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Acquiring Bitcoins in Your Wallet

On the Receive tab (see Figure 2-7), you should see a list of several Bitcoin-receiving addresses.

The Receive tab

Figure 2-7: The Receive tab

You can share these addresses with your friends so they can send you some starting bitcoins—one way to acquire bitcoins! At this point, if you want to put significant money into bitcoins, refer to Chapter 4 where we discuss how to do this in detail (but be sure to first read Chapter 3, for security reasons).

To get a small quantity of bitcoins into your wallet—whether from a friend or from a site listed on newbiecoins.com/—you'll have to give that friend or website one of your public Bitcoin addresses. At the time of this writing, a small amount of Bitcoin for testing would be about 0.5 milli-bitcoin (mBTC). If at the time you are reading, 0.5 mBTC is a lot of money, then feel free to use a smaller amount. A few minutes after your friend (or the site) sends these coins, you should see a balance of 0.5 mBTC in your Electrum wallet. (Actually, your balance will usually update instantaneously.) Well done! You now own bitcoins, which enables you to look into your future! How? Read on.

Importing private Bitcoin keys into a wallet can be hazardous. You should only import money using private keys when small sums of money are involved, and never use this method as part of a strategy for managing larger sums of money unless you're an advanced bitcoiner. The comic at the end of this chapter illustrates why working with raw private Bitcoin keys can be very dangerous.

Spending Bitcoins with Your Wallet

Although thousands of merchants now accept bitcoins, you can't buy much with 0.5 mBTC. You'll need to scour the Internet for good deals!

Alternatively, for the deal of the century, you can have your fortune read online for the low, low price of 0.1 mBTC.

Visit befuddled.org/ to access our fortune-telling website, which we've linked directly to a crystal ball. When you send 0.1 mBTC to the server's Bitcoin address, the server transmits a fortune request to the crystal ball, and it predicts your future.

To get your fortune, use Electrum's Send function and paste the website's Bitcoin address into the Pay to field. In the Amount field, specify 0.1 mBTC (if your units are set to BTC, enter 0.0001; change the default units by choosing Tools ►Preferences ►Base Unit). Bitcoin transactions also require a fee. In the Fee field, enter 0.1 mBTC as well (this amount may be more than is necessary, but let's not worry about that for now). Your screen should look something like Figure 2-8.

Sending bitcoins through Electrum

Figure 2-8: Sending bitcoins through Electrum

When you click Send, Electrum asks for your password and then confirms that the transaction has been transmitted. Almost immediately, you should see your fortune on the website. Welcome to the future! You've just made your first Bitcoin transaction!

Electrum's History section shows you the transactions you've made in the past. Transactions that display the word pending are not yet recorded on the Bitcoin public ledger (which typically occurs about 10 minutes after a transaction is sent).

If you're not interested in your fortune but want to practice sending bitcoins, you'll be pleased to know that many charities and nonprofit organizations now accept bitcoins. Some provide food for the homeless, defend online privacy rights, and support open source software (including Bitcoin). By searching online, you'll find numerous nonprofit organizations that have posted a Bitcoin address. We recommend giving your free mil-libitcoins to Sean's Outpost, a charity that feeds the homeless in Pensacola, Florida (its donation Bitcoin address can be found on its website, seansoutpost.com/). Unlike with the fortune-telling website, you might not

receive a response from the website when you donate. But rest assured that the recipients have accepted your bitcoins if Electrum's History section displays the word confirmed. (Sometimes the confirmation status is indicated by a small dial icon or more than one confirmation is given for the transaction.)

You might be wondering how and where Electrum got a Bitcoin address. The answer is your Bitcoin wallet program.

Bitcoin Addresses Generated by Your Bitcoin Wallet Program

When you run a Bitcoin wallet program, it can generate a new Bitcoin address for you offline. No communication with the Bitcoin network is necessary, an unusual feature that surprises many people. With other addresses or numbers, for example, when you create a new email address, you must first find out whether the address is being used by someone else. The same is true when get a new phone number or when you open an account at a bank. However, when you want a new Bitcoin address, one is chosen at random from all of the possible Bitcoin addresses. What are the odds that a Bitcoin address randomly generated for you will be the same as one generated by someone else? We'll use an analogy: Consider all the grains of sand on Earth—from all the beaches and deserts. When you choose a single grain at random to be yours and another person chooses a grain of sand at random to be his, the odds that both of you would choose the same grain of sand would be over a trillion times more likely than the odds that you both generate the same Bitcoin address.[1]

While you can create Bitcoin addresses offline, you must be online to see how much money is in your addresses or to send money to others. That's because these additional actions require you to access the public ledger of Bitcoin, which we'll discuss next.

  • [1] Odds of a trillion times more likely are still a dramatic understatement. The possible value of Bitcoin addresses is 2160 (~1048), and the number of grains of sand on Earth is approximately 1019.
 
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