Complete BTC Setup-Manual - Nexxus University · ! 6!)...

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Complete BTC Set-‐up/Manual

Table of Contents

Introduction -‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐ 2 Create the Ledger Hardware Wallet -‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐ 3

a) Download Chrome b) 4-‐digit PIN c) 24-‐word recovery phrase

Configure the Ledger Hardware Wallet -‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐ 5

a) Accounts b) Send c) Receive d) Settings e) Pairing a smartphone

Exchanges -‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐ 8

a) Local Bitcoins b) Security c) Escrow d) Login guard e) 2-‐factor authentication f) How to buy Bitcoin

breadwallet -‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐ 12

a) Setting up your breadwallet b) Converting to bits

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Introduction Bitcoin is a consensus network that enables a new payment system and completely digital money. It is the first decentralized peer-‐to-‐peer payment network that is powered by its users with no central authority (i.e. Fed Bank/Government) or middlemen. From a user perspective, Bitcoin is pretty much like cash for the Internet. Also from a user perspective, Bitcoin is nothing more than a mobile app or computer program that provides a personal Bitcoin wallet and allows a user to send and receive Bitcoins with them. When wallets are set up and used correctly, Bitcoin users can protect their money by using offline encrypted hardware wallets and encrypted mobile wallets and are in full control of their transactions. Although Bitcoin payments can be made without personal information tied to the transaction, and offers strong protection against identity theft, purchasing Bitcoin proves to be more difficult without ID when using conventional exchanges. The Bitcoin network operates with a decentralized consensus mechanism. Thousands of people around the world (miners) are working simultaneously to keep the public ledger honest. Since 2009, the Bitcoin network has been running globally without any catastrophic failures, even though there are continuous, countless attempts to hack the network. At this point it is reasonable to assume that the Bitcoin network will maintain its integrity for the foreseeable future. The first time entering the Bitcoin market can make one feel a little anxious. There are many things to consider when getting started. Which exchange will provide the most security while at the same time respect my privacy? Which web based/desk top wallet will give me all that and still be easy to use? Which mobile app works best on my android phone? Will it work on my daughter’s iPhone too? Because Bitcoin is an emerging technology, one can know that in fact, there is no conformation… the choices are literally “all over the map”. Even though the Bitcoin network is global, many things including where you live and where your bank is located have everything to do with which exchanges are best for you. While keeping privacy and security as top priorities, this report tries to sift through many of the options that are available for you, and list the top preferences and why. The top preferences will have instructions on how to install and use your new wallet hardware & software as well as how to navigate the exchanges.

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Creating the Ledger Hardware Wallet You can order your Ledger Hardware Wallet at: https://www.ledgerwallet.com/products

Step 1-‐ Create your wallet There are several steps involved with creating and configuring your new Ledger Hardware Wallet. The good news is -‐ it only has to be completed once. If the steps are followed correctly, one can feel good about having a top-‐level security hardware wallet for their BTC. Ledger has three models; HW-‐1, Nano and Nano-‐s. The Nano-‐s has a display and also holds Ether (The internal coin of the Ethereum Blockchain). The prices range from 15-‐58 Euros. I am describing the set up and use of the HW-‐1 model. (Price-‐ 15 Euros) All Ledger wallets are cutting edge HD (hierchical-‐deterministic) wallets which means, among many things, it creates a new address for each transaction, which helps with anonymity. This along with 2-‐factor authentication and the fact that when it is not in a USB drive, it is offline makes it one of the most secure wallets on the market. The following instructions will guide you through the set-‐up process:

1) If you don’t already have it, download Google Chrome. The Chrome browser is used to download the Ledger web wallet app.

2) Click on the “app” tab on the upper left corner of the Chrome browser and a list

of apps appears.

3) Click on the “web store” icon and in the search box type Ledger wallet and enter.

4) Click on the “add to chrome” icon beside the Ledger app. Once the app is added

to Chrome you can click on the Ledger app icon to open your wallet.

5) Once the Ledger web wallet app is opened, you can close the Chrome browser. It is no longer needed. You can pin the Ledger app to the tray or add to dock.

6) Once the app is opened, it will instruct you to insert your Ledger Hardware

Wallet (from here referred to as “LEDGER”) into a USB port on your computer.

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From this point all that required is to carefully follow the instructions. They are:

1) Select between New/Existing by choosing “Create new wallet”. Notice that the 2nd option is “Recover existing wallet” should you ever need that option in the future (more below).

2) To the best of your ability, make sure you are setting your wallet up on a “secure

computer”. As with ALL hardware devices, the LEDGER is only as secure as the environment used to create it. You must acknowledge that you are on a secure computer.

3) “Choose a PIN”. You have the option to select your own custom PIN or you can

have the Ledger app generate a random PIN.

4) You will be instructed to “write down your 24 word recovery phrase” The app will generate 24 random words, all numbered. Carefully write down the words in the corresponding blanks on the Ledger recovery sheet included. I used a Sharpie ultra fine-‐point marker so that it is permanent and doesn’t smear.

**Note:(It is VERY important that once you have set up your LEDGER with the 24 word recovery phrase, that you keep your recovery sheet in a SECURE/SAFE location. Anyone who has access to this phrase has access to your LEDGER (and funds). It is this phrase, that has been encrypted, that will be used to recover your LEDGER (and funds) in the event it is lost. If you loose your recovery sheet and loose your LEDGER, your funds are gone, forever. It IS advisable to make copies however, it IS NOT a good idea to do so by taking pictures with a digital camera/your phone, or even using a copier that is connected to the internet. DO NOT store/save the information on your computer/tablet/or phone. Just as when setting up your LEDGER, you DO NOT want to have a copy of this information in a currently/or future unsecure environment. If you allow that to happen, the whole purpose is defeated.)

5) “Confirm recovery phrase”. This is where you will retype some of the words randomly, to confirm they are correct.

6) “Re-‐type PIN” Here you will verify the PIN is correct. This PIN will now be used in

the future when signing in.

**Note: although there is no place for it, I recommend writing down your PIN on the recovery sheet as well (top right hand corner for me)

Congratulations!! You created your new Ledger Hardware Wallet

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Step 2-‐ Configure your wallet Now that you have successfully created your LEDGER, it is now time to configure your wallet. Click on the Ledger app icon to open Ledger app and insert your LEDGER into a USB drive. The app will prompt you to enter your PIN and will open your wallet. As soon as your wallet opens, you can see 4 tabs in the upper left corner and a total of funds in Bitcoin (from here referred to as “BTC”) as well as a conversion into fiat $ in the upper right. The 4 tabs on the left are: First tab-‐ Accounts-‐ (default tab)

• Quick look-‐allows you to see all your BTC accounts and the most recent transactions.

• See all operations-‐ in the upper right hand corner. This tab allows you to see all BTC transactions.

• Add an account-‐ in the upper right hand corner. This tab allows you to add

multiple BTC accounts to be stored on your LEDGER.

Second Tab-‐ Send-‐ send window opens, very straightforward.

• Type in the amount you want to send in BTC. (BTC = fiat/exchange rate) • Copy and paste recipients address (you have the option, if the person is

there with a smartphone, to click the camera icon in the lower left corner and scan the QR code).

**Note: It is NEVER a good idea to manually type in the box a BTC recipient address. ALWAYS copy and paste or scan the QR code. For if you were to do that and the address is off by just one digit, because BTC has no chargebacks, your funds will be transferred and you will have no way of recovering them.

• Select the account from which you want to send BTC.

• Select a transaction fee amount.

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**Note: While it is almost completely free to transact in BTC, there are cost incurred by the miners who are maintaining the ledger on the Bitcoin Blockchain. A higher transaction fee (collected by the miners) just means that your BTC transaction will be confirmed faster. A lower transaction fee means that it can take a while. LEDGER gives you the ability to customize the amount. Average transaction fees that will receive 2-‐ 3 confirmations relatively quick are 8-‐20 cents, no matter the size/amount of the transaction.

• Total spent is the last line that includes all fees. Click “send” and a window will open that indicates, “verifying”. At this point you will have (2) options in order to complete the 2-‐factor authentication which verifies/completes the transaction:

Option 1 -‐ You can use your security card. To use your security card, click “other validation methods” in the lower left corner of the send window. The back of your security card provides the information needed to decipher/decode the digits in the 4 boxes on your computer. Simply enter the corresponding number/letter, from the back of your security card, which coincides with the number/letter in the boxes on your computer. Once you have deciphered all 4 boxes you will see “verifying transaction” and then “transaction complete”. You will now see the transaction listed on the accounts/quick look tab.

Option 2 -‐ You can click “confirm” on your smartphone (see below-‐ Pairing smartphone). Once you have selected confirm on your smartphone, you will see “verifying transaction” and then “transaction complete” and also see the transaction listed on the accounts/quick look tab. Third tab-‐ Receive-‐ receive window opens again, straightforward.

• Type in amount to receive in BTC. (BTC = fiat/exchange rate)

• Select an account to credit.

• The third line will show your recipients address. You can:

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1) Copy and paste the address into a different wallet on your computer

2) Email a request for funds (your wallet address will be in the email)

3) Use the camera/QR code option.

4) Print a copy of the request that can be sent via snail-‐mail. **Note: Again, it is NEVER a good idea to manually type in the box a BTC recipient address. ALWAYS copy and paste or scan the QR code. For if you were to do that and the address is off by just one digit, because BTC has no chargebacks, your funds will be transferred with no way of recovering them. Fourth tab-‐ Settings There are only a couple things I am going to touch on here as everything else is for the more experienced.

• Display-‐ BTC unit, unit of exchange, language, etc. can all be customized. Ledger allows you change units to “bits”(more below)

• Hardware-‐ Click the “hardware” tab in order to pair your smartphone for 2-‐Factor Authentication. (See below-‐pairing smartphone)

Pairing smartphone-‐ There are a few steps involved when pairing your smartphone with your LEDGER. However, just like the last time when installing the Ledger app, it only needs to be completed once. You will need the security card to enter the matching value for each character in the boxes.

1) Download the Ledger app on your smartphone.

2) Click the “pair a Ledger wallet” icon.

3) Get your security card ready-‐ you must be quick.

4) On your computer, under “Hardware” click “pair a smartphone” and a QR code will appear.

5) Scan the code and decipher/decode the 4 boxes on your smartphone.

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**Note: right now the clock starts ticking. I am not sure how long you have, maybe 3-‐4 seconds per box. Quickly decipher/decode the 4 boxes on your smartphone. Once deciphered, the app will initiate a secure connection and pair the smartphone. If you don’t get it the first time, no worries, just remove your LEDGER from the USB and reinsert it. You will have to key in your security code again, but then you can click on hardware and try again.

Congratulations!! Now you can utilize 2-‐factor authentication on your smartphone to confirm transactions made with your new LEDGER.

Exchanges

Now that you have your wallet set-‐up, it’s time to buy some BTC. As we all know, the KYC (Know Your Customer) and AML (Anti Money Laundering) laws are over the top. This makes it difficult to buy BTC from the conventional exchanges without producing “Governmental Issued” Photo ID and Proof of Residence, especially if you are a US resident. Some conventional exchanges however, let you buy smaller amounts in the beginning and increase your limits slowly over time with less ID requirements. However, if you are a US resident and you want to do business with a conventional exchange outside of the US, then the best way to fund your account is by bank wire transfer. Keeping all that in mind, a more unconventional, yet very popular exchange, LocalBitcoins is by far the most private of all.

LocalBitcoins

LocalBitcoins is a well-‐established BTC trading site operating since early 2012. They have been featured in international business magazines like BusinessWeek and Forbes.

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The parent company, LocalBitcoins Oy is registered in Helsinki, Finland. On the 2012 Transparency International Corruption Perceptions Index, Finland is the least corrupted country in the world. LocalBitcoins operates under the respected Nordic jurisdiction.

LocalBitcoins is a peer-‐to-‐peer BTC exchange. A marketplace where users can buy and sell BTC to and from each other. Users create advertisements with the price and the payment method they want to offer. Each user has a reputation rating and a public history that shows all past activity. When you trade with a user with high feedback score, you can feel confident you are dealing with a well-‐established party. You can browse the website for trade advertisements and search for a payment method you prefer. In addition to cash trades you will also find traders buying and selling BTC online utilizing many different payment methods. There are two ways to buy and sell with LocalBitcoins:

1) You can buy online with PayPal, pre-‐paid debit card, bank deposits, bank transfers, etc., or

2) You can meet at a public place in person and pay with cash. Meeting and paying with cash gives you the most privacy as none of your personal information is revealed.

Security LocalBitcoins offers many levels of security protection. No matter your choice, ALL online transactions are protected in escrow and you have the option to include escrow on personal meet-‐ups. Escrow

LocalBitcoins escrow process protects your BTC.

When a request is made to trade on LocalBitcoins, the specified amount of BTC you wish to buy is held locked in LocalBitcoins’ escrow service. After initiating a buy request, the BTC are reserved from the wallet of the seller and put into escrow. The BTC are not released until the seller confirms the trade has been completed. Escrow process locks the BTC until confirmation from the seller

• Cash trades are protected by LocalBitcoins transaction service • In the case of problems, LocalBitcoins support resolves the dispute cases

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Login guard

Login guard prevents unauthorized logins

LocalBitcoins remembers your web browsers and verifies logins are coming from the same browser. If an unknown web browser is encountered, an email confirmation is required before the login can proceed.

Two-‐factor authentication

2-‐factor authentication prevents account theft

LocalBitcoins offers optional 2-‐factor authentication with a mobile app. When enabled, you need to enter a secret code from your mobile phone to log in. By doing this, malicious parties cannot access your LocalBitcoins account in the event that your computer or user credentials are hijacked.

Although on the buying end you are safe from fraud, the safest form of transaction for a seller on LocalBitcoins is in person cash sales. This is because many forms of online payment through a third party service are reversible by the buyer of the BTC. This is chargeback fraud, which can happen in the world of selling BTC.

Getting set up is easy with LocalBitcoins.

How to buy Bitcoins

1) Register an account-‐ you get a free and secure online BTC wallet. No additional apps are needed.

2) Quick buy-‐-‐go to the home page and in the orange box fill in the form with the amount you want to buy in your currency, your location and choose a payment method. If you're unsure how you want to pay, choose "All online offers" as your payment method. The site will list Bitcoin traders available in your region. If you want to purchase in person, select “In person-‐cash”.

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3) Choose an offer-‐ choose one from a trader with a good reputation score and a high amount of trades. The online indicator shows if a trader is online right now (green), inactive (yellow) or offline (grey). You can click the 'Buy' button to view more information about an offer.

4) Review-‐ after you press the 'Buy' button you'll see more information about the offer, including the terms of the trade. Read through them before submitting the trade request, if you don't agree with them you can go back to the previous page and choose another offer.

5) Start the trade-‐ type in the blue box how much you want to buy, enter a message for the seller and click the “Send trade request” button to the start the trade. Be sure you're ready to pay when clicking the button. If you don't pay before the payment window is over, the trade will be automatically cancelled.

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6) Once you have made the payment, click the “mark payment complete” button.

Once the trader has verified that your payment has been received your BTC will be released from escrow and they are instantly available in your LocalBitcoins wallet.

And that's all there is to it, congratulations on your first Bitcoin trade!

breadwallet

breadwallet is a real, open source, standalone mobile BTC client. There is no server to get hacked or go down, so you can always access your money. Using SPV (simplified payment verification), breadwallet connects directly to the BTC network with the fast performance you need on a mobile device.

breadwallet is designed to protect you from malware, browser security holes, and many other intrusions. With AES hardware encryption, app sandboxing, keychain and code signatures, breadwallet represents a significant security advance over web and desktop wallets, and other mobile platforms.

Simplicity is breadwallet's core design principle. A simple backup phrase is all you need to restore your wallet on another device if yours is ever lost or broken. Because breadwallet is "hierchical deterministic", your balance and transaction history can be recovered from just your backup phrase.

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Setting up your breadwallet

1) Download the breadwallet app

2) Generate a recovery phrase

** You will see a warning screen … press “show” at the bottom of the screen

3) Write down your 12 word recovery phrase 4) Select “I wrote it down”

5) Press “Done”

6) Choose 4 digit passcode

7) Verify passcode

Congratulations!! You now have a breadwallet. **Note-‐ breadwallet is denominated in “bits”, also known as (μBtc) or “microbitcoin”.

• There are 1 million bits in 1 Bitcoin • 1 bit = 1 microbitcoin = 1 μBTC = 0.000001 Bitcoin (BTC)

A bit (6 decimal places) is becoming the most preferred BTC denomination. As time goes on and more people adopt it’s use, BTC’s value will have to increase to a point to where virtually all BTC transactions will be a fraction of a BTC. In fact, if mainstream adoption all of a sudden sped up and BTC’s value were exactly $1M U.S. Dollars today, then 1 bit would be equal to 1 U.S. Dollar…at that point, it will be much easier to refer to amounts in bits much like we do in dollars today.

It is very simple to convert your BTC into bits. All you have to do is move the decimal 6 places to the right… and the same in reverse to convert back.

Example: 0.03459875 BTC = 34,598.75 bits

Complete BTC Setup-Manual - Nexxus University · ! 6!)...

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