Let's try this. This thread is for any questions that are not easily googleable that people want to ask. Newfriends and oldfags all welcome, no bullying allowed. I'll start.
If Bitcoin is decentralized, where does its dev team come from? I get the forks cause random people decided to go ahead and create the new coins, but what about the core dev team? Where did they come from? Did Satoshi give them dev rights directly or what?
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>If Bitcoin is decentralized, where does its dev team come from?
they are the ones who maintain the public repository and accepts pull requests yada yada
once the repository is updated, its only a matter of time for the changes to take effect on the blockchain, since everyone will eventually update to the new release
think of the update propagation as a ripple effect or some cliche shit like that
When a fork happens, who decides who to get to keep the name "bitcoin"?
Can a forked project merge after it has forked if they find common ground?
i'd expect that the origin keeps the name after a fork since a fork by itself is independent of the origin
you dont really merge the origin with a fork, you can add the fork as a remote and merge the changes form there
Can someone explain to me just what the fuck a 'node' does - do they process the payments?
This is totally different from a 'miner' which unlocks new blocks, yes? Nodes and Miners are totally unrelated, yes?
What he hell does "proof of stake" mean, like as I understand Proof of Work needs to have a consensus that the cipher provided is correct, which makes sense, since there is only one correct answer you can't fudge/fake it. But what is "proof of stake", it's proof that I made a claim - but I don't have to 'work' for it? What is this incentivizing?
Also, is there any foreseeable reason why after the Hard Fork a large number of miners would stick with the old blockchain/protocol? Since it's an opt in, doesn't that mean it might be more, uhhh, desirable to just not change anything?
Bitcoin is simply the chain with the most accumulated work, so miners decide.
How can LINK be decentralized if you have to acquire data from an Oracle, which is usually connected to a centralized source?
Do you basically just multiply the number of oracles? How is this much better?
A node is someone that transmits the data to the block chain for a miner to mine. They also hold the ledger database so it can be referred to by others and more nodes and be made off it. After which the newly made node would check with other nodes that it is correct which allows it to interact with the network.
What makes a forked coin more desirable is it’s payout for being mined. This is why BTC as we know it is going to start having issues. Big miners with lots of ASIC power have formed a monopoly on BTC core, so in order to stick with the original vision and keep it decentralized, BTC was forked BCH was created. This fork allows difficulty adjustment so that a monopoly on mining is far harder to obtain.
Proof of work means you discovered the answer to the current block. Since you have the answer, and have proved that the transaction really took place, you are rewarded with the gas fee.
From my understanding there are 3 things make ChainLink decentralized:
1. able to query multiple sources (if multiple sources exist) and aggregate the result
2. able to query the same source from multiple oracles, now you no longer have to trust one oracle, but you only have to trust the source
3. people unaffiliated with ChainLink will run their own oracles within the system, because there exists an economic incentive to do so, thus making it decentralized as more parties are involved rather than one company
Multiple oracles can now provide the same data. You can choose to retrieve that data from them with link tokens. The more link tokens they have, the more reputable the source is. LINK will take a few years to take off, but it will truly revolutionize the way smart contracts interpret data. Instead of only working with erc-20 tokens, methods for sending and receiving can now be called from external sources like the swipe of a credit car in Walmart.
While many link supporters are complete autists, they are right. Chainlink will do amazing things for the industry.
So to answer your question about proof of stake, that pretty much means that instead of reward for mining going to the miners, it now goes in proportional amounts to token holders/people who have mined the token initially.
Proof of Stake is like implementing a Token cap.
>Do you basically just multiply the number of oracles? How is this much better?
The argument is that what happens is by having a whole bunch of "Oracles', randomly selected (this is important), it means you can trust that the Smart Contracts conditions were met. It's sort of like getting independent authentication in - by randomizing the selection of these Oracles (decentralizing them) it means you'd have to control like well over half of the oracles to manipulate payments, since it's consensus based anyway, even then there's no certainty because what if your manipulated fake Oracles only make up 4/10 of the Oracles chosen? Then you're the odd one out - so it rewards truth telling.
Of course this doesn't "Solve" the Oracle problem, because the one of the key selling point with Chainlink was meant to be that it provides an interface for taking external data from off the blockchain - now - how can you be sure that external data is trustworthy?
Yes, it means it's virtually impossible to cheat a smart-contract when it is end-to-end within the Chainlink blockchain, but it's only as trustworthy as the blockchain it depends on.
Thanks.
>What makes a forked coin more desirable is it’s payout for being mined
So it's incentivizing the smaller miners?
>This fork allows difficulty adjustment so that a monopoly on mining is far harder to obtain.
Is that algorithmically or randomly adjusted? Ya know, to make it unpredictable and therefore not giving the big miners an advantage?
So, with POW was it that only the miner that completed the block got the transaction fee/gas? But POS means that everybody who worked out part of it gets a slice? How does that deal with duplicate work?
Sorry if I'm not getting something that should be simple. You're doing a good job of explaining things I reckon.
It incentivezes it by making ASIC less affective essentially is what the goal will be.
I’m not sure how they decide to make a difficulty change. I imagine it’s through another fork.
Think of proof of work as a reason to obtain the coin, and proof of stake as a reason to hold it. Holding the coin in proof of stake is like mining the coin in proof of work.
Once ETH implements proof of stake, it’s going to grow. Especially once more people understand what ETH actually is and what it can provide. As well as what LINK can provide.
Why do people trust hardware wallets? What's stopping someone from designing malware to attack it?
If a company makes more cars or achieves higher sales than Ford, do they become Ford?
If someone changes the board of Chess to a 36 by 36 board, is that game still called chess?
The original keeps the name.
Why do DASH and XEM have billion market caps yet no one ever discusses them it's like they don't exist
This isn’t true in the case of a fork.
Only thing stopping other people from becoming Ford is patents and ownership. No one owns the concept of bitcoin, and if everyone decides to use something else instead. Like BCH, then it becomes bitcoin.
If you are talking about the ticker symbol BTC then you are correct. However pairs will just be rematches is a flippening occurred because the new coin is worth the most trade volume to exchanges.
Because all innovation is coming from the team working on Bitcoin Core, DASH and XEM bring nothing new to the table.
Basically they're just scams suckers buy in thinking it'll be the next big thing.
- Miners are the supply.
- Users are the demand.
- Nodes specify what the users are demanding.
- Miners work to fulfill that specification.
This is an awesome way to explain it.
In case Bcash becomes the #1 valuable coin, it won't be Bitcoin. Same goes for Ethereum. They will still go by their own name. Sure they could dethrone Bitcoin, but they can't become Bitcoin.
You’re still talking about the ticker. But if thinking of it that way makes the most sense for you then so be it.
How can something that does not abide by Bitcoin's consensus mechanism become Bitcoin?
How can Bitcoin ever become Bcash if it doesn't abide by its' consensus?
The idea of bitcoin is decentralized peer to peer cash. If another coin achieves consensus and the miners start mining it then consensus is that it is bitcoin.
You’re thinking about the names exchanges have applied too hard. In a way you’re right. BTC will always be listed as BTC on exchanges, even if it is dead one day.
short answer, Veeky Forums is retarded.
XEM is really popular in Japan (+ asia). 2nd biggest coin with active use cases within business and local government. People rarely talk about it because it's an "old" project with a high coin cap and low recorded** daily trade volume.
Japanese exchanges don't list trade volume numbers, they are estimates highlighted by ** on coinmarketcap.
It also has no real marketing. It has only just (like 3 years into it's life as a top 10 crypto?) revamped it's website, opened a new crypto office in Malaysia and put aside a marketing budget. It never tried to bang the hype drum, especially not in the west.
I'd recommend looking into it. It's a solid platform about to receive a very serious rewrite, Catapult. If it wasn't for Veeky Forums's aversion to high coin volume projects, they'd probably like it considering the boners they got over ETH and now LINK.
If Linux gets more users than Windows the consensus is that Linux is now Windows?
Windows will still be Windows even when nobody uses it anymore. Linux will still be Linux.
Windows 98 is still Windows 98, Windows 10 Vista is Windows Vista.
Bitcoin is Bitcoin
Bitcoin Cash is Bitcoin Cash
B2X is B2X
Okay well clearly you don’t have a high enough IQ to understand so whatever helps you to sleep at night bud. Good luck.
Bitcoin is an idea/protocol to hold value safely. Once you realize that, you’ll understand.
>XEM bring nothing new to the table.
>because Veeky Forums is retarded
Yea, see?
Bitcoin is an idea/protocol to hold value safely, if someone has an idea/protocol that does it even better it's still Bitcoin? Got it.
Bitcoin isnt a title you fucking imbicile
How do I get into crypto?
Oh I did some reading off-chan, so POS means that you get more 'weight' when you act in consensus with everyone, a malicious monopolous miner would vote against everyone (to confirm their fraudluent doublespends) and gradually diminish their credibility (losing their weight) more and more over time which means they need to get even more equipment, spend more power/money to manipulate.
Yes?
>Why do people trust hardware wallets?
Nothing is totally safe, but put it this way - if you were to rob someone would you go house to house robbing for petty cash, or would you rob the supermarket just before they put the money in the safe?
Hardware wallet is safer.
Cleared up some things but still a little confusing, I still not sure I understand what a Node does (I think I do, but I'm not sure) - it keeps a duplicate of the ledger, or potentially a partial duplicate, and confirms new additions, yeah?
thanks.
Didn't this happen to Jefferson Airplane/Starship?
Thinking as a clueless 2X CEO: “So all we need to do is have miners mine a few days and everyone will call 2X Bitcoin.”
The chain with most accumulated difficulty IS Bitcoin, but only if it falls within the current rules of consensus and 2X breaks consensus.
Core nodes will just reject the invalid blocks that 2X miners generate and ~96% of all nodes are Core nodes. The majority of the 2X nodes are run on AWS.
Stay poor.
what is mining, basically?
bitcoin is the only coin with this problem. the dev space is such a fucking shitshow that they never have consensus on their forks, it's all politics.
when a regular coin hard forks it's simply a software upgrade, the minority chain dies off shortly after. with bitcoin everyone fucking hates each other and wants their own fork. this leads the users into thinking the forks are "free money" and the deluded bitcoiners still think they have a "deflationary" and "immutable" chain.
that's why this question is not answerable, this is the first time in the history of cryptos that no one knows what's going to happen, and the reason is fucking politics. logic dictates that the coin with the most proof of work will be bitcoin though.
giving processing power to people, dont bother with it unless you have an hangar filled with graphic cards tho
what are you even talking about? how does recongnizing that for example, link getting pumped to 500 billion market cap tommorow wont make it bitcoin mean i have to stay poor? you do realize that "name" and "title" mean different things right?
I've been waiting to find a thread like this for days!
PLEASE RESPOND NEW FRIENDS.
I come from Veeky Forums. I am very happy with my lifestyle as a volunteer migrant worker using organisations like Helpx and Workaway to travel through Europe. My true passion is reading and writing, I adore these things and live for them, and this lifestyle gives me eight hours a day to live my happiness.
I also have £1000 stagnating in my bank which I wont touch for over a year. A friend told me about bitcoins back in September... I said it sounded good and was willing to stake some cash. I didn't because I was scared and have no experience. You guys know they've doubled since then.
Cryptocurrency trading has really spiked my interest, as something fun to do. I want to join you guys. Problem is, I am super sceptical by nature, and come from a working class family with no exposure to trading or investment. Like I said, I've been researching the ins and outs of this game and am willing to put up £500 fun money to give it a shot.
Would a kind user please be able to lay out the following:
which coin exchange network I should use as a beginner?
which phone apps/websites should I use to track market changes?
where and what exactly are wallets, and how do I use them to securely manage my money?
It would mean so much. I want in. Thanks.
>Bittrex
>download blockfolio
>You better be holding 1000 in your exchange, it's not worth to pay the withdrawal costs over.
In order to trade your local currency for Bitcoin you the exchange is most likely going to require KYC, or know your customer. I am not sure what exchanges will accept you, but you can try Bittrex. Bittrex has the best variety of coins to buy. Alternatively you can buy Bitcoin locally, face to face, with cash. Exchanges won't require much information from you if you are only trading coins for other coins (an not depositing cash).
CoinMarketCap is a good website to keep an eye on coins. Blockfolio is a phone app that will keep track for you once you tell it how much coin you own.
A "wallet" is just like an "account" you have with a bank. Two parts to a wallet though. The "public" key which is what you will give to people/exchanges so that they can send you coin. It's like your account number. The "private" key is the other part of your wallet, and you will NEVER give that key out. The private key is only used if you want to send coins to someone else. There are some wallets that will hold multiple types of coins (Jaxx, exodus) but most of the time you have to have a separate wallet for each type of coin (Bitcoin, Ethereum, etc). Whatever wallets you choose, the first thing you need to do after sending coins to them is BACK THEM UP.
This is why I hate Veeky Forums. Look at that wall of text. Look at that description. You keep talking about yourself when it should be clear no one cares about your passion or whether or not you are skeptical about what we do.
You think you're an intellectual and that everyone will want to read your inane bullshit yet you are wasting my time with all that fluff while not being able to sort out the most basic questions in the cryptospace. What an absolutely insufferable cunt. I'd punch you in the face if I could.
Wont we see a new pump season for 2-3 years?
Is bitcoin TRULY independent of a stock / housing market crash? Could you see a dip, or rather the opposite like gold in 2008.
Wow you are an awful person.
Serious question, because of OPs pic:
What would happen if I ate silica gel?
this desu
and? stupid nerd pussy
Not a lot.
But it always says "DO NOT EAT" on the packaging? So it's not toxic or something like that?
How can I find out the address I am sending from if I wanted to send some ethereum from coinbase to someone so that they know it is me?
There are no dev 'rights'. People build implementations of "Bitcoin" and then hope other people use them. It's terrible inefficient if there are thousands of implementations, so we mostly agree to use the bitcoin core client that was first made. You can go to github and contribute directly to this project, and when there are major disagreements about how things should be built, then you get a fork
Your mouth and throat would become uncomfortably dry as the silica dioxide absorbed enough saliva to stop reacting.
ok thx
Bump
Blend it, inhale in to your lungs.
Best experience in your last living day.
I used silica dust to threat cockroach problem in dorms. Very good in killing ants too.
In real life we use silica gel in transformers to suck up humidity from oil.
what is going to happen at the fork? I've heard that I will get both segwit2x and btc once the fork happens. My btc is in an electrum wallet right now. How do I sell the segwit2x once the fork happens?
Thank you anons! I'll look more into Bittrex, I am based in the UK with a British Bank if that makes a difference given that Bittrex is America-based. Are there transfer fees for changing GBP to USD through Bittrex for example?
Also, do you have any recommendations for the most reputable wallet type for single types of coin?
I have downloaded Blockfolio after seeing a thread on here showing peoples profiles. I got a feel for it but didn't really understand what it was used for until your explanations, so thanks for that too.
I've bounced around Veeky Forums boards for about seven years now, so I know how ridiculously cliquey each board can be. I openly admitted that I know nothing about finances, let alone trading, and wanted some help and encouragement from a really interesting community, but I also wanted to display a semblance of credibility to belong on Veeky Forums instead of appearing like a dumb kid who stumbled upon Veeky Forums after seeing some meme video about bitcoins reaching an all time high. Because you assumed, I don't expect anybody to care about what I read or write in my free time, and have come to terms with knowing I am not going to make enough money to survive from writing, its just a hobby.
I'm sorry to hear that your life is defined by so much internal pain that you are thrown into a fit of infuriated conjecture when you see a few sentences written by a stranger on the internet.
hey Veeky Forumsbro: brevity is the soul of wit
Thanks.
Exactly. If this nigger spent a third of the time it took to write either of his essays on himself and his feelings googling the basics and had come with decent informed questions I wouldn't have bashed him. But he hasn't done an iota of research and wants baby level spoonfeeding.
Microsoft Linux.
Is windows 10 the same as windows 3.11?
Literally this. I lurk and have come here just to complain about this one fucking lit guy that can only talk about themselves in a verbose manner in order to appear more intelligent. I really want to hit him
pls respond i've now done research and found out about something called a "replay attack"? is this a legit concern or a meme
What is it exactly
Honestly, thanks for the feedback anons. Brevity is something that I've been working on for years now. I now consciously stop myself from slipping into thesaurus-core when I write anything, even just a post on Veeky Forums, because it always comes off as if I'm trying to peddle myself as a 'holier-than-thou' dickhead, I'm really not.
>Nothing is totally safe, but put it this way - if you were to rob someone would you go house to house robbing for petty cash, or would you rob the supermarket just before they put the money in the safe?
This analogy doesn't make sense to me. In order for a hardware wallet to be used, it still has to touch the network at some point. It's no safer than a wallet for which the private key was generated by a program, I think. Both are, however, safer than an exchange. In fact a hardware wallet is less safe than an open source program used to generate a wallet, since one of them has source code that can't easily be audited to see if it has the functionality to transmit your info to a third party.
Well thanks you for taking insults this well user you've instantly become a lot more respectable. It is nice to practice such words to use in debates and actual intelligent conversation. Which mostly cannot happen on this board. Unless you absolutely need to, sticking to the simple stuff makes you a lot more approachable for discussion on Veeky Forums.
Buy 800 eth
100 btc
100salt
Also use anycoindirect
read up sepa transfers
download and use exodus wallet
What does a discrepancyin USD value to Bitcoin satoshi value indicate? If you buy into a coin when the sat value is down, but USD value is the same, are you gaining value?
also what causes the difference? thought it just meant bitcoin is spiking, but coins like qtum have a constant high usd value even though sats keep bleeding.
You should start with Poloniex, as it has the most trustworthy tokens (less volatility), and the best developer legacy of any of the exchanges. I think the latter detail is way more important than variety of coins, like you'd find with Bittrex or C-cex. Sounds like you want to just buy tokens and hold them off exchange for like a year. I'd recommend Electrum, it's the industry standard for BTC paper wallets. Probably just buy them with Coinbase and transfer it to an Electrum wallet. Good luck.
Also, don't listen to the faggots that say you should deposit a minimum amount of like 1k pounds. I withdrew $680 a while ago, and got like $640 from it. Anything over 100 is fine.
>If Bitcoin is decentralized, where does its dev team come from? I get the forks cause random people decided to go ahead and create the new coins, but what about the core dev team? Where did they come from? Did Satoshi give them dev rights directly or what?
bitcoin core was just group of individuals who decided to work on the bitcoin project full time. anyone can participate and contribute, it is completely open to public, as anyone can change the bitcoin code. bitcoin core team do not have any special rights when it comes to changing bitcoin code, whatever software is being run by the nodes and miners is bitcoin
>When a fork happens, who decides who to get to keep the name "bitcoin"?
It's really all subjective, no one can claim to be bitcoin. Everyone has their own definition. Some people say it's whatever satoshi true vision, some people say it's whatever the users decide, and some say it is the longest chain with most accumulated hasharte.
>Can a forked project merge after it has forked if they find common ground?
hard forks aren't backwards compatible since it created a chain with entirely different set of rules, so i don't think this is possible.
Will someone swallow my jizz already!!!
Thank you user, it looks like its a good time to enter with Ethereum. I will look into everything else you've suggested too.
You're right. I want to be able to touch some cash if I've got access to it, I'm relatively poor right now. £500 is enough money for me to live very well for two or three months. I'm not drawn towards caffeine fuelled day trading but I would like to be actively engaged in the community for a few hours a day to really catch up with what has been going on in this space.
Again, thanks for the advice! Will shorten words.
>Can someone explain to me just what the fuck a 'node' does - do they process the payments?
>This is totally different from a 'miner' which unlocks new blocks, yes? Nodes and Miners are totally unrelated, yes?
good explanation --> youtu.be
and nodes basically just validate all of the other nodes to make sure all the blocks are in sync. it's the whole point of validating a trust-less system, and everyone should run a full node if they can. Miners are also nodes i believe.
>Also, is there any foreseeable reason why after the Hard Fork a large number of miners would stick with the old blockchain/protocol? Since it's an opt in, doesn't that mean it might be more, uhhh, desirable to just not change anything?
yes absolutely. i am guessing there will still be a decent amount of hashrate on the legacy chain (price will be much higher, so huge opportunity to make money when bitmain miners move over). people who are currently mining btc will see large percentage increase in profits if they do not mine on segwit2x chain. hard forks are so difficult because you need almost 95% consensus within the entire ecosystem (nearly impossible). this is one of the greatest things about BTC is that it is nearly impossible to change bitcoin at the protocol level.
>Is bitcoin TRULY independent of a stock / housing market crash?
in my opinion, it is one of the most uncorrelated assets one can buy.
>Could you see a dip, or rather the opposite like gold in 2008.
everything in BTC is based off of purely supply and demand. dips happen all the time. if you are looks for external factors of demand, i would say financial crisis in countries around the world are the main driver. since "store of value" if one of the most important properties of BTC due to it's scarcity and economics, bitcoin usually gonna skyrocket when hyperinflation is going on in venezuela or India decides to get rid of the $100 rupee.
You'd be very dehydrated inside of your throat. It's made to aggressively absorb water, even water in the air. You'd have to drink enough water to saturate it, then you'd poop it out.
As far as blockchain tech goes, are there any competitors to Bitcoin, or Ethereum, and is there any new bleeding age tech or development happening. All I know of atm is mimblewimble.
Also is the blockchain itself just going to keep growing forever?
agree with this 100%
buy bitcoin :P
>- Miners are the supply.
>- Users are the demand.
>- Nodes specify what the users are demanding.
>- Miners work to fulfill that specification.
i like dis a lot
>What does a discrepancyin USD value to Bitcoin satoshi value indicate?
The discrepancy is caused by the fact that bitcoin price is moving all the time relative to USD!
>If you buy into a coin when the sat value is down, but USD value is the same, are you gaining value?
that just means the bitcoin price went up (denominator of altcoin pair)
>also what causes the difference? thought it just meant bitcoin is spiking, but coins like qtum have a constant high usd value even though sats keep bleeding.
i think all you're asking about here is fractions. when you are trading BTC/USD or XMR/BTC or XMR/USDT it all depends on the fractions and how you are reading it!
BTC/USD is not bitcoin, it is bitcoin in exchange of U.S. dollars. This is an important distinction that must be understood.
What happens when the denomitor of something gets larger?
1/x --> 1/2 = 0.5..... 1/4 = 0.25.... 1/8 = 0.125
Yup you guessed it! The number is getting smaller. So why does a USD bull market matter for BTC?
If our denominator is in a bull market, then logically we can expect chart to be in downwards direction.
>As far as blockchain tech goes, are there any competitors to Bitcoin, or Ethereum
if you're talking about crypocurencies and cryptoassets competing for marketcap, yea there are about 1,200 listed on coinmarketcap alone (90% are completely useless)
coinmarketcap.com
>is there any new bleeding age tech or development happening.
the blockchain itself was only put into existence around 8 years, and there are about 5 new blockchains being created everyday to there are tons of new age development happening in this space. although most of it might be scams / money grabs, the amount of research being done in the applied cryptography field in unprecedented and has never been seen before. this industry is growing at an exponential rate it seems like, and smart people are entering the space working on atomic swaps, lightning network, and tons of other innovations.
>Also is the blockchain itself just going to keep growing forever?
y...yes? i think blockchains grows in data after every single transaction because of the way they are designed, i could be wrong though
what resources do you use to learn more about crypto and different alts? Its difficult when your a newfag told to fuck off and google is often no help
What exactly is the intended use of Ark tokens? Or ether, or any other alt token for that matter?
I like the projects, I just don't get that part
if you want to learn a lot of alts or what is going on with them, follow their bitcointalk pages everyday. bitcointalk is one of best forums for crypto along with all of the reddit forums.
for example here is the bitcointalk page for komodo
bitcointalk.org
you would learn a lot more there than reading their whitepaper, following their twitter, or looking at the FAQ on the website imo. the developers are usually very active there, and information is usually posted there first.
also crypto twitter is still very active and a lof of decent info is posted their from O.G. bitcoiners
if you are trying to learn more about crypto in general i would definitely advise watching any andreas antonopoulos videos.
youtube.com
also here is a list of great crypto resources for non technical ppl (beginners) taylorpearson.me
if you are trying to learn about mathematics and computer science behind crypto, their are great princeton courses on YT.
thank you user
np np
>Also is the blockchain itself just going to keep growing forever?
Yeah, it'll just gradually become more costly to run full BTC nodes, eventually it'll just be people with huge storage arrays with their blocks on partitons. Currently ~140 GB so it's pretty slow growth, the slope of that graph is based on network MH/s so at worst it'll reach 1 TB in 17.36 years, maybe sooner.
How do wallets work? Say I want to move my coins from an exchange so they'll be safe.
People have tried to explain it to me before but I didn't get it. So you don't really have the coins on your hard drive, just a password to access an online wallet? So where is this wallet?
It's a shit coin.
Interesting thanks friend
this
"There is no actual BTC in your Bitcoin wallet: there are only private keys which are used to unlock and then transfer ownership of BTC stored in the Bitcoin system. BTC never actually leaves the Bitcoin system."
>How do wallets work?
honestly i don't know exactly how wallets works, i know it's a complex answer that involves a lot of cryptography
Here is interesting video from andreas on wallets
youtube.com
AFAIK, there isn't much difference between the safety level of:
- a paper wallet
- a cold (offline) wallet
- a hardware wallet
the difference is in the price and usability.
- a paper wallet is allmost free (the cost of a piece of paper), but can only be used to collect unspent outputs. When you need the funds, you have to sweep the paper wallet and throw it away. It's also a bit tricky to make a paper wallet in the correct way
- a cold (offline) wallet costs a lot more, since you need an old PC that can never be connected to the internet as soon as you start using it to store your funds. However, if you set it up correctly, it's not that hard to use, and you can send and receive as much as you want, but you can also access the full feature set (like signing messages, creating raw transactions, broadcasting,...)
- a hardware wallet (trezor, ledger nano S,...) is actually pretty cheap, can be used to send and receive, can usually be used in different places,... It is my personal favorite. you are bound by some restrictions tough (for example, if you use the official ledger chrome plugin, it can not be used to sign messages)