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Revision as of 13:51, 23 May 2012 by Gmaxwell (talk | contribs) (Do I need to configure my firewall to run bitcoin?)
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Here you will find answers to the most commonly asked questions.



What are bitcoins?


How can I get Bitcoins?

There are a variety of ways to acquire Bitcoins:

  • Accept Bitcoins as payment for goods or services.
  • Create a new block (currently yields 50 Bitcoins).
  • Participate in a mining pool.

Does Bitcoin guarantee an influx of free money?


A) Some sort of online 'get-rich-quick' scam.

B) A loophole in the market economy, the installation of which guarantees a steady influx of cash.

C) A sure investment that will almost certainly yield a profit.


Is Bitcoin a 'get-rich-quick' scheme?

If you've spent much time on the internet, you've probably seen many 'get-rich-quick' plans advertised on sites such as craigslist. These ads usually promise huge profits for a small amounts of easy work. Such schemes are usually pyramid- and matrix-style schemes that make money from their own employees and offer nothing of any real value. Most convince one to buy packages that will make them earn hundreds a day, which in fact have the buyer distribute more such ads, and make minute profits.

Bitcoin is in no way similar to these sorts of scams. Bitcoin doesn't promise windfall profits, and there is no way for the developers to make money from your involvement, or to take money from you. That the Bitcoin is nearly impossible to acquire without the owner's consent represents one of its greatest strengths. Bitcoin is an experimental, virtual currency; none of its developers expect to get rich off of it.

A more detailed answer to this question can be found here.

Will I make money by installing the client?

Most people who use Bitcoin don't earn anything by doing so, and the default client has no built-in way to earn Bitcoins. A small minority of people with dedicated, high-performance hardware do earn some Bitcoins. by mining with special software, but joining Bitcoin shouldn't be construed as being the road to riches. Most Bitcoin users get involved because they the find the project conceptually interesting, and don't earn anything by doing so. This is also why you won't find much speculation about the political or economic repercussions of Bitcoin anywhere on this site: Bitcoin developers owe their dedication to the project's intellectual yieldings than more than to those of a monetary nature. Bitcoin is still taking its first baby steps; it may go on to do great things, but right now it only has something to offer

As an investment, is the Bitcoin a sure thing?

Bitcoin represents a brand new and risky concept, the value of which is not backed by any formal entity. As a young and unestablished currency, it is only worth something because people are willing to trade it for goods and services. A quick glance at the Mt. Gox exchange reveals that the Bitcoin's worth still fluctuates often, and wildly; it lacks wide acceptance and is still vulnerable to a small-disturbances. Hacked accounts can still trigger major sell-offs, and fluctuations can transform into positive feedback loops that destabilize the entire network. Anyone who puts money into Bitcoin runs the severe risk of losing all of it. As Bitcoin becomes better known and more widely accepted, it should stabilize, but right now, and for some time to come, it will remain unpredictable. Any investment in Bitcoin represents a highly insecure strategy.

It is people who take risks, and trade things with intrinsic value for Bitcoins, who give it value. For Bitcoin to become an accepted currency, users will have to go out on limbs, and be prepared to take smalls losses. However, Bitcoin is far from stable and probably will not be anytime in the near future, and no one should invest in it funds they cannot afford to lose. Ultimately, Bitcoin is a currency, and is intended for trade, not investment.

Can I buy Bitcoins with Paypal?

It is possible to buy physical Bitcoins with PayPal. It is much more difficult to buy digital Bitcoins with PayPal, because of the chargeback risk to the seller. Sales of physical goods present a lower risk than sales of digital ones.



Where can I find a forum of Bitcoin users?


How are new Bitcoins created?

File:Total bitcoins over time graph.png



What's the current total number of Bitcoins in existence?

Current count. Also see Total Bitcoins in circulation chart


How divisible are Bitcoins?


What do I call the various denominations of Bitcoins?


  • 1 BTC = 1 Bitcoin







How does the halving work when the number gets really small?




How long will it take to generate all the coins?











Learn more about Scalability.






Is Bitcoin a bubble?


Is Bitcoin a Ponzi scheme?




Doesn't Bitcoin unfairly benefit early adopters?











For more information, see the Deflationary spiral page.

What if someone bought up all the existing Bitcoins?





That the block chain cannot be easily forced represents one of the central security mechanisms of Bitcoin. Given the choice between two blocks chains, Bitcoin miner always chooses the longer one -that is to say, the one with the more complex hash. Thusly, it ensures that each user can only spend their Bitcoins once, and that no user gets ripped off.

As a consequence of the block chain, there may at any time be many different sub-branches, and the possibility always exists of a transaction being over-written by the longest branch, if it has been recorded in a shorter one. The older a transaction is though, the lower its chances of being over-written, and the higher of becoming permanent. Although the block chain prevents one from spending more Bitcoins than he has, it means that transactions can be accidentally nullified.


Bitcoin will always choose the longer Block Chain and determines the relative length of two branches by the complexities of their hashes. Since the hash of each new block is made from that of the block preceding it, to create a block with a more complex hash, one must be prepared to do more computation than has been done by the entire Bitcoin network up to that point. Needless to say, such an undertaking would require an incredible amount of processing power and since Bitcoin is continually growing and expanding, it will only require exponentially more with the passage of time.




Sending and Receiving Payments













The latest version of the Bitcoin-Qt client will tell you how far it has to go yet in downloading the blockchain. Hover over the icon in the bottom right corner of the client to learn your client's status.



Bear in mind that if the transaction is based on a coin that was in a recent transaction then it could be considered a low priority transaction take longer to transfer if the transaction fee paid isn't high enough. Very low priority transactions with 0 fees might take hours or days to be included in a block.

Why does my Bitcoin address keep changing?


How much will the transaction fee be?



In cases where a fee is required it is required because your transaction objectively looks like a denial of service attack to the bitcoin system, either due to it being burdensome to transmit or it recycles bitcoins you recently received. The wallet software attempts to avoid generating burdensome transactions, but it isn't always able if the funds in your wallet are new or are composed of many very tiny payments.

Because the fee is related to the amount of data that makes up the transaction and not to the amount of bitcoins being sent, the fee may seem extremely low (0.0005 BTC for a 1,000 BTC transfer) or unfairly high (0.004 BTC for a 0.02 BTC payment, or about 20%). If you are receiving tiny amounts (e.g., as small payments from a mining pool) then fees when sending will be higher than if your activity follows a more normal consumer or business transaction pattern. As of bitcoin 0.5.3 the required fee it will ask for will not be higher than 0.05 BTC, though for most users there is usually no required fee at all and 0.0005 is the most common when one is required.



The coins that were sent to you when the client was not running will later appear as if they were received in your wallet when you later launch the client. It will download blocks and catch up with any transactions it didn't already have.

How long does "synchronizing" take when the bitcoin client is first installed? What is it doing?

The popular bitcoin client software from implements a "full" bitcoin node: It can carry out all the duties of the bitcoin P2P system, it isn't simply a "client". One of the principles behind the operation of full bitcoin nodes is that they don't trust that the other participants have followed the rules of the bitcoin system. During synchronization the software is processing historical bitcoin transactions and making sure for itself that all of the rules of the system have been correctly followed.

In normal operation after synchronizing the software should use a hardly noticeable amount of IO, CPU, or network capacity.

The initial validation is very disk IO intensive so the amount of time to synchronize depend on your disk speed and, to a lesser extent, your cpu speed. It can take anywhere from a few hours to a day or so. You can use the software while this process is going on, but you may not see recent payments to you until the synchronization has caught up to the point where those transactions happened.

If this is too long for you, you can download a pre-synchronized blockchain from Alternatively, you can try an alternative "lite" client such as Multibit or a super-light client like electrum though these clients have somewhat weaker security, are less mature, and don't contribute to the health of the P2P network.


Do I need to configure my firewall to run bitcoin?

Bitcoin will connect to other nodes, usually on tcp port 8333. You will need to allow outgoing TCP connections to port 8333 if you want to allow your bitcoin client to connect to many nodes. Testnet uses tcp port 18333 instead of 8333.

If you want to restrict your firewall rules to a few ips, you can find stable nodes in the fallback nodes list.

How does the peer finding mechanism work?

Bitcoin finds peers primarily by forwarding peer announcements within its own network and each node saves a database of peers that it's aware of for use in the future. In order to bootstrap this process Bitcoin needs a list of initial peers, these can be provided manually but normally it obtains them by querying a set of DNS domain names which have automatically updated lists, if that doesn't work it falls back to a build-in list which is updated from time to time in new versions of the software. There is also an IRC based mechanism but it is disabled by default.


What is mining?



Is mining used for some useful computation?


Is it not a waste of energy?






 nonce = 1
 hash = SHA2( SHA2( payload + nonce ) )











Could miners gang up and give themselves money?





Of course, the real question is:


Bitcoin isn't infallible. It can be cheated. But doing so is extremely difficult. Bitcoin was designed to evade some of the central problems with modern currencies – namely, that their trustworthiness hinges upon that of people who might not have user's best interests in mind. Every currency in the world (other than Bitcoin) is controlled by large institutions who keep track of what's done with done with it, and who can manipulate it's value. And every other currency has value because people trust the institutions that control them.


Nonetheless, there are a few ways that one can acquire Bitcoins dishonestly. Firstly, one can steal private keys. Key theft isn't something that Bitcoin security has been designed to prevent: it's up to users to keep their's safe. But the cryptography is designed so that it is completely impossible to deduce someone's private from their public one. So long as you keep your private key to yourself, you don't have much to worry about. Furthermore, one could theoretically create a new block chain, but due to the way in which the block chain is constructed, this would be extremely difficult and require massive amounts of processing power. A full explanation of the difficulties involved can be found in the block chain article.

Bitcoin can be ripped off – but doing so would be extremely hard and require considerable expertise and a staggering amount of processing power. And it's only going to get harder with the passage of time. Bitcoin is isn't impenetrable, but it's close enough to put any real worries in the peripherals.

Could miners fundamentally change the nature of Bitcoin?

Once again, almost certainly not.


And thus, it is more or less impossible for any person to change the function of Bitcoin to their advantage. If users don't like the changes, they won't take, and if uses do like them, then they'll help everyone equally. Of course, one can conceive of a situation where someone manages to get a change pushed through that provides them with an advantage that no one notices, but given that Bitcoin is structurally relatively simple, it is unlikely that any major changes will go through without someone noticing first.

The fact that such changes are so difficult to make testifies to the fully distributed nature of Bitcoin. Any centrally-controlled currency can be modified by its central agency without the consent of its adherents. Bitcoin has no central authority, so it changes only at the behest of the whole community. Bitcoins development represents a kind of collective evolution; the first of its kind among currencies.


I'd like to learn more. Where can I get help?

See Also