cover operating expenses. If the shopkeeper's back-end expenses were transacted in bitcoins as well, then the exchange rate would be irrelevant. Larger adoption of bitcoins would make prices [http://en.wikipedia.org/wiki/Sticky_%28economics%29 sticky]. Future volatility is expected to decrease, as the size and depth of the market grows.

In the meantime, many merchants simply regularly pull the latest market rates from the exchanges and automatically update the prices on their websites. Also you might be able to buy a put option in order to sell at a fixed rate for a given amount of time. This would protect you from drops in price and simplify your operations for that time period.

== Like Flooz and e-gold, bitcoins serve as opportunities for criminals and will be shut down ==

* Hopefully Bitcoin will grow to the point where no single organization can disrupt the network, or would be better served by helping it.
* Terrorists fly aircraft into buildings, but the governments have not yet abolished consumer air travel. Obviously the public good outweighs the possible bad in their opinion.
* Criminal law differs between jurisdictions.

== Bitcoins will be shut down by the government just like Liberty Dollars were ==

Liberty Dollars started as a commercial venture to establish alternative US currency, including physical banknotes and coins, backed by precious metals. This, in and of itself, is not illegal. They were later shut down for counterfeiting and intent to fraud after the coins, which contained less than $1 worth of silver, were put into circulation with the general money supply, supposedly having a value of 1 USD. These actions were encouraged by the makers of Liberty Dollars.

Bitcoins are not necessarily equal in value to dollars or any other currency and no one is saying they are. No member of the public will be tricked into accepting a bitcoin instead of a dollar.

Of course, actually 'shutting down' the decentralized Bitcoin network is rife with its own set of difficult considerations.

== Bitcoin is not decentralized because the developers can dictate the software's behaviour ==

The Bitcoin protocol was originally defined by Bitcoin's inventor, [[Satoshi Nakamoto]], and this protocol has now been widely accepted as the standard by the community of miners and users.

Though the developers of the original Bitcoin client still exert influence over the Bitcoin community, their power to arbitrarily modify the protocol is very limited. Since the release of Bitcoin v0.3, changes to the protocol have been minor and always in agreement with community consensus.

Protocol modifications, such as increasing the block award from 50 to 100 BTC, are not compatible with clients already running in the network. If the developers were to release a new client that the majority of miners perceives as corrupt, or in violation of the project’s aims, that client would simply not catch on, and the few users who do try to use it would find that their transactions get rejected by the network.

There are also other Bitcoin clients made by other groups of developers that adhere to the Bitcoin protocol. As more developers create alternative clients, less power will lie with the developers of the original Bitcoin client.

[[de:Mythen]]

Myths

2011-11-24T10:53:44Z

Forever: Some more environmental-economic arguments that were discussed in the forums

Let's clear up some common Bitcoin misconceptions.

== Bitcoin is just like all other digital currencies; nothing new ==

Nearly all other digital currencies are centrally controlled. This means that:
* they can be printed at the subjective whims of the controllers
* they can be destroyed by attacking the central point of control
* arbitrary rules can be imposed upon their users by the controllers

Being decentralized, Bitcoin solves all of these problems.

== Bitcoins don't solve any problems that fiat currency and/or gold doesn't solve ==

Unlike gold, bitcoins are:
* easy to transfer
* easy to secure
* easy to verify
* easy to granulate

Unlike fiat currencies, bitcoins are:
* predictable and limited in [[Controlled_Currency_Supply|supply]]
* not controlled by a central authority(Ex. Fed)

Unlike electronic fiat currency systems, bitcoins are:
* potentially anonymous
* freeze proof
* faster to transfer
* cheaper to transfer

== Bitcoin is backed by processing power ==

It is not correct to say that Bitcoin is backed by processing power. A currency being "backed" by something means that it is pegged to something else via a central party at a certain exchange rate. You cannot exchange bitcoins for the computing power that was used to create them. Bitcoin is in this sense not backed by anything. It is a currency in its own right. Similar to gold - is gold backed by anything? No! It's just gold. The same applies with Bitcoin.

The Bitcoin currency is ''created'' via processing power, and the integrity of the block chain is ''protected'' by the existence of a large network of computing nodes from certain possible [[Weaknesses#Attacker_has_a_lot_of_computing_power|attacks]]. And that is all.

== Bitcoins are worthless because they aren't backed by anything ==

Gold isn't backed by anything either. Bitcoins have properties inherent to its design that are subjectively valued by individuals. This valuation is demonstrated when individuals freely exchange for or with bitcoins. Please refer to the [http://en.wikipedia.org/wiki/Subjective_theory_of_value Subjective Theory of Value]. See also myth [[#Bitcoin_is_backed_by_processing_power|Bitcoin is backed by processing power]].

== Bitcoins value is based on how much electricity and computing power it takes to mine them ==

This statement is an attempt to apply to Bitcoin the [http://en.wikipedia.org/wiki/Labor_theory_of_value labor theory of value], which is generally accepted as false. Just because something takes X resources to create does not mean that the resulting product will be worth X. It can be worth more, or less, depending on the utility thereof to its users.

In fact the causality is the reverse of that (this applies to the labor theory of value in general). The cost to mine Bitcoins is based on how much they are worth. If Bitcoins go up in value, more people will mine (because mining is profitable), thus [[difficulty]] will go up, thus the cost of mining will go up. The inverse happens if bitcoins go down in value. These effects balance out to cause mining to always cost the amount of bitcoins it produces.

== Bitcoins have no intrinsic value (unlike some other things) ==

It is true that bitcoins have no intrinsic value, in the [http://en.wikipedia.org/wiki/Intrinsic_value_%28numismatics%29 numismatic sense], in other words, value in any realm outside of being used as a medium of exchange.

However, while some tangible commodities do have intrinsic value, that value is generally much less than its trading price. Consider for example that gold, if it were not used as an inflation-proof store of value, but rather only for its industrial uses, would certainly not be worth what it is today, since the industrial requirements for gold are far smaller than the available supply thereof.

While historically intrinsic value, as well as other attributes like divisibility, fungibility, scarcity, durability, helped establish certain commodities as mediums of exchange, it is certainly not a prerequisite. While bitcoins lack 'intrinsic value' in this sense, they make up for it in spades by possessing the other qualities necessary to make it a good medium of exchange, equal to or better than [http://en.wikipedia.org/wiki/Commodity_money commodity money].

Value is ultimately determined by what people are willing to trade for - by supply and demand.

== Bitcoins are illegal because they're not legal tender ==

Short answer: chickens aren't legal tender either, but bartering with chickens is not illegal.

There are a [http://en.wikipedia.org/wiki/Local_currency number of currencies] in existence that are not official government-backed currencies. A currency is, after all, nothing more than a convenient unit of account. While national laws may vary from country to country, and you should certainly check the laws of your jurisdiction, in general trading in any commodity, including digital currency like Bitcoin, game currencies like WoW gold or Linden dollars, is not illegal.

== Bitcoin is a form of domestic terrorism because it only harms the economic stability of the USA and its currency ==

http://en.wikipedia.org/wiki/Definitions_of_terrorism#United_States according to this, you need to do violent activities to be considered a terrorist for legal purposes. This has no bearing on politicians and idiotic US attorney's public remarks.

Also, Bitcoin isn't domestic. It's a worldwide community. See this map of Bitcoin nodes
http://forum.bitcoin.org/?topic=2346.0

== Bitcoin will only enable tax evaders which will lead to the eventual downfall of civilization ==

Cash transactions hold the same level of anonymity but are still taxed successfully. It is up to you to follow the applicable state laws in your home country, or face the consequences.

== Bitcoins can be printed/minted by anyone and are therefore worthless ==

Bitcoins are not printed/minted. Instead, [[Blocks]] are computed by miners and for their efforts they are awarded a specific amount of bitcoins + transaction fees. See [[Blocks]] for more information on how this process works.

== Bitcoins are worthless because they're based on unproven cryptography ==

SHA256 and ECDSA which are used in Bitcoin are well-known industry standard algorithms. If you believe that these algorithms are untrustworthy then you should not trust Bitcoin, credit card transactions or any type of electronic bank transfer.

== Early adopters are unfairly rewarded ==

Early adopters are rewarded for taking the higher risk with their time and money.

In more pragmatic terms, "fairness" is an arbitrary concept that is improbable to be agreed upon by a large population. Establishing "fairness" is no goal of Bitcoin, as this would be impossible.

The vast majority of the 21 million Bitcoins still have not been distributed. By starting to mine or acquire bitcoins today, you too can become an early adopter.

== 21 million coins isn't enough; doesn't scale ==

One Bitcoin is divisible down to eight decimal places. There are really 2,099,999,997,690,000 (just over 2 quadrillion) maximum possible atomic units in the bitcoin design.

The value of "1 BTC" represents 100,000,000 of these. In other words, each is divisible by up to 10^8.

As the value of the unit of 1 BTC grows too large to be useful for day to day transactions, people can start dealing in smaller [[Units|units]], such as milli-bitcoins (mBTC) or micro-bitcoins (μBTC).

== Bitcoins are stored in wallet files, just copy the wallet file to get more coins! ==

No, your wallet contains your secret keys, giving you the rights to spend your bitcoins. Think of it like having bank details stored in a file. If you give your bank details (or bitcoin wallet) to someone else, that doesn't double the amount of money in your account. You can spend your money or they can spend your money, but not both.

== Lost coins can't be replaced and this is bad ==

Bitcoins are divisible to 0.00000001, so this is not a problem. If you lose your coins, all other coins will go up in value a little. Consider it a donation to all other bitcoin users.

A related question is: Why don't we have a mechanism to replace lost coins? The answer is that it is impossible to distinguish between a 'lost' coin and one that is simply sitting unused in someone's safe.

== It's a giant ponzi scheme ==
In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy.

A ponzi scheme is a zero sum game. Early adopters can only profit at the expense of late adopters. Bitcoin has possible win-win outcomes. Early adopters profit from the rise in value. Late adopters profit from the usefulness of a stable and widely accepted p2p currency.

Not to be confused with the [[Bitcoin randomizer|Bitcoin Randomizer]] which is a game that really is self-described as a Ponzi scheme.

== Finite coins plus lost coins means deflationary spiral ==
As deflationary forces may apply, economic factors such as hoarding are offset by human factors that may lessen the chances that a [[Deflationary spiral]] will occur.

== Bitcoin can't work because there is no way to control inflation ==

Inflation is simply a rise of prices over time, which is generally the result of the devaluing of a currency. This is a function of supply and demand. Given the fact that the supply of bitcoins is fixed at a certain amount, unlike fiat money, the only way for inflation to get out of control is for demand to disappear. Temporary inflation is possible with a rapid adoption of Fractional Reserve Banking but will stabilize once a substantial number of the 21 million "hard" bitcoins are stored as reserves by banks.

Given the fact that Bitcoin is a distributed system of currency, if demand were to decrease to almost nothing, the currency would be doomed anyway.

The key point here is that Bitcoin as a currency can't be inflated by any single person or entity, like a government, as there's no way to increase supply past a certain amount.

Indeed, the most likely scenario, as Bitcoin becomes more popular and demand increases, is for the currency to increase in value, or deflate, until demand stabilizes.

== The Bitcoin community consists of anarchist/conspiracy theorist/gold standard 'weenies' ==

The members of the community vary in their ideological stances.

== Anyone with enough computing power can take over the network ==

CONFIRMED, see [[Weaknesses]].

That said, as the network grows, it becomes harder and harder for a single entity to do so. Already the Bitcoin network's computing power is quite ahead of the world's fastest supercomputers, together.

What an attacker can do once the network is taken over is quite limited. Under no circumstances could an attacker take anybody else's money. An attacker's capabilities are limited to taking back their own money that they very recently spent, and preventing other people's transactions from receiving confirmations. Such an attack would be very costly in resources, and for such meager benefits there is little rational economic incentive to do such a thing.

Furthermore, this attack scenario would only be feasible for as long as it was actively underway. As soon as the attack stopped, the network would resume normal operation.

== Bitcoin violates governmental regulations ==

Name them if you can.

See also the [[Myths#Bitcoins_are_illegal_because_it_s_not_legal_tender|legal tender]] question.

== Fractional reserve banking is not possible ==

Please see the main article, [[Fractional Reserve Banking and Bitcoin]]

== Point of sale with bitcoins isn't possible because of the 10 minute wait for confirmation ==

Transactions [[FAQ#Why_do_I_have_to_wait_10_minutes_before_I_can_spend_money_I_received.3F|can]] take tens of minutes to become ''confirmed'', and this won't change for the foreseeable future. Even after the computing power of the network is orders of magnitude larger than today, the difficulty of generating a block will self-adjust to maintain a target of 6 blocks per hour. Three potential solutions to allow POS transactions are:

'''1.''' For small transactions, simply assume the customer isn't ripping you off. Give the customer his latte immediately after the transaction posts to the network. The transaction should propagate through the network almost instantly, allowing the seller to see the transaction within seconds (albeit with zero confirmations.) The cost of a double-spend attack should make small-scale fraud not worthwhile.

'''2.''' Utilize a [https://bitcointalk.org/index.php?topic=423.msg3819#msg3819 'listening' period] prior to rendering the service or good. This has yet to be formally implemented in the standard Bitcoin client, but would allow a vendor to receive the transaction and then monitor the Bitcoin network for a certain period of time (maybe 10 seconds) for possible double spends. Vendors might utilize specialized payment processors with multiple well-connected nodes for this purpose. As explained by Satoshi, the network nodes only accept the first version of a transaction they receive to incorporate into the block they're trying to generate. When you broadcast a transaction, if someone else broadcasts a double-spend at the same time, it is a race to propagate them to the most nodes first. If one has a slight head start, it will geometrically spread through the network and get many times more nodes. Additionally, a payment "processing" company could blast out the transaction to thousands of nodes instantly and listen for double spend attempts. The probability of the attacker thwarting such a system would be so low that a payment processor could ''guarantee'' payments and eat the cost if a double-spend attempt actually succeeds. If a double-spend attempt is detected, the vendor is notified: no latte, and a call to the police should be put in immediately.

'''3.''' Create a network of transaction hubs. These entities would communicate using a common API. They would float short-term loans between each other to facilitate instant transactions.

Imagine that Alice uses Carol's Clearinghouse as her hub, and Bob uses Dave's Anonymous Exchange. Both Alice and Bob have accounts with their respective hubs, and have already deposited some bitcoins in their accounts. When Alice wants to buy a latte from Bob at a point of sale, Alice tells Carol "I want to send Bob ''x'' bitcoins. He uses Dave's Anonymous Exchange." After checking that Alice's account does contain at least ''x'' bitcoins, Carol sends a message to Dave, saying "Credit Bob's account with ''x'' bitcoins immediately; I'll send you the real bitcoins in the next block." Bob instantly sees his balance increase, and gives Alice her latte.

Optionally, option 3 allows all parties to circumvent use of the block-chain and its associated fees altogether. If Alice and Bob have accounts with Carol and Dave, then Carol and Dave are effectively functioning as banks. Carol and Dave can credit and debit millions of accounts millions of times daily and only "re-balance" money owed at the end of each business day through a single transaction in the Bitcoin block-chain.

Option 3 requires trust. Alice has to trust Carol's Clearinghouse, and the hubs have to trust each other. Due to competition, various hubs could develop with vastly different fee structures, membership requirements, trustability, etc. The advantage of option 3 is that it is instant. The disadvantage of option 3 is that trust is required. If trust is not established, option 2 can be used.

== After 21 million coins are mined, no one will generate new blocks ==

When operating costs can't be covered by the block creation bounty, which will happen some time before the total amount of BTC is reached, miners will earn some profit from [[transaction fees]]. However unlike the block reward, there is [http://bitcoin.stackexchange.com/questions/876/how-much-will-transaction-fees-eventually-be/895#895 no coupling between transaction fees and the need for security], so there is less of a guarantee that the amount of mining being performed will be sufficient to maintain the network's security.

== Bitcoin has no built-in chargeback mechanism, and this isn't good ==

'''Why some people think this is bad''': Chargebacks are useful for limiting fraud. The person handling your money has a responsibility to prevent fraud. If you buy something on eBay and the seller never ships it, PayPal takes funds from the seller's account and gives you back the money. This strengthens the eBay economy, because people recognize that their risk is limited and are more willing to purchase items from risky sellers.

'''Why it's actually a good thing''': Bitcoin is designed such that your money is yours and yours alone. Allowing chargebacks implies that it is possible for another entity to take your money from you. You can have either total ownership rights of your money, or fraud protection, but not both. That said, nothing prevents the creation of services overlayed on top of Bitcoin that provide fraud protection services.

The statement "The person handling your money has a responsibility to prevent fraud" is still true; the power has been shifted into your own hands. Fraud will always exist. It's up to you to only send bitcoins to trusted entities. It is possible to trust an online identity without ever knowing their physical identity; see the [http://wiki.bitcoin-otc.com/wiki/OTC_Rating_System OTC Web of Trust].

== Quantum computers would break Bitcoin's security ==

Yes, but quantum computers don't yet exist and probably won't for a while. Bitcoin's security can be [http://en.wikipedia.org/wiki/Post-quantum_cryptography upgraded] if this were considered an imminent threat.

See the implications of quantum computers on public key cryptography here http://en.wikipedia.org/wiki/Quantum_computer#Potential

The ''risk'' of quantum computers is also there for financial institutions, like banks, because they heavily rely on cryptography when doing transactions.

== Bitcoin mining is a waste of energy and harmful for ecology ==

No more so than the wastefulness of mining gold out of the ground, melting it down and shaping it into bars, and then putting it back underground again. Not to mention the building of big fancy buildings, the waste of energy printing and minting all the various fiat currencies, the transportation thereof in armored cars by no less than two security guards for each who could probably be doing something more productive, etc.

'''Economic Argument 1'''

Bitcoin mining is a highly competitive, dynamic, almost [http://en.wikipedia.org/wiki/Perfect_market perfect], market. Mining rigs can be set up and dismantled almost anywhere in the world with relative ease. Thus, market forces are constantly pushing mining activity to ''places'' and ''times'' where the marginal price of electricity is low or zero. These electricity products are cheap for a reason. Often it’s because the electricity is difficult (and wasteful) to transport, difficult to store, or because there is low demand and high supply. Using electricity in this way is a lot less wasteful than simply plugging a mining rig into the mains indiscriminately.

For example, Iceland produces an excess of cheap electricity from renewable sources, but it has no way of exporting electricity because of its remote location. It is conceivable that at some point in future Bitcoin mining will only be profitable in places like Iceland, and unprofitable in places like central Europe, where electricity comes mostly from nuclear and fossil sources.

Market forces could even push mining into innovative solutions that have a ''net'' electricity consumption of ''zero''. For example, electric heaters could come equipped with a cheap CPU instead of a resistance coil.

'''Economic Argument 2'''

When the environmental costs of mining are considered, they need to be weighed up against the benefits. If you question Bitcoin on the grounds that it consumes electricity, then you should also ask questions like this: Will Bitcoin promote economic growth by freeing up trade? Will this speed up the rate of technological innovation? Will this lead to faster development of green technologies? Will Bitcoin enable new, border crossing [http://en.wikipedia.org/wiki/Smart_grid smart grid] technologies? …

Dismissal of Bitcoin because of its costs, while ignoring is benefits, is a dishonest argument. In fact, any environmental argument of this type is dishonest, not just pertaining to Bitcoin. Along similar lines, it could be argued that wind turbines are bad for the environment because making the steel structure consumes energy.

As far as mediums of exchange go, Bitcoin is actually quite economical of resources, compared to others.

== Shopkeepers can't seriously set prices in bitcoins because of the volatile exchange rate ==

Your assumption is that bitcoins must be sold immediately to cover operating expenses. If the shopkeeper's back-end expenses were transacted in bitcoins as well, then the exchange rate would be irrelevant. Larger adoption of bitcoins would make prices [http://en.wikipedia.org/wiki/Sticky_%28economics%29 sticky]. Future volatility is expected to decrease, as the size and depth of the market grows.

In the meantime, many merchants simply regularly pull the latest market rates from the exchanges and automatically update the prices on their websites. Also you might be able to buy a put option in order to sell at a fixed rate for a given amount of time. This would protect you from drops in price and simplify your operations for that time period.

== Like Flooz and e-gold, bitcoins serve as opportunities for criminals and will be shut down ==

* Hopefully Bitcoin will grow to the point where no single organization can disrupt the network, or would be better served by helping it.
* Terrorists fly aircraft into buildings, but the governments have not yet abolished consumer air travel. Obviously the public good outweighs the possible bad in their opinion.
* Criminal law differs between jurisdictions.

== Bitcoins will be shut down by the government just like Liberty Dollars were ==

Liberty Dollars started as a commercial venture to establish alternative US currency, including physical banknotes and coins, backed by precious metals. This, in and of itself, is not illegal. They were later shut down for counterfeiting and intent to fraud after the coins, which contained less than $1 worth of silver, were put into circulation with the general money supply, supposedly having a value of 1 USD. These actions were encouraged by the makers of Liberty Dollars.

Bitcoins are not necessarily equal in value to dollars or any other currency and no one is saying they are. No member of the public will be tricked into accepting a bitcoin instead of a dollar.

Of course, actually 'shutting down' the decentralized Bitcoin network is rife with its own set of difficult considerations.

== Bitcoin is not decentralized because the developers can dictate the software's behaviour ==

The Bitcoin protocol was originally defined by Bitcoin's inventor, [[Satoshi Nakamoto]], and this protocol has now been widely accepted as the standard by the community of miners and users.

Though the developers of the original Bitcoin client still exert influence over the Bitcoin community, their power to arbitrarily modify the protocol is very limited. Since the release of Bitcoin v0.3, changes to the protocol have been minor and always in agreement with community consensus.

Protocol modifications, such as increasing the block award from 50 to 100 BTC, are not compatible with clients already running in the network. If the developers were to release a new client that the majority of miners perceives as corrupt, or in violation of the project’s aims, that client would simply not catch on, and the few users who do try to use it would find that their transactions get rejected by the network.

There are also other Bitcoin clients made by other groups of developers that adhere to the Bitcoin protocol. As more developers create alternative clients, less power will lie with the developers of the original Bitcoin client.

[[de:Mythen]]

How to set up a secure offline savings wallet

2011-11-24T09:35:28Z

Forever: /* How to retrieve funds */

== Why set up an offline savings wallet? ==

Modern operating systems are getting more and more complex. The flip side of all this complexity is that they generally have a large [http://en.wikipedia.org/wiki/Attack_surface attack surface] and constantly leak information without the user’s knowledge or consent. No matter how many precautions you take, your wallets will never be 100% safe on a computer that is connected to the internet.

Because bitcoins are stored directly on your computer and because they are real money, the motivation for sophisticated and targeted attacks against your system is higher than in the pre-bitcoin era, when only large organizations normally had to worry about such attacks.

This guide will instruct you on how to create an offline wallet, a wallet that never even touches the internet in its plaintext form. This security measure is also referred to as being an air gap. For all practical purposes, this wallet is safe from all online threats, such as viruses and hackers. It is however still exposed to offline threats, such as [http://en.wikipedia.org/wiki/Hardware_keylogger hardware keyloggers], extortion, or people looking over your shoulder. A best practice is to keep the majority of your bitcoins in the offline wallet and only to use the online wallet for everyday expenses/earnings.

The below procedure may seem tedious, but remember that security almost always comes at the cost of convenience. When you deposit money at a bank, you let them worry about security. Bitcoins, however, are stored on '''your''' computer and that means '''you''' are fully responsible for securing them. The bitcoin ecosystem is still very young and unfortunately no user friendly tools for creating highly secure wallets have been developed yet (though some members of the Bitcoin community are [http://forum.bitcoin.org/?topic=7357.0 working hard at this]).

== How to deposit funds ==

# Set up a [http://www.wuala.com/en/bitcoin Wuala] account, or other cloud backup service of your choice.
# Create a strong and unique password offline (manually). This password should be at least 20 characters long; it should contain numbers, upper and lower case letters, and symbols. It should be as random as possible, ie it should look something like this: Zr%8qL03&cvwS9@05AatdP71. Never use this password elsewhere.
# '''Do not forget this password'''. Recite it several times a day. It is easy to overestimate your ability to remember a password several months in the future. To be on the safe side, write it down and store the piece of paper in a safety deposit box.
# Download [http://www.bitcoin.org/ Bitcoin Linux binary] and save it on a USB drive.
# Shut down your computer, and boot [http://www.ubuntu.com/ Ubuntu] (or Linux distribution of you choice) from a [http://www.ubuntu.com/download/ubuntu/download liveCD]. This will not affect your current operating system.
# '''Disconnect machine from the internet'''. Unplug any network cables and disable wireless. Verify that wireless is disabled in the icon on the upper right corner (Ubuntu). Double check that machine is disconnected by opening the web browser.
# Run bitcoin while disconnected to the internet. The client will show 0 connections and 0 blocks, but it will still generate a wallet.dat file and a bitcoin address.
# Encrypt your wallet using the strong and unique password from step 2 above. (Bitcoin Client > Settings > Encrypt wallet)
# Copy wallet.dat (found in hidden folder .bitcoin in your home directory) to USB drive.
# Save bitcoin address to a text file and copy it to USB drive.
# Shut down system and turn off computer. Before switching your computer on again, remove all power sources for about 1 minute. Physically remove battery from laptop.
# Backup encrypted wallet.dat file in several places:
#*Send it to your 5 best friends by email attachment and ask them to save it for you.
#*Save it on your Wuala account created in step 1.
#*Save it on several USB drives and CDs and store them in different geographic locations.
#Send bitcoins to the address saved on the USB drive. Double check in the [[Bitcoin Block Explorer|block explorer]] that they have been sent.

==How to retrieve funds ==

#Boot from Ubuntu liveCD, as in step 5 above.
#Insert USB drive.
#Run bitcoin client and close it again.
#Replace wallet.dat in ~/.bitcoin directory with wallet.dat from USB drive.
#Connect to the internet.
#Restart bitcoin client.
#Wait for blocks to download (optional).
#Send bitcoins.

==Notes==

*This procedure is only secure if you perform steps 1-13 in this '''exact order'''.

*Perform one or two trial runs of the above procedure with a few bitcents, and make sure that you know how to successfully retrieve them, before making a bulk transfer.

*Every time you retrieve bitcoins from your savings wallet, create a fresh savings wallet by repeating the above procedure, and send all your remaining savings balance there.

*There is more than one way to do it. Similar procedures have been suggested on the forums [http://forum.bitcoin.org/index.php?topic=17240.0 here] and [http://forum.bitcoin.org/?topic=5194.0 here].

*Beware that even savings wallets have limited lifetimes. New, backwards incompatible versions of bitcoin might come out in future, [http://en.wikipedia.org/wiki/Advanced_Encryption_Standard AES] might be broken, [http://en.wikipedia.org/wiki/Bit_rot bit rot] might destroy your wallets, etc. Update to fresh savings wallets every couple of years, or as needed.

How to set up a secure offline savings wallet

2011-11-24T09:28:03Z

Forever: /* How to deposit funds */

== Why set up an offline savings wallet? ==

Modern operating systems are getting more and more complex. The flip side of all this complexity is that they generally have a large [http://en.wikipedia.org/wiki/Attack_surface attack surface] and constantly leak information without the user’s knowledge or consent. No matter how many precautions you take, your wallets will never be 100% safe on a computer that is connected to the internet.

Because bitcoins are stored directly on your computer and because they are real money, the motivation for sophisticated and targeted attacks against your system is higher than in the pre-bitcoin era, when only large organizations normally had to worry about such attacks.

This guide will instruct you on how to create an offline wallet, a wallet that never even touches the internet in its plaintext form. This security measure is also referred to as being an air gap. For all practical purposes, this wallet is safe from all online threats, such as viruses and hackers. It is however still exposed to offline threats, such as [http://en.wikipedia.org/wiki/Hardware_keylogger hardware keyloggers], extortion, or people looking over your shoulder. A best practice is to keep the majority of your bitcoins in the offline wallet and only to use the online wallet for everyday expenses/earnings.

The below procedure may seem tedious, but remember that security almost always comes at the cost of convenience. When you deposit money at a bank, you let them worry about security. Bitcoins, however, are stored on '''your''' computer and that means '''you''' are fully responsible for securing them. The bitcoin ecosystem is still very young and unfortunately no user friendly tools for creating highly secure wallets have been developed yet (though some members of the Bitcoin community are [http://forum.bitcoin.org/?topic=7357.0 working hard at this]).

== How to deposit funds ==

# Set up a [http://www.wuala.com/en/bitcoin Wuala] account, or other cloud backup service of your choice.
# Create a strong and unique password offline (manually). This password should be at least 20 characters long; it should contain numbers, upper and lower case letters, and symbols. It should be as random as possible, ie it should look something like this: Zr%8qL03&cvwS9@05AatdP71. Never use this password elsewhere.
# '''Do not forget this password'''. Recite it several times a day. It is easy to overestimate your ability to remember a password several months in the future. To be on the safe side, write it down and store the piece of paper in a safety deposit box.
# Download [http://www.bitcoin.org/ Bitcoin Linux binary] and save it on a USB drive.
# Shut down your computer, and boot [http://www.ubuntu.com/ Ubuntu] (or Linux distribution of you choice) from a [http://www.ubuntu.com/download/ubuntu/download liveCD]. This will not affect your current operating system.
# '''Disconnect machine from the internet'''. Unplug any network cables and disable wireless. Verify that wireless is disabled in the icon on the upper right corner (Ubuntu). Double check that machine is disconnected by opening the web browser.
# Run bitcoin while disconnected to the internet. The client will show 0 connections and 0 blocks, but it will still generate a wallet.dat file and a bitcoin address.
# Encrypt your wallet using the strong and unique password from step 2 above. (Bitcoin Client > Settings > Encrypt wallet)
# Copy wallet.dat (found in hidden folder .bitcoin in your home directory) to USB drive.
# Save bitcoin address to a text file and copy it to USB drive.
# Shut down system and turn off computer. Before switching your computer on again, remove all power sources for about 1 minute. Physically remove battery from laptop.
# Backup encrypted wallet.dat file in several places:
#*Send it to your 5 best friends by email attachment and ask them to save it for you.
#*Save it on your Wuala account created in step 1.
#*Save it on several USB drives and CDs and store them in different geographic locations.
#Send bitcoins to the address saved on the USB drive. Double check in the [[Bitcoin Block Explorer|block explorer]] that they have been sent.

==How to retrieve funds ==

#Boot from Ubuntu liveCD, as in step 6 above.
#Insert USB drive.
#Run bitcoin client and close it again.
#Replace wallet.dat in ~/.bitcoin directory with wallet.dat from USB drive.
#Connect to the internet.
#Restart bitcoin client.
#Wait for blocks to download (optional).
#Send bitcoins.

==Notes==

*This procedure is only secure if you perform steps 1-13 in this '''exact order'''.

*Perform one or two trial runs of the above procedure with a few bitcents, and make sure that you know how to successfully retrieve them, before making a bulk transfer.

*Every time you retrieve bitcoins from your savings wallet, create a fresh savings wallet by repeating the above procedure, and send all your remaining savings balance there.

*There is more than one way to do it. Similar procedures have been suggested on the forums [http://forum.bitcoin.org/index.php?topic=17240.0 here] and [http://forum.bitcoin.org/?topic=5194.0 here].

*Beware that even savings wallets have limited lifetimes. New, backwards incompatible versions of bitcoin might come out in future, [http://en.wikipedia.org/wiki/Advanced_Encryption_Standard AES] might be broken, [http://en.wikipedia.org/wiki/Bit_rot bit rot] might destroy your wallets, etc. Update to fresh savings wallets every couple of years, or as needed.

How to set up a secure offline savings wallet

2011-11-24T09:27:29Z

Forever: Simplified procedure now that the client has built-in wallet encryption.

== Why set up an offline savings wallet? ==

Modern operating systems are getting more and more complex. The flip side of all this complexity is that they generally have a large [http://en.wikipedia.org/wiki/Attack_surface attack surface] and constantly leak information without the user’s knowledge or consent. No matter how many precautions you take, your wallets will never be 100% safe on a computer that is connected to the internet.

Because bitcoins are stored directly on your computer and because they are real money, the motivation for sophisticated and targeted attacks against your system is higher than in the pre-bitcoin era, when only large organizations normally had to worry about such attacks.

This guide will instruct you on how to create an offline wallet, a wallet that never even touches the internet in its plaintext form. This security measure is also referred to as being an air gap. For all practical purposes, this wallet is safe from all online threats, such as viruses and hackers. It is however still exposed to offline threats, such as [http://en.wikipedia.org/wiki/Hardware_keylogger hardware keyloggers], extortion, or people looking over your shoulder. A best practice is to keep the majority of your bitcoins in the offline wallet and only to use the online wallet for everyday expenses/earnings.

The below procedure may seem tedious, but remember that security almost always comes at the cost of convenience. When you deposit money at a bank, you let them worry about security. Bitcoins, however, are stored on '''your''' computer and that means '''you''' are fully responsible for securing them. The bitcoin ecosystem is still very young and unfortunately no user friendly tools for creating highly secure wallets have been developed yet (though some members of the Bitcoin community are [http://forum.bitcoin.org/?topic=7357.0 working hard at this]).

== How to deposit funds ==

# Set up a [http://www.wuala.com/en/bitcoin Wuala] account (or other cloud backup service of your choice).
# Create a strong and unique password offline (manually). This password should be at least 20 characters long; it should contain numbers, upper and lower case letters, and symbols. It should be as random as possible, ie it should look something like this: Zr%8qL03&cvwS9@05AatdP71. Never use this password elsewhere.
# '''Do not forget this password'''. Recite it several times a day. It is easy to overestimate your ability to remember a password several months in the future. To be on the safe side, write it down and store the piece of paper in a safety deposit box.
# Download [http://www.bitcoin.org/ Bitcoin Linux binary] and save it on a USB drive.
# Shut down your computer, and boot [http://www.ubuntu.com/ Ubuntu] (or Linux distribution of you choice) from a [http://www.ubuntu.com/download/ubuntu/download liveCD]. This will not affect your current operating system.
# '''Disconnect machine from the internet'''. Unplug any network cables and disable wireless. Verify that wireless is disabled in the icon on the upper right corner (Ubuntu). Double check that machine is disconnected by opening the web browser.
# Run bitcoin while disconnected to the internet. The client will show 0 connections and 0 blocks, but it will still generate a wallet.dat file and a bitcoin address.
# Encrypt your wallet using the strong and unique password from step 2 above. (Bitcoin Client > Settings > Encrypt wallet)
# Copy wallet.dat (found in hidden folder .bitcoin in your home directory) to USB drive.
# Save bitcoin address to a text file and copy it to USB drive.
# Shut down system and turn off computer. Before switching your computer on again, remove all power sources for about 1 minute. Physically remove battery from laptop.
# Backup encrypted wallet.dat file in several places:
#*Send it to your 5 best friends by email attachment and ask them to save it for you.
#*Save it on your Wuala account created in step 1.
#*Save it on several USB drives and CDs and store them in different geographic locations.
#Send bitcoins to the address saved on the USB drive. Double check in the [[Bitcoin Block Explorer|block explorer]] that they have been sent.

==How to retrieve funds ==

#Boot from Ubuntu liveCD, as in step 6 above.
#Insert USB drive.
#Run bitcoin client and close it again.
#Replace wallet.dat in ~/.bitcoin directory with wallet.dat from USB drive.
#Connect to the internet.
#Restart bitcoin client.
#Wait for blocks to download (optional).
#Send bitcoins.

==Notes==

*This procedure is only secure if you perform steps 1-13 in this '''exact order'''.

*Perform one or two trial runs of the above procedure with a few bitcents, and make sure that you know how to successfully retrieve them, before making a bulk transfer.

*Every time you retrieve bitcoins from your savings wallet, create a fresh savings wallet by repeating the above procedure, and send all your remaining savings balance there.

*There is more than one way to do it. Similar procedures have been suggested on the forums [http://forum.bitcoin.org/index.php?topic=17240.0 here] and [http://forum.bitcoin.org/?topic=5194.0 here].

*Beware that even savings wallets have limited lifetimes. New, backwards incompatible versions of bitcoin might come out in future, [http://en.wikipedia.org/wiki/Advanced_Encryption_Standard AES] might be broken, [http://en.wikipedia.org/wiki/Bit_rot bit rot] might destroy your wallets, etc. Update to fresh savings wallets every couple of years, or as needed.

Talk:Wallet Security Dos and Don'ts (Windows)

2011-11-05T21:13:50Z

Forever:

== Don't keep your computer switched on overnight. ==

Could you please elaborate on "Don't keep your computer switched on overnight.". Mining is a common case for bitcoiners to leave on their pc over night.
Was the idea to not leave on the work pc where the "cleaning lady" might gain access?
-- [[User:Giszmo|Giszmo]] 14:42, 28 June 2011 (GMT)
: Yes, also you are giving targeted attackers a lot of time to try out different ways to get into your system. --[[User:Forever|Forever]] 07:43, 29 June 2011 (GMT)
:: Huh?? So your worry is that the PC is online +30% increasing the risk by 30%? Sorry but I would remove that point or change it to "Don't allow physical access to strangers." and "Don't plug in any devices of doubtful origin.". If your system is well protected, time should not be an issue. (Maybe an inspiration: I know a guy who had a trigger at his server room door so whenever the door opened you had 60s to unlock the screen and stop the fully encrypted pc from shutting down. A camera was taping who entered the room to the pc's disc so he could check if it was the cleaning lady or strangers.) --[[User:Giszmo|Giszmo]] 10:55, 29 June 2011 (GMT)
::: Isn't the amount of uninterrupted time your computer is online also security issue? As for devices, that's another good Don't. I'm going to add it. --[[User:Forever|Forever]] 06:36, 1 July 2011 (GMT)

==Seems like the moral police is hard at work==

This guide was actually advising people NOT to install pirated software. I don't see how this "condones" it in any way. The debate about the morality of software piracy should be irrelevant here. This is supposed to be a practical guide, and it is an unfortunate/fortunate (delete as appropriate to your ideological camp) fact of life that a significant proportion of computer users install ''some'' pirated software at ''some'' stage in their lives. It is also a fact of life that pirated software is a popular vector for viruses. Acknowledging this fact is no more an endorsement of piracy than it's an endorsement of illegal drugs when a hospital questions a patient about their illegal drug habits prior to performing an operation. --[[User:Forever|Forever]] 21:13, 5 November 2011 (GMT)

User:Forever

2011-08-04T07:53:38Z

Forever:

Contributors Award participant: 122fmmdxJPLymYMwbtaSomj5wuNpMQfZBr

User:Forever

2011-08-04T07:53:26Z

Forever:

Contributors Award participant: 122fmmdxJPLymYMwbtaSomj5wuNpMQfZBr

How to set up a secure offline savings wallet

2011-07-03T11:26:01Z

Forever: /* Notes */

== Why set up an offline savings wallet? ==

Modern operating systems are getting more and more complex. The flip side of all this complexity is that they generally have a large [http://en.wikipedia.org/wiki/Attack_surface attack surface] and constantly leak information without the user’s knowledge or consent. No matter how many precautions you take, your wallets will never be 100% safe on a computer that is connected to the internet.

Because bitcoins are stored directly on your computer and because they are real money, the motivation for sophisticated and targeted attacks against your system is higher than in the pre-bitcoin era, when only large organizations normally had to worry about such attacks.

This guide will instruct you on how to create an offline wallet, a wallet that never even touches the internet in its plaintext form. For all practical purposes, this wallet is safe from all online threats, such as viruses and hackers. It is however still exposed to offline threats, such as [http://en.wikipedia.org/wiki/Hardware_keylogger hardware keyloggers], extortion, or people looking over your shoulder. A best practice is to keep the majority of your bitcoins in the offline wallet and only to use the online wallet for everyday expenses/earnings.

The below procedure may seem tedious, but remember that security almost always comes at the cost of convenience. When you deposit money at a bank, you let them worry about security. Bitcoins, however, are stored on '''your''' computer and that means '''you''' are fully responsible for securing them. The bitcoin ecosystem is still very young and unfortunately no user friendly tools for creating highly secure wallets have been developed yet (though some members of the Bitcoin community are [http://forum.bitcoin.org/?topic=7357.0 working hard at this]).

== How to deposit funds ==

# Set up a [http://www.wuala.com/en/bitcoin Wuala] account (or other cloud backup service of your choice).
# Create a strong and unique password offline (manually). This password should be at least 20 characters long; it should contain numbers, upper and lower case letters, and symbols. It should be as random as possible, ie it should look something like this: Zr%8qL03&cvwS9@05AatdP71. Never use this password elsewhere.
# '''Do not forget this password'''. Recite it several times a day. It is easy to overestimate your ability to remember a password several months in the future. To be on the safe side, write it down and store the piece of paper in a safety deposit box.
# Download [http://www.bitcoin.org/ Bitcoin Linux binary] and save it on a USB drive.
# Download [http://www.truecrypt.org/downloads Truecrypt for Linux] and save it on a USB drive.
# Shut down your computer, and boot [http://www.ubuntu.com/ Ubuntu] (or Linux distribution of you choice) from a [http://www.ubuntu.com/download/ubuntu/download liveCD]. This will not affect your current operating system.
# '''Disconnect machine from the internet'''. Unplug any network cables and disable wireless. Verify that wireless is disabled in the icon on the upper right corner (Ubuntu). Double check that machine is disconnected by opening the web browser.
# Insert USB drive. Install and run truecrypt. Create an encrypted file container, using the strong and unique password from step 2. Mount truecrypt container.
# Run bitcoin while disconnected to the internet. The client will show 0 connections and 0 blocks, but it will still generate a wallet.dat file and a bitcoin address.
# Copy wallet.dat (found in hidden folder .bitcoin in your home directory) to mounted truecrypt volume. Dismount volume and and copy truecrypt container file to USB drive.
# Save bitcoin address to a text file and copy it to USB drive.
# Shut down system and turn off computer. Before switching your computer on again, remove all power sources for about 1 minute. Physically remove battery from laptop.
# Backup truecrypt container file in several places:
#*Send it to your 5 best friends by email attachment and ask them to save it for you.
#*Save it on your Wuala account created in step 1.
#*Save it on several USB drives and CDs and store them in different geographic locations.
#Send bitcoins to the address saved on the USB drive. Double check in the [[Bitcoin Block Explorer|block explorer]] that they have been sent.

==How to retrieve funds ==

#Boot from Ubuntu liveCD, as in step 6 above.
#Insert USB drive, install and run truecrypt. Mount truecrypt volume using password from step 2 above.
#Run bitcoin client and close it again.
#Replace wallet.dat in ~/.bitcoin directory with wallet.dat from truecrypt volume.
#Connect to the internet.
#Restart bitcoin client.
#Wait for blocks to download
#Send bitcoins.

==Notes==

*This procedure is only secure if you perform steps 1-14 in this '''exact order'''.

*Perform one or two trial runs of the above procedure with a few bitcents, and make sure that you know how to successfully retrieve them, before making a bulk transfer.

*Every time you retrieve bitcoins from your savings wallet, create a fresh savings wallet by repeating the above procedure, and send all your remaining savings balance there.

*There is more than one way to do it. Similar procedures have been suggested on the forums [http://forum.bitcoin.org/index.php?topic=17240.0 here] and [http://forum.bitcoin.org/?topic=5194.0 here].

*Beware that even savings wallets have limited lifetimes. New, backwards incompatible versions of bitcoin might come out in future, [http://en.wikipedia.org/wiki/Advanced_Encryption_Standard AES] might be broken, [http://en.wikipedia.org/wiki/Bit_rot bit rot] might destroy your wallets, etc. Update to fresh savings wallets every couple of years, or as needed.

Wallet Security Dos and Don'ts (Windows)

2011-07-03T11:19:25Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send [[Securing_your_wallet#General_Solutions|unencrypted]] copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use elsewhere on the web.

*'''Don't''' use weak passwords. If a password is easy to remember without rehearsal, it is probably weak.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a device that you insert into machines of friends, at work, or while traveling.

*'''Don't''' insert any devices of doubtful origin.

*'''Don't''' develop a carefree attitude towards wallet security. Handle bitcoins with the same amount of diligence as you handle physical cash.

*'''Do''' keep at least one [[How to set up a secure offline savings wallet|offline savings wallet]].

*'''Do''' backup your spending wallet regularly.

*'''Do''' keep dated versions of each backed up wallet.

*'''Do''' [[Securing_your_wallet#General_Solutions|encrypt]] all wallets as soon as they leave your system.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use [http://www.truecrypt.org/docs/?s=keyfiles keyfiles] to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date (but understand their limitations).

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the [http://noscript.net/ NoScript] plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine, such as [http://downloads.vmware.com/d/info/desktop_downloads/vmware_player/3_0 VMWare Player].

*'''Do''' browse questionable websites from inside a virtual machine.

*'''Do''' always connect the bitcoin client and IRC via [[Tor]].

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

Talk:Wallet Security Dos and Don'ts (Windows)

2011-07-01T06:41:08Z

Forever: /* Don't keep your computer switched on overnight. */

Wallet Security Dos and Don'ts (Windows)

2011-07-01T06:38:09Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send [[Securing_your_wallet#General_Solutions|unencrypted]] copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use elsewhere on the web.

*'''Don't''' use weak passwords. If a password is easy to remember without rehearsal, it is probably weak.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a drive stick that you insert into machines of friends, at work, or while traveling.

*'''Don't''' insert any devices of doubtful origin.

*'''Don't''' develop a carefree attitude towards wallet security. Handle bitcoins with the same amount of diligence as you handle physical cash.

*'''Do''' keep at least one [[How to set up a secure offline savings wallet|offline savings wallet]].

*'''Do''' backup your spending wallet regularly.

*'''Do''' keep dated versions of each backed up wallet.

*'''Do''' [[Securing_your_wallet#General_Solutions|encrypt]] all wallets as soon as they leave your system.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use [http://www.truecrypt.org/docs/?s=keyfiles keyfiles] to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date (but understand their limitations).

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the [http://noscript.net/ NoScript] plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine, such as [http://downloads.vmware.com/d/info/desktop_downloads/vmware_player/3_0 VMWare Player].

*'''Do''' browse questionable websites from inside a virtual machine.

*'''Do''' always connect the bitcoin client and IRC via [[Tor]].

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

Talk:Wallet Security Dos and Don'ts (Windows)

2011-07-01T06:36:37Z

Forever:

How to set up a secure offline savings wallet

2011-06-30T10:37:29Z

Forever: /* Why set up an offline savings wallet? */

== Why set up an offline savings wallet? ==

Modern operating systems are getting more and more complex. The flip side of all this complexity is that they generally have a large [http://en.wikipedia.org/wiki/Attack_surface attack surface] and constantly leak information without the user’s knowledge or consent. No matter how many precautions you take, your wallets will never be 100% safe on a computer that is connected to the internet.

Because bitcoins are stored directly on your computer and because they are real money, the motivation for sophisticated and targeted attacks against your system is higher than in the pre-bitcoin era, when only large organizations normally had to worry about such attacks.

This guide will instruct you on how to create an offline wallet, a wallet that never even touches the internet in its plaintext form. For all practical purposes, this wallet is safe from all online threats, such as viruses and hackers. It is however still exposed to offline threats, such as [http://en.wikipedia.org/wiki/Hardware_keylogger hardware keyloggers], extortion, or people looking over your shoulder. A best practice is to keep the majority of your bitcoins in the offline wallet and only to use the online wallet for everyday expenses/earnings.

The below procedure may seem tedious, but remember that security almost always comes at the cost of convenience. When you deposit money at a bank, you let them worry about security. Bitcoins, however, are stored on '''your''' computer and that means '''you''' are fully responsible for securing them. The bitcoin ecosystem is still very young and unfortunately no user friendly tools for creating highly secure wallets have been developed yet (though some members of the Bitcoin community are [http://forum.bitcoin.org/?topic=7357.0 working hard at this]).

== How to deposit funds ==

# Set up a [http://www.wuala.com/en/bitcoin Wuala] account (or other cloud backup service of your choice).
# Create a strong and unique password offline (manually). This password should be at least 20 characters long; it should contain numbers, upper and lower case letters, and symbols. It should be as random as possible, ie it should look something like this: Zr%8qL03&cvwS9@05AatdP71. Never use this password elsewhere.
# '''Do not forget this password'''. Recite it several times a day. It is easy to overestimate your ability to remember a password several months in the future. To be on the safe side, write it down and store the piece of paper in a safety deposit box.
# Download [http://www.bitcoin.org/ Bitcoin Linux binary] and save it on a USB drive.
# Download [http://www.truecrypt.org/downloads Truecrypt for Linux] and save it on a USB drive.
# Shut down your computer, and boot [http://www.ubuntu.com/ Ubuntu] (or Linux distribution of you choice) from a [http://www.ubuntu.com/download/ubuntu/download liveCD]. This will not affect your current operating system.
# '''Disconnect machine from the internet'''. Unplug any network cables and disable wireless. Verify that wireless is disabled in the icon on the upper right corner (Ubuntu). Double check that machine is disconnected by opening the web browser.
# Insert USB drive. Install and run truecrypt. Create an encrypted file container, using the strong and unique password from step 2. Mount truecrypt container.
# Run bitcoin while disconnected to the internet. The client will show 0 connections and 0 blocks, but it will still generate a wallet.dat file and a bitcoin address.
# Copy wallet.dat (found in hidden folder .bitcoin in your home directory) to mounted truecrypt volume. Dismount volume and and copy truecrypt container file to USB drive.
# Save bitcoin address to a text file and copy it to USB drive.
# Shut down system and turn off computer. Before switching your computer on again, remove all power sources for about 1 minute. Physically remove battery from laptop.
# Backup truecrypt container file in several places:
#*Send it to your 5 best friends by email attachment and ask them to save it for you.
#*Save it on your Wuala account created in step 1.
#*Save it on several USB drives and CDs and store them in different geographic locations.
#Send bitcoins to the address saved on the USB drive. Double check in the [[Bitcoin Block Explorer|block explorer]] that they have been sent.

==How to retrieve funds ==

#Boot from Ubuntu liveCD, as in step 6 above.
#Insert USB drive, install and run truecrypt. Mount truecrypt volume using password from step 2 above.
#Run bitcoin client and close it again.
#Replace wallet.dat in ~/.bitcoin directory with wallet.dat from truecrypt volume.
#Connect to the internet.
#Restart bitcoin client.
#Wait for blocks to download
#Send bitcoins.

==Notes==

*This procedure is only secure if you perform steps 1-14 in this '''exact order'''.

*Perform several trial runs of the above procedure with a few bitcents, and make sure that you know how to successfully retrieve them, before making a bulk transfer.

*Every time you retrieve bitcoins from your savings wallet, create a fresh savings wallet by repeating the above procedure, and send all your remaining savings balance there.

*There is more than one way to do it. Similar procedures have been suggested on the forums [http://forum.bitcoin.org/index.php?topic=17240.0 here] and [http://forum.bitcoin.org/?topic=5194.0 here].

*Beware that even savings wallets have limited lifetimes. New, backwards incompatible versions of bitcoin might come out in future, [http://en.wikipedia.org/wiki/Advanced_Encryption_Standard AES] might be broken, [http://en.wikipedia.org/wiki/Bit_rot bit rot] might destroy your wallets, etc. Update to fresh savings wallets every couple of years, or as needed.

How to set up a secure offline savings wallet

2011-06-30T10:33:21Z

Forever:

== Why set up an offline savings wallet? ==

Modern operating systems are getting more and more complex. The flip side of all this complexity is that they generally have a large [http://en.wikipedia.org/wiki/Attack_surface attack surface] and constantly leak information without the user’s knowledge or consent. No matter how many precautions you take, your wallets will never be 100% safe on a computer that is connected to the internet.

Because bitcoins are stored directly on your computer and because they are real money, the motivation for sophisticated and targeted attacks against your system is higher than in the pre-bitcoin era, when only large organizations normally had to worry about such attacks. A best practice is to keep the majority of your bitcoins in the offline wallet and only to use the online wallet for everyday expenses/earnings.

This guide will instruct you on how to create an offline wallet, a wallet that never even touches the internet in its plaintext form. For all practical purposes, this wallet is safe from all online threats, such as viruses and hackers. It is however still exposed to offline threats, such as [http://en.wikipedia.org/wiki/Hardware_keylogger hardware keyloggers], extortion, or people looking over your shoulder.

The below procedure may seem tedious, but remember that security almost always comes at the cost of convenience. When you deposit money at a bank, you let them worry about security. Bitcoins, however, are stored on '''your''' computer and that means '''you''' are fully responsible for securing them. The bitcoin ecosystem is still very young and unfortunately no user friendly tools for creating highly secure wallets have been developed yet (though some members of the Bitcoin community are [http://forum.bitcoin.org/?topic=7357.0 working hard at this]).

== How to deposit funds ==

# Set up a [http://www.wuala.com/en/bitcoin Wuala] account (or other cloud backup service of your choice).
# Create a strong and unique password offline (manually). This password should be at least 20 characters long; it should contain numbers, upper and lower case letters, and symbols. It should be as random as possible, ie it should look something like this: Zr%8qL03&cvwS9@05AatdP71. Never use this password elsewhere.
# '''Do not forget this password'''. Recite it several times a day. It is easy to overestimate your ability to remember a password several months in the future. To be on the safe side, write it down and store the piece of paper in a safety deposit box.
# Download [http://www.bitcoin.org/ Bitcoin Linux binary] and save it on a USB drive.
# Download [http://www.truecrypt.org/downloads Truecrypt for Linux] and save it on a USB drive.
# Shut down your computer, and boot [http://www.ubuntu.com/ Ubuntu] (or Linux distribution of you choice) from a [http://www.ubuntu.com/download/ubuntu/download liveCD]. This will not affect your current operating system.
# '''Disconnect machine from the internet'''. Unplug any network cables and disable wireless. Verify that wireless is disabled in the icon on the upper right corner (Ubuntu). Double check that machine is disconnected by opening the web browser.
# Insert USB drive. Install and run truecrypt. Create an encrypted file container, using the strong and unique password from step 2. Mount truecrypt container.
# Run bitcoin while disconnected to the internet. The client will show 0 connections and 0 blocks, but it will still generate a wallet.dat file and a bitcoin address.
# Copy wallet.dat (found in hidden folder .bitcoin in your home directory) to mounted truecrypt volume. Dismount volume and and copy truecrypt container file to USB drive.
# Save bitcoin address to a text file and copy it to USB drive.
# Shut down system and turn off computer. Before switching your computer on again, remove all power sources for about 1 minute. Physically remove battery from laptop.
# Backup truecrypt container file in several places:
#*Send it to your 5 best friends by email attachment and ask them to save it for you.
#*Save it on your Wuala account created in step 1.
#*Save it on several USB drives and CDs and store them in different geographic locations.
#Send bitcoins to the address saved on the USB drive. Double check in the [[Bitcoin Block Explorer|block explorer]] that they have been sent.

==How to retrieve funds ==

#Boot from Ubuntu liveCD, as in step 6 above.
#Insert USB drive, install and run truecrypt. Mount truecrypt volume using password from step 2 above.
#Run bitcoin client and close it again.
#Replace wallet.dat in ~/.bitcoin directory with wallet.dat from truecrypt volume.
#Connect to the internet.
#Restart bitcoin client.
#Wait for blocks to download
#Send bitcoins.

==Notes==

*This procedure is only secure if you perform steps 1-14 in this '''exact order'''.

*Perform several trial runs of the above procedure with a few bitcents, and make sure that you know how to successfully retrieve them, before making a bulk transfer.

*Every time you retrieve bitcoins from your savings wallet, create a fresh savings wallet by repeating the above procedure, and send all your remaining savings balance there.

*There is more than one way to do it. Similar procedures have been suggested on the forums [http://forum.bitcoin.org/index.php?topic=17240.0 here] and [http://forum.bitcoin.org/?topic=5194.0 here].

*Beware that even savings wallets have limited lifetimes. New, backwards incompatible versions of bitcoin might come out in future, [http://en.wikipedia.org/wiki/Advanced_Encryption_Standard AES] might be broken, [http://en.wikipedia.org/wiki/Bit_rot bit rot] might destroy your wallets, etc. Update to fresh savings wallets every couple of years, or as needed.

Securing your wallet

2011-06-29T13:41:38Z

Forever: /* See Also */

==Introduction==

Wallet security can be broken down into two independent goals:
# Protecting your wallet against loss.
# Protecting your wallet against theft.

In the case that your current wallet hasn't been protected adequately (e.g. put online with a weaker password):
# Making a new secure wallet, using appropriate long-term protection.

''For a brief overview see also: [[Wallet Security Dos and Don'ts (Windows)|Wallet Security Dos and Don'ts]]''

==Technical Background==

Bitcoin transactions send Bitcoins to a specific public key. A Bitcoin address is an encoded hash of a public key. In order to use received Bitcoins, you need to have the private key matching the public key you received with. This is sort of like a super long password associated with an account (public key). Your Bitcoin wallet contains all of the private keys necessary for spending your received transactions. If you delete your wallet without a backup, then you no longer have the authorization information necessary to claim your coins, and the coins associated with those keys are lost forever.

The wallet contains a pool of queued keys. By default there are 100 keys in the [[key pool]]. The size of the pool is configurable using the "-keypool" command line argument. When you need an address for whatever reason (send, “new address”, generation, etc.), the key is not actually generated freshly, but taken from this pool. A brand new address is generated to fill the pool back to 100. So when a backup is first created, it has all of your old keys plus 100 unused keys. After sending a transaction, it has 99 unused keys. After a total of 100 new-key actions, you will start using keys that are not in your backup. Since the backup does not have the private keys necessary for authorizing spends of these coins, restoring from the old backup will cause you to lose Bitcoins.

Creating a new address generates a new pair of public and private keys, which are added to your wallet. Each keypair is mostly random numbers, so they cannot be known prior to generation. If you backup your wallet and then create more than 100 new addresses, the keypair associated with the newest addresses will not be in the old wallet because the new keypairs are only known after creating them. Any coins received at these addresses will be lost if you restore from the backup.

The situation is made somewhat more confusing because the receiving addresses shown in the UI are not the only keys in your wallet. Each Bitcoin generation is given a new public key, and, more importantly, each sent transaction also sends some number of Bitcoins back to yourself at a new key. When sending Bitcoins to anyone, you generate a new keypair for yourself and simultaneously send Bitcoins to your new public key and the actual recipient's public key. This is an anonymity feature – it makes tracking Bitcoin transactions much more difficult.

So if you create a backup, do more than 100 things that cause a new key to be used, and then restore from the backup, some Bitcoins will be lost. Bitcoin has not deleted any keys (keys are never deleted) – it has created a new key that is not in your old backup and then sent Bitcoins to it.

== Making a new wallet ==

In the case that a wallet has been distributed, or stored, in a (real or potential) compromised state, it is wise to create a new wallet and transfer the full balance of Bitcoins to an address contained only in the newly created wallet.

For example, this will be necessary if one created a wallet with a password of 12 characters, as suggested. However a few years have passed and the wallet is now more easily compromised. Just re-encrypting isn't secure. One needs to make a new wallet and make the old wallet worthless (spending the funds to the new wallet).

==Making a secure workspace==

===Linux===

The first step is to make a [http://www.howtogeek.com/howto/ubuntu/add-a-user-on-ubuntu-server/ new user,] so run:

<code>adduser new_user_name</code>

as root. When you get to the prompt 'Enter the new value, or press ENTER for the default', just keep hitting ENTER.

Then switch user to the new user. To get to the new user you can use the switch user icon for your system, which on Ubuntu is in the 'System/Quit' screen, or if there is no switch icon on your system you can log out and log back in as the new user. Then click on a folder in the new user to display the file browser, then keep going up folders until you see the new user home directory, then right click to bring up the Properties dialog, then click on the Permissions tab, then in the Others section, set the folder access to None.

For secure browsing, open Firefox, and then go into the Edit menu and click Preferences. Starting from the left, click on the General tab, and in the 'Startup/When Firefox starts' pop up menu, choose 'Show a Blank Page'. Then click on the Content tab, and deselect 'Load images automatically' and deselect 'Enable Javascript'. Then click on the Privacy tab, and in the 'History/Firefox will' pop up menu, choose 'Never remember history'. Then click on the Security tab, and in the Passwords section, deselect 'Remember passwords for sites' and deselect 'Use a master password'. Then click on the Advanced tab, then click on the Update tab, and then in the 'Automatically check for updates to' section, deselect 'Add-ons' and 'Search Engines'.

When javascript is disabled, the [http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.3.23/bitcoin-0.3.23-linux.tar.gz/download linux download page] will not download automatically, so you'll have to click on the 'direct link' part of the "Problems with the download? Please use this 'direct link' or try another mirror." line.

After you've made your secure new user, to maintain security you should use it only for bitcoin.

It's also a good idea to encrypt the Home directory of whatever user you run Bitcoin under using ecryptfs-utils. To do this:
# If the Home directory is not empty you should back it up first, by just copying the data to an external drive or something.
# install ecryptfs-utils (on Ubuntu: sudo apt-get install ecryptfs-utils)
# log out of X (graphical system) and press Ctrl+Alt+F1 to login to the command shell (you must be logged out or some files will be open and the tool won't be able to encrypt your data)
# change directory to something that's not in your home folder (ex: cd / )
# run the migration tool (on Ubuntu: sudo ecryptfs-migrate-home -u username)
# if it's successful, you can now press ALT+F8 to go back to the GUI and login
# run 'ecryptfs-unwrap-passphrase' and '''WRITE DOWN OR SAVE THE CODE IT RETURNS''' because you will need it if you ever have to pull your data off while the OS is not working. (You can run it again later if you need to, but run it now so that you can get your data if your Linux install gets botched.)
# run 'ecryptfs-setup-swap' to encrypt your swap partition (the encrypted folder data is not encrypted while it's in memory, and so if it's ever sent to the swap partition it can be stolen from there unless that too is encrypted - be aware that this will mean you cannot use Hibernate anymore, as the bootloader won't be able to restore the hibernation data)
(instructions from [http://bodhizazen.net/Tutorials/Ecryptfs/#Migrate])

===Mac===

=====Backup all data (500MB)=====
Follow these instructions to backup all the bitcoin data (wallet and block chains) to an encrypted disk image.
# Open Disk Utility
# Click New Image and choose 500MB, 128-bit or 256-bit (faster or more secure) encryption and single partition.
# Save it somewhere you won't lose it (like your Wuala, Dropbox, Strongspace or whatever)
# Choose a safe and strong password
# Move everything from ~/Library/Application Support/Bitcoin/ to the image
# Symlink it back so the app would be able to use it
:::ln -s /Volumes/Bitcoin ~/Library/Application Support/Bitcoin

Don't forget to mount your image before using Bitcoin and unmount after quitting it.

=====Backup just wallet.dat (40MB)=====
Follow these instructions to backup just the wallet.dat file. This results in a smaller disk image, but it's more complicated to do.
# Open Disk Utility
# Click New Image and choose 40MB, 128-bit or 256-bit (faster or more secure) encryption and single partition.
# Save it somewhere you won't lose it (like your Wuala, Dropbox, Strongspace or whatever)
# Choose a safe and strong password
# Move your wallet.dat file to the image
# Symlink it back so the app would be able to use it
:::ln -s /Volumes/Bitcoin/wallet.dat ~/Library/Application Support/Bitcoin/wallet.dat

[[File:MountWalletAndLauchnBitcoin_OSX_Automator.png|thumbnail|150px|Mount Wallet and launch Bitcoin]]
Don't forget to mount your image before using Bitcoin and unmount after quitting it.

'''Note''': If you start the Bitcoin application without having the image mounted, the application will overwrite your symlink with a new wallet. If that happens, don't panic. Just delete the new wallet.dat, mount the image, and recreate the symlink like above.

'''Automation''': You can create a small application using [http://en.wikipedia.org/wiki/Automator_%28software%29 Automator] (included in OS X) to automatically mount the wallet and then launch Bitcoin App. See the Screenshot on how to do this.

If one ''doesn't'' want to use encrypted Disk images, then a '''small shell script''' can be used instead that takes care of decrypting the wallet, launching bitcoin client, and encrypting it after the client exits. This script works on both OSX and Linux: [http://lorelei.kaverit.org/bitcoin.sh bitcoin-launch-script]

===Windows===

If you are using Windows XP or Windows 7, you can keep your wallet on an encrypted disk image created by third-party software, such as [http://www.truecrypt.org/ TrueCrypt] (open source) or [http://www.jetico.com/encryption-bestcrypt/ Jetico BestCrypt] (commercial). You can probably do the same with Windows Vista (but why would you use that?) or Windows 2000.

'''NOTE:''' You should configure BitCoin in this manner only on computers where you use BitCoin, but do not use that computer to mine. For example, this is a good configuration for a notebook or tablet computer.

Assuming that you have installed the Windows BitCoin client and run it at least once, the process is described below.

To mount the BitCoin data directory on an encrypted drive
<ol start=1 type=1>
<li>Use the third-party disk image encryption program of your choice to create and mount an encrypted disk image of at least 100 MB in size.</li>
<li>Locate the BitCoin data directory, and copy the directory with all contents to the encrypted drive.
For help finding this directory, see [[Securing_your_wallet#Locating_BitCoin_s_data_directory|Locating BitCoin's Data Directory]].</li>
<li>Create a Windows shortcut that starts BitCoin with the <code>-datadir</code> parameter and specifies the encrypted drive and directory.
For example, if you installed Bitcoin in the default directory, mounted your BitCoin encrypted drive as <code>E:\</code>, and stored your BitCoin data directory on it as <code>Bitcoin</code>, you would type the following command as the shortcut Target:
<blockquote><code>C:\Program Files\Bitcoin\bitcoin.exe -datadir=E:\Bitcoin</code></blockquote></li>
<li>Open BitCoin's settings and configure it NOT to start automatically when you start Windows.
This is to allow you to mount the BitCoin encrypted disk image before starting BitCoin.</li>
<li>Shut down BitCoin, and then restart it from the new shortcut.</li>
</ol>

After doing this, any time you want to use BitCoin, you must first mount the BitCoin encrypted disk image using the same drive designation, and then run BitCoin from the shortcut that you created, so that it can find its data and your wallet. :-)

== Locating BitCoin's data directory ==

The [[data directory]] is the location where Bitcoin's data files are stored, including the wallet data file.

=== Windows ===

Go to Start -> Run (or press WinKey+R) and run this:

explorer %APPDATA%\BitCoin

BitCoin's data folder will open. For most users, this is the following locations:

C:\Documents and Settings\YourUserName\Application data\BitCoin (XP)

C:\Users\YourUserName\Appdata\Roaming\BitCoin (Vista and 7)

"AppData" and "Application data" are hidden by default.

=== Linux ===

By default BitCoin will put its data here:

~/.bitcoin/

You need to do a "ls -a" to see directories that start with a dot.

If that's not it, you can do a search like this:

find / -name wallet.dat -print 2>/dev/null

=== Mac ===

By default BitCoin will put its data here:

~/Library/Application Support/Bitcoin/

==Backup==

'''Note''': I would strongly recommend against using Dropbox to back up your Bitcoin data due to [http://en.wikipedia.org/wiki/Dropbox_(service)#Criticism security concerns] such as:
# the fact that they store your encryption key (meaning that a disgruntled Dropbox employee or an attacker who gained access to the system could decrypt your Dropbox data and steal your Bitcoins)
# the fact that the Dropbox client only needs a password for the first login. After it authenticates once, the server assigns it a token which it uses to show that, at one time, its user knew the password rather than sending the actual password (meaning that if you ever use the Dropbox client on another PC, that PC's users can access your Dropbox - even if you change your password - and can steal your Bitcoins or get a virus that will steal your Bitcoins).

For these reasons, I personally prefer to use Wuala, which does not store your encryption key and requires a password each time (the client can be set to remember your password, but the server will check each time to make sure that the client is sending the correct password). Like Dropbox, the basic, lowest-storage-space account with Wuala is free of charge, and coincidentally, Wuala [http://www.wuala.com/en/bitcoin is experimenting with allowing users to pay for "upgraded" plans using Bitcoin.]

In fact, whether you use Dropbox as your backup or not, use what Steve Gibson calls "pre-Internet encryption" (which he actually [http://itknowledgeexchange.techtarget.com/security-corner/cloud-security-and-privacy-do-they-exist/ discussed in the context of Dropbox's security concerns]) and use some form of encryption on the files before you back them up, just in case someone other than yourself ever gains access to that backup. Make sure to pick a password that's memorable but secure.

The only file you need to back up is "wallet.dat". Ensure that BitCoin is closed, copy this file somewhere else, encrypt it, and put it somewhere safe. Ideally, you would put this file in two places: one nearby, and one 100+ miles away.

You can use the [[api|backupwallet]] JSON-RPC command to back up without shutting down Bitcoin.

=== General Solutions ===

Your wallet.dat file is not encrypted by BitCoin. Anyone who can access it can easily steal all of your coins. Use one of these encryption programs if there is any chance someone might stumble upon your wallet.
* [http://www.7-zip.org/ 7-zip] - Supports strongly-encrypted archives.
* [http://www.axantum.com/axcrypt/ AxCrypt]
* [http://lrzip.kolivas.org lrzip] - Compression software for Linux and OSX that supports very high grade password protected encryption
* [http://www.truecrypt.org/ TrueCrypt] - Volume-based on-the-fly encryption (for advanced users)
* [http://www.rarlab.com/ WinRar] - Commonly used archive software that supports verification records and encryption.

There is also a list of [[OpenSourceEncryptionSoftware|open source encryption software.]]

Decrypting and encrypting the wallet.dat every time you start or quit the Bitcoin client can be ''tedious'' (and outright error-prone). If you want to keep your wallet encrypted (except while you're actually running the Bitcoin client), it's better to relegate the automation to a [http://lorelei.kaverit.org/bitcoin.sh small shell script] that handles the en/decryption and starting up Bitcoin client for you (Linux and OSX).

There is also a method to Print out and encrypt your Wallet.dat as a special barcode. See details here: [[WalletPaperbackup]]

==== Password Strength ====
Brute-force password cracking has come a long distance, a previously thought secure password of random [a-Z] [0-9] [!-~] of 8 characters long can be trivially solved now (using appropriate hardware)... The recommended length is '''at least''' 12 characters long. You can also use a multi-word password. [http://www.baekdal.com/tips/password-security-usability The Usability of Passwords]

However, simply using dictionary words is also insecure as it opens you up to a dictionary attack. If you use dictionary words, be sure to throw random symbols and numbers in the mix as well.

A good way to create secure but easy-to-remember passwords is to pick a password (ex: d0g) and pad it with a good number of repeated characters afterward (such as 10 $ signs - so d0g becomes d0g$$$$$$$$$$) - this is just as cryptographically secure as a random password of equal length so long as the attacker does not know which symbol you are following your "word" with and how many times it is repeated. ([https://www.grc.com/haystack.htm source])

If you use keyfiles in addition to a password, it is unlikely that your encrypted file can ever be cracked using brute force methods, even 10 years from now when even a 12 character password might be too short.

Assume that any encrypted files you store online (eg. gmail, Dropbox) will be stored somewhere forever and can never be erased.

===== Chooseing Your Password =====
Make sure you pick at least one character in each group: 

Lowercase: abcdefghijklmnopqrstuvwxyz
Uppercase: ABCDEFGHIJKLMNOPQRSTUVWXYZ
Number: 1234567890
Symbol: `~!@#$%^&*()-_=+\|[{]};:'",<.>/? (space)

09 char = insecure
10 char = low security
11 char = medium security
12 char = good security (good enough for your wallet)
13 char = v.good enough for anything.

==== Storage of Archive ====
One of the most simple methods for storing a appropriately '''encrypted''' archive of your wallet.dat file is to send the archive as an email attachment to your own e-mail address. Services like gmail.com use very comprehensive distributed networks that make the loss of data very unlikely. One can even obfuscate the name of the files within the archive, and name the archive something less inviting, such as: 'personal notes' or 'car insurance'.

Another solution is to use a file storage service like [http://www.wuala.com/bitcoin Wuala] ( encrypted, [http://www.bitcoin.org/smf/index.php?topic=5817.0 instructions]), [http://www.dropbox.com Dropbox] and [http://en.wikipedia.org/wiki/Comparison_of_online_backup_services others], including the more secure [http://www.spideroak.com SpiderOak].

=== Linux solution ===

Linux users can setup cron by running 'crontab -e' and adding this line:

01 */1 * * * /usr/local/bin/backupwallet.sh

This cron line runs backupwallet.sh at the 01 minute of every hour. Remember to add a newline after the last line of the crontab file, or else the last line won't run.

backupwallet.sh:

#!/bin/bash

TS=$(date "+%Y%m%d-%H-%M")
WALLET=/tmp/wallet${TS}
WALLET_E=/tmp/wallet${TS}.crypt

if
echo -n making backup...
bitcoind backupwallet $WALLET
<nowiki>[[ ! -s "$WALLET" ]]</nowiki>
then echo failed
elif
echo done
echo -n encrypting....
! gpg -r myusername --output $WALLET_E --encrypt $WALLET
then echo failed
elif
echo done
echo -n copying to distant server...
! scp $WALLET_E user@myserver.org:~/wallets/
then echo failed
else echo done
fi

rm -f $WALLET $WALLET_E

The shell script:

* Calls bitcoind backupwallet to create a time/date-stamped wallet.
* GPG encrypts the wallet with your public key.
* Copies the result to a backup location.

[[Category:Technical]]

==Restore==

Assuming your backup is recent enough that you haven't used up all of your key pool... restoring a wallet to a new (or old) location and rescanning the block chain should leave you with all your coins. Just follow these steps:
* Quit bitcoin(d).
* Copy your backed up wallet.dat into your bitcoin profile directory.
* If copying into existing profile, delete file ''blkindex.dat'' and ''blk0001.dat'' to make the client re-scan the block chain.
And you'll be good as new.

==Erasing Plain Text Wallets==

A good practice is to keep at least two wallets, one as a "current account" for everyday transactions and one as a "savings account" where you store the majority of your Bitcoins.

The "savings account" wallet should be backed up in encrypted form only and all plaintext copies of this wallet should be erased. In case someone gains unauthorised access to your computer (either by physically stealing it or by exploiting a system vulnerability via the internet), they will only be able to spend the coins in your "current account" wallet.

In most operating systems, including Windows, Linux, and Mac OS X, simply deleting a wallet.dat file will ''not'' generally destroy it. It is likely that advanced tools can still be used to recover the wallet.dat file, even after it has been deleted.

The Linux '''shred''' command can be used to overwrite the wallet file with random data prior to deleting; this particular copy of the file will then be practically impossible to recover. Using shred (and similar tools on Windows) however does not guarantee that still other copies don't exist somewhere hidden on your HD. That will depend on your system configuration and what packages you have installed. Some system restore and backup tools, for instance, create periodic snapshots of your filesystem, duplicating your wallet.dat.

In Mac OS, the equivalent of '''shred''' is '''srm''' (introduced in Leopard). Using the Finder to remove files, clicking "Secure Empty Trash" in the Finder menu will shred the contents of the trash can. As with any OS this doesn't guarantee that there are not other copies elsewhere on your system.

For Windows, the built-in command ''cipher /W'' will shred all previously-deleted files. [http://www.cylog.org/utilities/cybershredder.jsp CyberShredder] can securely deleted individual files.

==eWallet==

Storing bitcoins with an [[eWallet]] provider incurs risks as well. Basically you grant the third party, in this case eWallet, full access to your wallet.

==See Also==

* [[Data directory]]
* [http://startbitcoin.com/how-to-create-a-secure-bitcoin-wallet/ Secure Bitcoin Wallet Tutorial]
* [[How to set up a secure offline savings wallet]]

[[de:Sichere deine Geldbörse]]
[[zh-cn:保护你的钱包]]

Wallet Security Dos and Don'ts (Windows)

2011-06-29T13:24:50Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send [[Securing_your_wallet#General_Solutions|unencrypted]] copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' keep your computer switched on overnight unless necessary. If you are a miner, empty your mining wallet regularly.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use elsewhere on the web.

*'''Don't''' use weak passwords. If a password is easy to remember without rehearsal, it is probably weak.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a USB stick that you insert into machines of friends, at work, or while traveling.

*'''Don't''' develop a carefree attitude towards wallet security. Handle bitcoins with the same amount of diligence as you handle physical cash.

*'''Do''' keep at least one [[How to set up a secure offline savings wallet|offline savings wallet]].

*'''Do''' backup your spending wallet regularly.

*'''Do''' keep dated versions of each backed up wallet.

*'''Do''' [[Securing_your_wallet#General_Solutions|encrypt]] all wallets as soon as they leave your system.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use [http://www.truecrypt.org/docs/?s=keyfiles keyfiles] to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date (but understand their limitations).

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the [http://noscript.net/ NoScript] plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine, such as [http://downloads.vmware.com/d/info/desktop_downloads/vmware_player/3_0 VMWare Player].

*'''Do''' browse questionable websites from inside a virtual machine.

*'''Do''' always connect the bitcoin client and IRC via [[Tor]].

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

How to set up a secure offline savings wallet

2011-06-29T13:18:02Z

Forever: Created page with "# Set up a [http://www.wuala.com/en/bitcoin Wuala] account (or other cloud backup service of your choice). # Create a strong and unique password offline (manually). This passwor..."

# Set up a [http://www.wuala.com/en/bitcoin Wuala] account (or other cloud backup service of your choice).
# Create a strong and unique password offline (manually). This password should be at least 20 characters long; it should contain numbers, upper and lower case letters, and symbols. It should be as random as possible, ie it should look something like this: Zr%8qL03&cvwS9@05AatdP71. Never use this password elsewhere.
# '''Do not forget this password'''. Recite it several times a day. It is easy to overestimate your ability to remember a password several months in the future. To be on the safe side, write it down and store the piece of paper in a safety deposit box.
# Download [http://www.bitcoin.org/ Bitcoin Linux binary] and save it on a USB drive.
# Download [http://www.truecrypt.org/downloads Truecrypt for Linux] and save it on a USB drive.
# Shut down your computer, and boot [http://www.ubuntu.com/ Ubuntu] (or Linux distribution of you choice) from a [http://www.ubuntu.com/download/ubuntu/download liveCD]. This will not affect your current operating system.
# '''Disconnect machine from the internet'''. Unplug any network cables and disable wireless. Verify that wireless is disabled in the icon on the upper right corner (Ubuntu). Double check that machine is disconnected by opening the web browser.
# Insert USB drive. Install and run truecrypt. Create an encrypted file container, using the strong and unique password from step 2. Mount truecrypt container.
# Run bitcoin while disconnected to the internet. The client will show 0 connections and 0 blocks, but it will still generate a wallet.dat file and a bitcoin address.
# Copy wallet.dat (found in hidden folder .bitcoin in your home directory) to mounted truecrypt volume. Dismount volume and and copy truecrypt container file to USB drive.
# Save bitcoin address to a text file and copy it to USB drive.
# Shut down system and turn off computer. Before switching your computer on again, remove all power sources for about 1 minute. Physically remove battery from laptop.
# Backup truecrypt container file in several places:
#*Send it to your 5 best friends by email attachment and ask them to save it for you.
#*Save it on your Wuala account created in step 1.
#*Save it on several USB drives and CDs and store them in different geographic locations.
#Send bitcoins to the address saved on the USB drive. Double check in the [[Bitcoin Block Explorer|block explorer]] that they have been sent.

==Notes==

*This procedure is only secure if you perform steps 1-14 in this '''exact order'''.

*Perform several trial runs of the above procedure with a few bitcents, and make sure that you know how to successfully retrieve them, before making a bulk transfer.

*Every time you retrieve bitcoins from your savings wallet, create a fresh savings wallet by repeating the above procedure, and send all your remaining savings balance there.

*There is more than one way to do it. Similar procedures have been suggested on the forums [http://forum.bitcoin.org/index.php?topic=17240.0 here] and [http://forum.bitcoin.org/?topic=5194.0 here].

*Beware that even savings wallets have limited lifetimes. New, backwards incompatible versions of bitcoin might come out in future, [http://en.wikipedia.org/wiki/Advanced_Encryption_Standard AES] might be broken, [http://en.wikipedia.org/wiki/Bit_rot bit rot] might destroy your wallets, etc. Update to fresh savings wallets every couple of years, or as needed.

*This procedure will create a wallet that, for all practical purposes, is safe against online threats, such as viruses and hackers. It is still however exposed to offline threats, such as [http://en.wikipedia.org/wiki/Hardware_keylogger hardware keyloggers], extortion, or people looking over your shoulder.

Wallet Security Dos and Don'ts (Windows)

2011-06-29T10:58:06Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send [[Securing_your_wallet#General_Solutions|unencrypted]] copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' keep your computer switched on overnight unless necessary. If you are a miner, empty your mining wallet regularly.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use elsewhere on the web.

*'''Don't''' use weak passwords. If a password is easy to remember without rehearsal, it is probably weak.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a USB stick that you insert into machines of friends, at work, or while traveling.

*'''Don't''' develop a carefree attitude towards wallet security. Handle bitcoins with the same amount of diligence as you handle physical cash.

*'''Do''' keep at least one offline savings wallet.

*'''Do''' backup your spending wallet regularly.

*'''Do''' keep dated versions of each backed up wallet.

*'''Do''' [[Securing_your_wallet#General_Solutions|encrypt]] all wallets as soon as they leave your system.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use [http://www.truecrypt.org/docs/?s=keyfiles keyfiles] to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date (but understand their limitations).

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the [http://noscript.net/ NoScript] plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine, such as [http://downloads.vmware.com/d/info/desktop_downloads/vmware_player/3_0 VMWare Player].

*'''Do''' browse questionable websites from inside a virtual machine.

*'''Do''' always connect the bitcoin client and IRC via [[Tor]].

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

Wallet Security Dos and Don'ts (Windows)

2011-06-29T10:50:29Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send [[Securing_your_wallet#General_Solutions|unencrypted]] copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' keep your computer switched on overnight unless necessary. If you are a miner, empty your mining wallet regularly.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use elsewhere on the web.

*'''Don't''' use weak passwords. If a password is easy to remember without rehearsal, it is probably weak.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a USB stick that you insert into machines of friends, at work, or while traveling.

*'''Do''' keep at least one offline savings wallet.

*'''Do''' backup your spending wallet regularly.

*'''Do''' keep dated versions of each backed up wallet.

*'''Do''' [[Securing_your_wallet#General_Solutions|encrypt]] all wallets as soon as they leave your system.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use [http://www.truecrypt.org/docs/?s=keyfiles keyfiles] to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date (but understand their limitations).

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the [http://noscript.net/ NoScript] plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine, such as [http://downloads.vmware.com/d/info/desktop_downloads/vmware_player/3_0 VMWare Player].

*'''Do''' browse questionable websites from inside a virtual machine.

*'''Do''' always connect the bitcoin client and IRC via [[Tor]].

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

Wallet Security Dos and Don'ts (Windows)

2011-06-29T10:47:49Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send [[Securing_your_wallet#General_Solutions|unencrypted]] copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' keep your computer switched on overnight unless necessary. If you are a miner, empty your mining wallet regularly.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use elsewhere on the web.

*'''Don't''' use weak passwords. If you can easily remember a password, it is probably weak.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a USB stick that you insert into machines of friends, at work, or while traveling.

*'''Do''' keep at least one offline savings wallet.

*'''Do''' backup your spending wallet regularly.

*'''Do''' keep dated versions of each backed up wallet.

*'''Do''' [[Securing_your_wallet#General_Solutions|encrypt]] all wallets as soon as they leave your system.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use [http://www.truecrypt.org/docs/?s=keyfiles keyfiles] to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date (but understand their limitations).

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the [http://noscript.net/ NoScript] plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine, such as [http://downloads.vmware.com/d/info/desktop_downloads/vmware_player/3_0 VMWare Player].

*'''Do''' browse questionable websites from inside a virtual machine.

*'''Do''' always connect the bitcoin client and IRC via [[Tor]].

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

Wallet Security Dos and Don'ts (Windows)

2011-06-29T10:45:08Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send [[Securing_your_wallet#General_Solutions|unencrypted]] copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' keep your computer switched on overnight unless necessary. If you are a miner, empty your mining wallet regularly.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use elsewhere on the web.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a USB stick that you insert into machines of friends, at work, or while traveling.

*'''Do''' keep at least one offline savings wallet.

*'''Do''' backup your spending wallet regularly.

*'''Do''' keep dated versions of each backed up wallet.

*'''Do''' [[Securing_your_wallet#General_Solutions|encrypt]] all wallets as soon as they leave your system.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use [http://www.truecrypt.org/docs/?s=keyfiles keyfiles] to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date (but understand their limitations).

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the [http://noscript.net/ NoScript] plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine, such as [http://downloads.vmware.com/d/info/desktop_downloads/vmware_player/3_0 VMWare Player].

*'''Do''' browse questionable websites from inside a virtual machine.

*'''Do''' always connect the bitcoin client and IRC via [[Tor]].

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

Wallet Security Dos and Don'ts (Windows)

2011-06-29T10:27:01Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send unencrypted copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' keep your computer switched on overnight unless necessary. If you are a miner, empty your mining wallet regularly.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use elsewhere on the web.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a USB stick that you insert into machines of friends, at work, or while traveling.

*'''Do''' keep at least one offline savings wallet.

*'''Do''' backup your spending wallet regularly.

*'''Do''' keep dated versions of each backed up wallet.

*'''Do''' encrypt all wallets as soon as they leave your system.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use [http://www.truecrypt.org/docs/?s=keyfiles keyfiles] to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date (but understand their limitations).

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the [http://noscript.net/ NoScript] plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine, such as [http://downloads.vmware.com/d/info/desktop_downloads/vmware_player/3_0 VMWare Player].

*'''Do''' browse questionable websites from inside a virtual machine.

*'''Do''' always connect the bitcoin client and IRC via [[Tor]].

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

Wallet Security Dos and Don'ts (Windows)

2011-06-29T08:27:25Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send unencrypted copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' keep your computer switched on overnight.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use elsewhere on the web.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a USB stick that you insert into machines of friends, at work, or while traveling.

*'''Do''' keep at least one offline savings wallet.

*'''Do''' backup your spending wallet regularly.

*'''Do''' keep dated versions of each backed up wallet.

*'''Do''' encrypt all wallets as soon as they leave your system.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use [http://www.truecrypt.org/docs/?s=keyfiles keyfiles] to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date (but understand their limitations).

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the [http://noscript.net/ NoScript] plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine, such as [http://downloads.vmware.com/d/info/desktop_downloads/vmware_player/3_0 VMWare Player].

*'''Do''' browse questionable websites from inside a virtual machine.

*'''Do''' regularly empty your mining wallet.

*'''Do''' always connect the bitcoin client and IRC via [[Tor]].

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

Wallet Security Dos and Don'ts (Windows)

2011-06-29T08:23:07Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send unencrypted copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' keep your computer switched on overnight.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use elsewhere on the web.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a USB stick that you insert into machines of friends, at work, or while traveling.

*'''Do''' keep at least one offline savings wallet.

*'''Do''' backup your spending wallet regularly.

*'''Do''' keep dated versions of each backed up wallet.

*'''Do''' encrypt all wallets as soon as they leave your system.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use [http://www.truecrypt.org/docs/?s=keyfiles keyfiles] to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date.

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the [http://noscript.net/ NoScript] plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine, such as [http://downloads.vmware.com/d/info/desktop_downloads/vmware_player/3_0 VMWare Player].

*'''Do''' browse questionable websites from inside a virtual machine.

*'''Do''' regularly empty your mining wallet.

*'''Do''' always connect the bitcoin client and IRC via [[Tor]].

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

Wallet Security Dos and Don'ts (Windows)

2011-06-29T08:22:23Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send unencrypted copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' keep your computer switched on overnight.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use elsewhere on the web.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a USB stick that you insert into machines of friends, at work, or while traveling.

*'''Do''' keep at least one offline savings wallet.

*'''Do''' backup your spending wallet regularly.

*'''Do''' keep dated versions of your backed up wallets.

*'''Do''' encrypt all wallets as soon as they leave your system.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use [http://www.truecrypt.org/docs/?s=keyfiles keyfiles] to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date.

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the [http://noscript.net/ NoScript] plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine, such as [http://downloads.vmware.com/d/info/desktop_downloads/vmware_player/3_0 VMWare Player].

*'''Do''' browse questionable websites from inside a virtual machine.

*'''Do''' regularly empty your mining wallet.

*'''Do''' always connect the bitcoin client and IRC via [[Tor]].

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

Wallet Security Dos and Don'ts (Windows)

2011-06-29T08:20:41Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send unencrypted copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' keep your computer switched on overnight.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use elsewhere on the web.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a USB stick that you insert into machines of friends, at work, or while traveling.

*'''Do''' keep at least one offline savings wallet.

*'''Do''' backup your spending wallet regularly.

*'''Do''' encrypt all wallets as soon as they leave your system.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use [http://www.truecrypt.org/docs/?s=keyfiles keyfiles] to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date.

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the [http://noscript.net/ NoScript] plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine, such as [http://downloads.vmware.com/d/info/desktop_downloads/vmware_player/3_0 VMWare Player].

*'''Do''' browse questionable websites from inside a virtual machine.

*'''Do''' regularly empty your mining wallet.

*'''Do''' always connect the bitcoin client and IRC via [[Tor]].

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

Wallet Security Dos and Don'ts (Windows)

2011-06-29T08:18:47Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send unencrypted copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' keep your computer switched on overnight.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use anywhere else on the web.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a USB stick that you insert into machines of friends, at work, or while traveling.

*'''Do''' keep at least one offline savings wallet.

*'''Do''' backup your spending wallet regularly.

*'''Do''' encrypt all wallets as soon as they leave your system.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use [http://www.truecrypt.org/docs/?s=keyfiles keyfiles] to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date.

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the [http://noscript.net/ NoScript] plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine, such as [http://downloads.vmware.com/d/info/desktop_downloads/vmware_player/3_0 VMWare Player].

*'''Do''' browse questionable websites from inside a virtual machine.

*'''Do''' regularly empty your mining wallet.

*'''Do''' always connect the bitcoin client and IRC via [[Tor]].

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

Wallet Security Dos and Don'ts (Windows)

2011-06-29T08:17:44Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send unencrypted copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' keep your computer switched on overnight.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use anywhere else on the web.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a USB stick that you insert into machines of friends, at work, or while traveling.

*'''Do''' keep at least one offline savings wallet.

*'''Do''' backup your active wallet regularly.

*'''Do''' encrypt all wallets as soon as they leave your system.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use [http://www.truecrypt.org/docs/?s=keyfiles keyfiles] to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date.

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the [http://noscript.net/ NoScript] plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine, such as [http://downloads.vmware.com/d/info/desktop_downloads/vmware_player/3_0 VMWare Player].

*'''Do''' browse questionable websites from inside a virtual machine.

*'''Do''' regularly empty your mining wallet.

*'''Do''' always connect the bitcoin client and IRC via [[Tor]].

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

Securing your wallet

2011-06-29T08:15:43Z

Forever: /* Introduction */

==Introduction==

Wallet security can be broken down into two independent goals:
# Protecting your wallet against loss.
# Protecting your wallet against theft.

In the case that your current wallet hasn't been protected adequately (e.g. put online with a weaker password):
# Making a new secure wallet, using appropriate long-term protection.

''For a brief overview see also: [[Wallet Security Dos and Don'ts (Windows)|Wallet Security Dos and Don'ts]]''

==Technical Background==

Bitcoin transactions send Bitcoins to a specific public key. A Bitcoin address is an encoded hash of a public key. In order to use received Bitcoins, you need to have the private key matching the public key you received with. This is sort of like a super long password associated with an account (public key). Your Bitcoin wallet contains all of the private keys necessary for spending your received transactions. If you delete your wallet without a backup, then you no longer have the authorization information necessary to claim your coins, and the coins associated with those keys are lost forever.

The wallet contains a pool of queued keys. By default there are 100 keys in the [[key pool]]. The size of the pool is configurable using the "-keypool" command line argument. When you need an address for whatever reason (send, “new address”, generation, etc.), the key is not actually generated freshly, but taken from this pool. A brand new address is generated to fill the pool back to 100. So when a backup is first created, it has all of your old keys plus 100 unused keys. After sending a transaction, it has 99 unused keys. After a total of 100 new-key actions, you will start using keys that are not in your backup. Since the backup does not have the private keys necessary for authorizing spends of these coins, restoring from the old backup will cause you to lose Bitcoins.

Creating a new address generates a new pair of public and private keys, which are added to your wallet. Each keypair is mostly random numbers, so they cannot be known prior to generation. If you backup your wallet and then create more than 100 new addresses, the keypair associated with the newest addresses will not be in the old wallet because the new keypairs are only known after creating them. Any coins received at these addresses will be lost if you restore from the backup.

The situation is made somewhat more confusing because the receiving addresses shown in the UI are not the only keys in your wallet. Each Bitcoin generation is given a new public key, and, more importantly, each sent transaction also sends some number of Bitcoins back to yourself at a new key. When sending Bitcoins to anyone, you generate a new keypair for yourself and simultaneously send Bitcoins to your new public key and the actual recipient's public key. This is an anonymity feature – it makes tracking Bitcoin transactions much more difficult.

So if you create a backup, do more than 100 things that cause a new key to be used, and then restore from the backup, some Bitcoins will be lost. Bitcoin has not deleted any keys (keys are never deleted) – it has created a new key that is not in your old backup and then sent Bitcoins to it.

== Making a new wallet ==

In the case that a wallet has been distributed, or stored, in a (real or potential) compromised state, it is wise to create a new wallet and transfer the full balance of Bitcoins to an address contained only in the newly created wallet.

For example, this will be necessary if one created a wallet with a password of 12 characters, as suggested. However a few years have passed and the wallet is now more easily compromised. Just re-encrypting isn't secure. One needs to make a new wallet and make the old wallet worthless (spending the funds to the new wallet).

==Making a secure workspace==

===Linux===

The first step is to make a [http://www.howtogeek.com/howto/ubuntu/add-a-user-on-ubuntu-server/ new user,] so run:

<code>adduser new_user_name</code>

as root. When you get to the prompt 'Enter the new value, or press ENTER for the default', just keep hitting ENTER.

Then switch user to the new user. To get to the new user you can use the switch user icon for your system, which on Ubuntu is in the 'System/Quit' screen, or if there is no switch icon on your system you can log out and log back in as the new user. Then click on a folder in the new user to display the file browser, then keep going up folders until you see the new user home directory, then right click to bring up the Properties dialog, then click on the Permissions tab, then in the Others section, set the folder access to None.

For secure browsing, open Firefox, and then go into the Edit menu and click Preferences. Starting from the left, click on the General tab, and in the 'Startup/When Firefox starts' pop up menu, choose 'Show a Blank Page'. Then click on the Content tab, and deselect 'Load images automatically' and deselect 'Enable Javascript'. Then click on the Privacy tab, and in the 'History/Firefox will' pop up menu, choose 'Never remember history'. Then click on the Security tab, and in the Passwords section, deselect 'Remember passwords for sites' and deselect 'Use a master password'. Then click on the Advanced tab, then click on the Update tab, and then in the 'Automatically check for updates to' section, deselect 'Add-ons' and 'Search Engines'.

When javascript is disabled, the [http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.3.23/bitcoin-0.3.23-linux.tar.gz/download linux download page] will not download automatically, so you'll have to click on the 'direct link' part of the "Problems with the download? Please use this 'direct link' or try another mirror." line.

After you've made your secure new user, to maintain security you should use it only for bitcoin.

It's also a good idea to encrypt the Home directory of whatever user you run Bitcoin under using ecryptfs-utils. To do this:
# If the Home directory is not empty you should back it up first, by just copying the data to an external drive or something.
# install ecryptfs-utils (on Ubuntu: sudo apt-get install ecryptfs-utils)
# log out of X (graphical system) and press Ctrl+Alt+F1 to login to the command shell (you must be logged out or some files will be open and the tool won't be able to encrypt your data)
# change directory to something that's not in your home folder (ex: cd / )
# run the migration tool (on Ubuntu: sudo ecryptfs-migrate-home -u username)
# if it's successful, you can now press ALT+F8 to go back to the GUI and login
# run 'ecryptfs-unwrap-passphrase' and '''WRITE DOWN OR SAVE THE CODE IT RETURNS''' because you will need it if you ever have to pull your data off while the OS is not working. (You can run it again later if you need to, but run it now so that you can get your data if your Linux install gets botched.)
# run 'ecryptfs-setup-swap' to encrypt your swap partition (the encrypted folder data is not encrypted while it's in memory, and so if it's ever sent to the swap partition it can be stolen from there unless that too is encrypted - be aware that this will mean you cannot use Hibernate anymore, as the bootloader won't be able to restore the hibernation data)
(instructions from [http://bodhizazen.net/Tutorials/Ecryptfs/#Migrate])

===Mac===

=====Backup all data (500MB)=====
Follow these instructions to backup all the bitcoin data (wallet and block chains) to an encrypted disk image.
# Open Disk Utility
# Click New Image and choose 500MB, 128-bit or 256-bit (faster or more secure) encryption and single partition.
# Save it somewhere you won't lose it (like your Wuala, Dropbox, Strongspace or whatever)
# Choose a safe and strong password
# Move everything from ~/Library/Application Support/Bitcoin/ to the image
# Symlink it back so the app would be able to use it
:::ln -s /Volumes/Bitcoin ~/Library/Application Support/Bitcoin

Don't forget to mount your image before using Bitcoin and unmount after quitting it.

=====Backup just wallet.dat (40MB)=====
Follow these instructions to backup just the wallet.dat file. This results in a smaller disk image, but it's more complicated to do.
# Open Disk Utility
# Click New Image and choose 40MB, 128-bit or 256-bit (faster or more secure) encryption and single partition.
# Save it somewhere you won't lose it (like your Wuala, Dropbox, Strongspace or whatever)
# Choose a safe and strong password
# Move your wallet.dat file to the image
# Symlink it back so the app would be able to use it
:::ln -s /Volumes/Bitcoin/wallet.dat ~/Library/Application Support/Bitcoin/wallet.dat

[[File:MountWalletAndLauchnBitcoin_OSX_Automator.png|thumbnail|150px|Mount Wallet and launch Bitcoin]]
Don't forget to mount your image before using Bitcoin and unmount after quitting it.

'''Note''': If you start the Bitcoin application without having the image mounted, the application will overwrite your symlink with a new wallet. If that happens, don't panic. Just delete the new wallet.dat, mount the image, and recreate the symlink like above.

'''Automation''': You can create a small application using [http://en.wikipedia.org/wiki/Automator_%28software%29 Automator] (included in OS X) to automatically mount the wallet and then launch Bitcoin App. See the Screenshot on how to do this.

===Windows===

If you are using Windows XP or Windows 7, you can keep your wallet on an encrypted disk image created by third-party software, such as [http://www.truecrypt.org/ TrueCrypt] (open source) or [http://www.jetico.com/encryption-bestcrypt/ Jetico BestCrypt] (commercial). You can probably do the same with Windows Vista (but why would you use that?) or Windows 2000.

'''NOTE:''' You should configure BitCoin in this manner only on computers where you use BitCoin, but do not use that computer to mine. For example, this is a good configuration for a notebook or tablet computer.

Assuming that you have installed the Windows BitCoin client and run it at least once, the process is described below.

To mount the BitCoin data directory on an encrypted drive
<ol start=1 type=1>
<li>Use the third-party disk image encryption program of your choice to create and mount an encrypted disk image of at least 100 MB in size.</li>
<li>Locate the BitCoin data directory, and copy the directory with all contents to the encrypted drive.
For help finding this directory, see [[Securing_your_wallet#Locating_BitCoin_s_data_directory|Locating BitCoin's Data Directory]].</li>
<li>Create a Windows shortcut that starts BitCoin with the <code>-datadir</code> parameter and specifies the encrypted drive and directory.
For example, if you installed Bitcoin in the default directory, mounted your BitCoin encrypted drive as <code>E:\</code>, and stored your BitCoin data directory on it as <code>Bitcoin</code>, you would type the following command as the shortcut Target:
<blockquote><code>C:\Program Files\Bitcoin\bitcoin.exe -datadir=E:\Bitcoin</code></blockquote></li>
<li>Open BitCoin's settings and configure it NOT to start automatically when you start Windows.
This is to allow you to mount the BitCoin encrypted disk image before starting BitCoin.</li>
<li>Shut down BitCoin, and then restart it from the new shortcut.</li>
</ol>

After doing this, any time you want to use BitCoin, you must first mount the BitCoin encrypted disk image using the same drive designation, and then run BitCoin from the shortcut that you created, so that it can find its data and your wallet. :-)

== Locating BitCoin's data directory ==

The [[data directory]] is the location where Bitcoin's data files are stored, including the wallet data file.

=== Windows ===

Go to Start -> Run (or press WinKey+R) and run this:

explorer %APPDATA%\BitCoin

BitCoin's data folder will open. For most users, this is the following locations:

C:\Documents and Settings\YourUserName\Application data\BitCoin (XP)

C:\Users\YourUserName\Appdata\Roaming\BitCoin (Vista and 7)

"AppData" and "Application data" are hidden by default.

=== Linux ===

By default BitCoin will put its data here:

~/.bitcoin/

You need to do a "ls -a" to see directories that start with a dot.

If that's not it, you can do a search like this:

find / -name wallet.dat -print 2>/dev/null

=== Mac ===

By default BitCoin will put its data here:

~/Library/Application Support/Bitcoin/

==Backup==

'''Note''': I would strongly recommend against using Dropbox to back up your Bitcoin data due to [http://en.wikipedia.org/wiki/Dropbox_(service)#Criticism security concerns] such as:
# the fact that they store your encryption key (meaning that a disgruntled Dropbox employee or an attacker who gained access to the system could decrypt your Dropbox data and steal your Bitcoins)
# the fact that the Dropbox client only needs a password for the first login. After it authenticates once, the server assigns it a token which it uses to show that, at one time, its user knew the password rather than sending the actual password (meaning that if you ever use the Dropbox client on another PC, that PC's users can access your Dropbox - even if you change your password - and can steal your Bitcoins or get a virus that will steal your Bitcoins).

For these reasons, I personally prefer to use Wuala, which does not store your encryption key and requires a password each time (the client can be set to remember your password, but the server will check each time to make sure that the client is sending the correct password). Like Dropbox, the basic, lowest-storage-space account with Wuala is free of charge, and coincidentally, Wuala [http://www.wuala.com/en/bitcoin is experimenting with allowing users to pay for "upgraded" plans using Bitcoin.]

In fact, whether you use Dropbox as your backup or not, use what Steve Gibson calls "pre-Internet encryption" (which he actually [http://itknowledgeexchange.techtarget.com/security-corner/cloud-security-and-privacy-do-they-exist/ discussed in the context of Dropbox's security concerns]) and use some form of encryption on the files before you back them up, just in case someone other than yourself ever gains access to that backup. Make sure to pick a password that's memorable but secure.

The only file you need to back up is "wallet.dat". Ensure that BitCoin is closed, copy this file somewhere else, encrypt it, and put it somewhere safe. Ideally, you would put this file in two places: one nearby, and one 100+ miles away.

You can use the [[api|backupwallet]] JSON-RPC command to back up without shutting down Bitcoin.

=== General Solutions ===

Your wallet.dat file is not encrypted by BitCoin. Anyone who can access it can easily steal all of your coins. Use one of these encryption programs if there is any chance someone might stumble upon your wallet.
* [http://www.7-zip.org/ 7-zip] - Supports strongly-encrypted archives.
* [http://www.axantum.com/axcrypt/ AxCrypt]
* [http://lrzip.kolivas.org lrzip] - Compression software for Linux and OSX that supports very high grade password protected encryption
* [http://www.truecrypt.org/ TrueCrypt] - Volume-based on-the-fly encryption (for advanced users)
* [http://www.rarlab.com/ WinRar] - Commonly used archive software that supports verification records and encryption.

There is also a list of [[OpenSourceEncryptionSoftware|open source encryption software.]]

There is also a method to Print out and encrypt your Wallet.dat as a special barcode. See details here: [[WalletPaperbackup]]

==== Password Strength ====
Brute-force password cracking has come a long distance, a previously thought secure password of random [a-Z] [0-9] [!-~] of 8 characters long can be trivially solved now (using appropriate hardware)... The recommended length is '''at least''' 12 characters long. You can also use a multi-word password. [http://www.baekdal.com/tips/password-security-usability The Usability of Passwords]

However, simply using dictionary words is also insecure as it opens you up to a dictionary attack. If you use dictionary words, be sure to throw random symbols and numbers in the mix as well.

A good way to create secure but easy-to-remember passwords is to pick a password (ex: d0g) and pad it with a good number of repeated characters afterward (such as 10 $ signs - so d0g becomes d0g$$$$$$$$$$) - this is just as cryptographically secure as a random password of equal length so long as the attacker does not know which symbol you are following your "word" with and how many times it is repeated. ([https://www.grc.com/haystack.htm source])

If you use keyfiles in addition to a password, it is unlikely that your encrypted file can ever be cracked using brute force methods, even 10 years from now when even a 12 character password might be too short.

Assume that any encrypted files you store online (eg. gmail, Dropbox) will be stored somewhere forever and can never be erased.

==== Storage of Archive ====
One of the most simple methods for storing a appropriately '''encrypted''' archive of your wallet.dat file is to send the archive as an email attachment to your own e-mail address. Services like gmail.com use very comprehensive distributed networks that make the loss of data very unlikely. One can even obfuscate the name of the files within the archive, and name the archive something less inviting, such as: 'personal notes' or 'car insurance'.

Another solution is to use a file storage service like [http://www.wuala.com/bitcoin Wuala] ( encrypted, [http://www.bitcoin.org/smf/index.php?topic=5817.0 instructions]), [http://www.dropbox.com Dropbox] and [http://en.wikipedia.org/wiki/Comparison_of_online_backup_services others], including the more secure [http://www.spideroak.com SpiderOak].

=== Linux solution ===

Linux users can setup cron by running 'crontab -e' and adding this line:

01 */1 * * * /usr/local/bin/backupwallet.sh

This cron line runs backupwallet.sh at the 01 minute of every hour. Remember to add a newline after the last line of the crontab file, or else the last line won't run.

backupwallet.sh:

#!/bin/bash

TS=$(date "+%Y%m%d-%H-%M")
WALLET=/tmp/wallet${TS}
WALLET_E=/tmp/wallet${TS}.crypt

if
echo -n making backup...
bitcoind backupwallet $WALLET
<nowiki>[[ ! -s "$WALLET" ]]</nowiki>
then echo failed
elif
echo done
echo -n encrypting....
! gpg -r myusername --output $WALLET_E --encrypt $WALLET
then echo failed
elif
echo done
echo -n copying to distant server...
! scp $WALLET_E user@myserver.org:~/wallets/
then echo failed
else echo done
fi

rm -f $WALLET $WALLET_E

The shell script:

* Calls bitcoind backupwallet to create a time/date-stamped wallet.
* GPG encrypts the wallet with your public key.
* Copies the result to a backup location.

[[Category:Technical]]

==Restore==

Assuming your backup is recent enough that you haven't used up all of your key pool... restoring a wallet to a new (or old) location and rescanning the block chain should leave you with all your coins. Just follow these steps:
* Quit bitcoin(d).
* Copy your backed up wallet.dat into your bitcoin profile directory.
* If copying into existing profile, delete file ''blkindex.dat'' and ''blk0001.dat'' to make the client re-scan the block chain.
And you'll be good as new.

==Erasing Plain Text Wallets==

A good practice is to keep at least two wallets, one as a "current account" for everyday transactions and one as a "savings account" where you store the majority of your Bitcoins.

The "savings account" wallet should be backed up in encrypted form only and all plaintext copies of this wallet should be erased. In case someone gains unauthorised access to your computer (either by physically stealing it or by exploiting a system vulnerability via the internet), they will only be able to spend the coins in your "current account" wallet.

In most operating systems, including Windows, Linux, and Mac OS X, simply deleting a wallet.dat file will ''not'' generally destroy it. It is likely that advanced tools can still be used to recover the wallet.dat file, even after it has been deleted.

The Linux '''shred''' command can be used to overwrite the wallet file with random data prior to deleting; this particular copy of the file will then be practically impossible to recover. Using shred (and similar tools on Windows) however does not guarantee that still other copies don't exist somewhere hidden on your HD. That will depend on your system configuration and what packages you have installed. Some system restore and backup tools, for instance, create periodic snapshots of your filesystem, duplicating your wallet.dat.

In Mac OS, clicking "Secure Empty Trash" in the Finder menu will shred the contents of the trash can. As with any OS this doesn't guarantee that there are not other copies elsewhere on your system.

For Windows, the built-in command ''cipher /W'' will shred all previously-deleted files. [http://www.cylog.org/utilities/cybershredder.jsp CyberShredder] can securely deleted individual files.

==eWallet==

Storing bitcoins with an [[eWallet]] provider incurs risks as well. Basically you grant the third party, in this case eWallet, full access to your wallet.

==See Also==

* [[Data directory]]
* [http://startbitcoin.com/how-to-create-a-secure-bitcoin-wallet/ Secure Bitcoin Wallet Tutorial]

[[de:Sichere deine Geldbörse]]
[[zh-cn:保护你的钱包]]

Wallet Security Dos and Don'ts (Windows)

2011-06-29T07:44:51Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send unencrypted copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' keep your computer switched on overnight.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use anywhere else on the web.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a USB stick that you insert into machines of friends, at work, or while traveling.

*'''Do''' keep at least one offline savings wallet.

*'''Do''' backup your active wallet regularly.

*'''Do''' encrypt all wallets as soon as they leave your system.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use [http://www.truecrypt.org/docs/?s=keyfiles keyfiles] to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date.

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the [http://noscript.net/ NoScript] plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine, such as [http://downloads.vmware.com/d/info/desktop_downloads/vmware_player/3_0 VMWare Player].

*'''Do''' browse questionable websites from inside a virtual machine.

*'''Do''' regularly empty your mining wallet.

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

Talk:Wallet Security Dos and Don'ts (Windows)

2011-06-29T07:43:34Z

Forever: /* Don't keep your computer switched on overnight. */

Talk:Wallet Security Dos and Don'ts (Windows)

2011-06-29T07:43:15Z

Forever: /* Don't keep your computer switched on overnight. */

Wallet Security Dos and Don'ts (Windows)

2011-06-28T18:58:01Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send unencrypted copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' keep your computer switched on overnight.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use anywhere else on the web.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a USB stick that you insert into machines of friends, at work, or while traveling.

*'''Do''' keep at least one offline savings wallet.

*'''Do''' backup your active wallet regularly.

*'''Do''' encrypt all wallets as soon as they leave your system.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use [http://www.truecrypt.org/docs/?s=keyfiles keyfiles] to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date.

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the [http://noscript.net/ NoScript] plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine, such as [http://downloads.vmware.com/d/info/desktop_downloads/vmware_player/3_0 VMWare Player].

*'''Do''' browse questionable websites from inside a virtual machine.

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

Wallet Security Dos and Don'ts (Windows)

2011-06-28T18:53:00Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send unencrypted copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' keep your computer switched on overnight.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use anywhere else on the web.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a USB stick that you insert into machines of friends, at work, or while traveling.

*'''Do''' keep at least one offline savings wallet.

*'''Do''' backup your active wallet regularly.

*'''Do''' encrypt all wallets as soon as they leave your system.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use [http://www.truecrypt.org/docs/?s=keyfiles keyfiles] to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date.

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the [http://noscript.net/ NoScript] plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine.

*'''Do''' browse questionable websites from inside a virtual machine.

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

Wallet Security Dos and Don'ts (Windows)

2011-06-28T18:47:15Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send unencrypted copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' keep your computer switched on overnight.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use anywhere else on the web.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a USB stick that you insert into machines of friends, at work, or while traveling.

*'''Do''' keep at least one offline savings wallet.

*'''Do''' backup your active wallet regularly.

*'''Do''' encrypt all wallets as soon as they leave your system.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use keyfiles to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date.

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the [http://noscript.net/ NoScript] plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine.

*'''Do''' browse questionable websites from inside a virtual machine.

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

Wallet Security Dos and Don'ts (Windows)

2011-06-28T18:46:14Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send unencrypted copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' keep your computer switched on overnight.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use anywhere else on the web.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a USB stick that you insert into machines of friends, at work, or while traveling.

*'''Do''' keep at least one offline savings wallet.

*'''Do''' backup your active wallet regularly.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use keyfiles to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date.

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the [http://noscript.net/ NoScript] plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine.

*'''Do''' browse questionable websites from inside a virtual machine.

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

Wallet Security Dos and Don'ts (Windows)

2011-06-27T12:09:17Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send unencrypted copies of your wallets over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' keep your computer switched on overnight.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use anywhere else on the web.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a USB stick that you insert into machines of friends, at work, or while traveling.

*'''Do''' keep at least one offline savings wallet.

*'''Do''' backup your active wallet regularly.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use keyfiles to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date.

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the NoScript plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine.

*'''Do''' browse questionable websites from inside a virtual machine.

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromised, '''do''' wipe your HD and perform a clean OS install.

Wallet Security Dos and Don'ts (Windows)

2011-06-27T11:18:54Z

Forever:

*'''Don't''' keep all your bitcoins in one wallet.

*'''Don't''' send bitcoins to a wallet that hasn't been backed up ''beforehand''.

*'''Don't''' send unencrypted copies of your wallet over the Internet.

*'''Don't''' store unencrypted copies of your wallets on online backup/storage services.

*'''Don't''' run or install programs from questionable sources on the system where you are running bitcoin.

*'''Don't''' click on questionable links in your browser.

*'''Don't''' run bitcoin on an untrusted or badly maintained machine.

*'''Don't''' keep your computer switched on overnight.

*'''Don't''' install unnecessary browser plugins.

*'''Don't''' use a password for wallet encryption that you use anywhere else on the web.

*'''Don't''' forget your passwords. If you write them down on a piece of paper, keep that piece of paper in a safety deposit box.

*'''Don't''' store unencrypted copies of your wallets on a USB stick that you insert into machines of friends, at work, or while traveling.

*'''Do''' keep at least one offline savings wallet.

*'''Do''' backup your active wallet regularly.

*'''Do''' keep encrypted backups of all your wallets in at least 3 physically separate locations.

*'''Do''' use strong, unique passwords to encrypt your wallets.

*'''Do''' use keyfiles to encrypt your wallets, and keep backups of your keyfiles in at least 3 physically separate locations.

*'''Do''' use a good antivirus and firewall, and keep them up to date.

*'''Do''' update all your installed programs to the latest version.

*'''Do''' update your operating system with the latest security patches.

*'''Do''' uninstall all programs that you don't use regularly.

*'''Do''' uninstall all browser plugins/ add-ons that you don't use regularly.

*'''Do''' always browse in private mode.

*'''Do''' use the NoScript plugin (or similar) in your browser and whitelist only the sites you trust.

*'''Do''' run programs from questionable sources (eg. pirated software) inside a virtual machine.

*'''Do''' browse questionable websites from inside a virtual machine.

*If you own a large number of bitcoins, '''do''' invest time and money in order to secure them, just like you would with other valuables. If you lack the technical expertise, ask or pay somebody else to do it for you.

*If you believe your computer has been compromized, '''do''' wipe your HD and perform a clean OS install.