Bitcoin is a decentralized P2P electronic cash system without a central server or trusted parties. Users hold the cryptographic keys to their own money and make transactions directly with each other, with the help of the network to check for double-spending. Bitcoins, usually denoted by BTC (i.e. '144 BTC'), can also be exchanged for traditional currencies like US dollars.
The Bitcoin network runs on peer-to-peer networking, digital signatures and cryptographic proof to make and verify transactions. Nodes broadcast transactions to the network, which records them in a public record of all transactions, called the block chain. A block is a record of some or all of the most recent Bitcoin transactions that have not yet been recorded in any prior blocks. In order to preserve the integrity of the block chain, each block in the chain confirms the integrity of the previous one, all the way back to the first one, using hashing.
New bitcoins are generated by the network through the process of mining. Mining involves inserting a new block into the current block chain, this is difficult because it requires generating a valid hash (in this case a large integer).
A variation in difficulty is achieved by requiring that this integer is below a certain threshold - the data in the block is perturbed by a nonce value, until the data in the block hashes to produce an integer below the threshold - which takes a lot of processing power. The threshold is set by the number of people currently mining for bitcoins so as to achieve a general speed of about 1 block every 10 minutes.
The official Bitcoin application can be installed with the official repositories.and packages, available in the
How to get Bitcoins?
There are a variety of ways to acquire bitcoins:
- Accept bitcoins as payment for goods or services.
- There are several services where you can trade them for traditional currency.
- Find someone to trade cash for bitcoins in-person through a local directory. To find traders near you, you can use bitcoin.local or a bitcoin map.
- Participate in a mining pool.
- If you have very good hardware, you can solo mine and attempt to create a new block (currently yields 25 bitcoins).
The basic concept of Bitcoin mining is that there's a little chunk of each block that contains meaningless random data. Bitcoin miners take all the data in the current top block, shuffle up that random chunk and calculate the hash of the whole thing, repeating this until they obtain a valid block. While hashes are easy to reproduce, they're impossible to predict and they seem to function completely randomly, so the miner has no way of predicting what chunk of random data will produce what hash.
Mining requires the use of a miner, which is program used compute the required hashes and thus to create Bitcoins. To learn more about mining please read this article.
There are several Bitcoin miners in the AUR:
- Bitcoin CUDA — Version of the official Bitcoin daemon with CUDA support (for Nvidia GPUs).
- http://www.bitcoin.org/ || AUR
- CGMiner — Multi-threaded multi-pool CPU and GPU miner.
- cpuminer — Multi-threaded CPU Miner.
- http://yyz.us/bitcoin/ || AUR
- Phoenix Miner — Efficient, fast, modular, python-based, OpenCL GPU miner.
Sample config file
An example of a configuration file for bitcoin-qt can be seen below. Make sure to set the mode of the file to
# chmod 600 ~/.bitcoin/bitcoin.conf
# bitcoin.conf configuration file. Lines beginning with # are comments. # Network-related settings: # Run on the test network instead of the real bitcoin network. #testnet=1 # Connect via a socks4 proxy #proxy=127.0.0.1:9050 # Use as many addnode= settings as you like to connect to specific peers #addnode=18.104.22.168 #addnode=10.0.0.2:8333 # … or use as many connect= settings as you like to connect ONLY # to specific peers: #connect=22.214.171.124 #connect=10.0.0.1:8333 # Do not use Internet Relay Chat (irc.lfnet.org #bitcoin channel) to # find other peers. #noirc=1 # Maximum number of inbound+outbound connections. #maxconnections= # JSON-RPC options (for controlling a running Bitcoin/bitcoind process) # server=1 tells Bitcoin to accept JSON-RPC commands. #server=1 # You must set rpcuser and rpcpassword to secure the JSON-RPC api #rpcuser=user #rpcpassword=password # How many seconds bitcoin will wait for a complete RPC HTTP request. # after the HTTP connection is established. rpctimeout=30 # By default, only RPC connections from localhost are allowed. Specify # as many rpcallowip= settings as you like to allow connections from # other hosts (and you may use * as a wildcard character): #rpcallowip=10.1.1.34 #rpcallowip=192.168.1.* # Listen for RPC connections on this TCP port: rpcport=8332 # You can use Bitcoin or bitcoind to send commands to Bitcoin/bitcoind # running on another host using this option: rpcconnect=127.0.0.1 # Use Secure Sockets Layer (also known as TLS or HTTPS) to communicate # with Bitcoin -server or bitcoind #rpcssl=1 # OpenSSL settings used when rpcssl=1 rpcsslciphers=TLSv1+HIGH:!SSLv2:!aNULL:!eNULL:!AH:!3DES:@STRENGTH rpcsslcertificatechainfile=server.cert rpcsslprivatekeyfile=server.pem # Miscellaneous options # Set gen=1 to attempt to generate bitcoins gen=0 # Use SSE instructions to try to generate bitcoins faster. For muliple core processors. #4way=1 # Pre-generate this many public/private key pairs, so wallet backups will be valid for # both prior transactions and several dozen future transactions. keypool=100 # Pay an optional transaction fee every time you send bitcoins. Transactions with fees # are more likely than free transactions to be included in generated blocks, so may # be validated sooner. paytxfee=0.00 # Allow direct connections for the ‘pay via IP address’ feature. #allowreceivebyip=1 # User interface options # Start Bitcoin minimized #min=1 # Minimize to the system tray #minimizetotray=1
There are other clients available for BitCoin.
- Armory — Client with features for advanced users. It uses information from the satoshi client (bitcoin-qt) for communication with the bitcoin network.
- https://bitcoinarmory.com/ || AUR
- MultiBit — Light-weight client that focusses on being fast and easy to use.
- https://multibit.org || AUR
- Electrum — Light-weight client that relies on cloud servers to scan the blockchain.
- http://electrum.org/ || AUR