How to use the Bitcoin peer-to-peer currency on a PC and Android mobile phone

Bitcoin is a relatively new development that is starting to revolutionise the way people are able to transfer currency. It does away with banking transactions and any other third party interference that traditionally gets in the way of one person wishing to send some currency to somebody else with as little fuss (or cost) as possible.  In the same way that peer-to-peer (p2p) file sharing works, Bitcoin is decentralised, meaning there is no central organisation controlling Bitcoin. All the transactions made with Bitcoin are processed purely by the distributed community of Bitcoin users themselves.  But you don’t need to understand how that works. It just works.

So, to use Bitcoin, you’ll firstly need a Bitcoin client.  On personal computers running Windows, Ubuntu, Linux and Mac operating systems visit the Bitcoin website and you’ll find a download in your preferred flavour.  This program is effectively your Bitcoin Wallet. This is why it is incredibly important to make sure the database files that the program uses are backed up and secured.

Once you’ve installed, the program will need to synchronise the Block Chain, which is the database containing all the transactions across the network of Bitcoin users. The first time you run Bitcoin this will take a while so be patient.  While it’s catching up one of the first things you’ll notice is your Bitcoin address – a long stream of random looking characters.  This is the address which you can give to other people so that they can send you payments.

If you intend to send someone else a Bitcoin payment you’ll fist need to load-up your Bitcoin wallet with some Bitcoins (BTC’s). To do this it’s much like any other currency transaction.  There are a whole range of Bitcoin currency exchanges.

You can check my guide to Getting Started With Bitcoin to find out exactly how this process works.  There is also a fantastic walk-through guide at www.sovereignbitcoin.com that explains everything you need to know to start using Bitcoin in a lot more details than I’ve mentioned here.

Within  a few seconds you should see the funds appear in your Bitcoin wallet.  You’ll notice that to the left of the transaction details in the Status column some numbers will begin slowly counting up.  This is the transaction being confirmed by the other users’ on the network.  Once this number reaches 6 you can be fairly sure that the transaction is legit and the transaction is complete.

Once you’ve received funds you will see the Balance reflect whatever you have in the Bitcoin wallet.  Once you have something there you can, of course, send funds to another user.  All you will need is their unique Bitcoin address.  As long as you’re using the same wallet you can continue to use the same address or the program will issue  you with a new unique Bitcoin address for every new transaciton (this can be useful if you need to tie up orders with transactions).

Bitcoin really comes into it’s own if you install it on your smartphone.  I tried out Bitcoin Wallet which worked perfectly for me.  If two people with Android smartphones want to exchange some currency they can simply use the software to produce a QR code which the other person scans in using the phone’s camera as a barcode scanner, which makes it a lot easier than typing in the long stream of characters in the unique Bitcoin address. Just point the phone and click. A few seconds later you’ll hear “kerching!” and the transaction is done.