Bitcoin Core Wallet Review

What is the Bitcoin Core Wallet?

 Bitcoin Core is the fundamental software used by Bitcoin users to send, receive, and store Bitcoin. There are numerous other wallets that can do these tasks today, but in 2009 when Bitcoin was new, Bitcoin Core was the only shop in town. Satoshi Nakamoto created the wallet to serve as a dashboard for the sending and receiving of Bitcoin. To distinguish it from the Bitcoin Network, Bitcoin Core is sometimes referred to as the “Satoshi Client”.

People who run the Bitcoin core wallet are running a “Full Node” in the Bitcoin Network, to which the Bitcoin Core Wallet is connected. This means that the Bitcoin Core wallet helps the Bitcoin network confirm and relay Bitcoin transactions (sending, receiving, purchases). The Bitcoin Core wallet is necessary for the Bitcoin network to function at all.

This means that Bitcoin Core is more than a wallet, but for everyday users, its wallet functionality is all that’s necessary to understand. We’ll cover the deeper functionality in the rest of this Bitcoin Core review, but new users should not be worried that we’ll get too technically complex.

Who Runs the Bitcoin Core Wallet

Understanding the Bitcoin Core Wallet is necessary to comprehend Bitcoin as a whole. Bitcoin is a decentralized network, meaning that there’s no one who is in charge of it in the same way that Jeff Bezos is in charge of Amazon, for example. Instead, the network is operated by people who run the Bitcoin Core Wallet (Full Node runners) and miners (those who use powerful computers to confirm Bitcoin transactions and mine new Bitcoins).

The Bitcoin Core code is, however, maintained by volunteers. People all over the world can make suggestions about how Bitcoin Core may be improved. These are called Bitcoin Improvement Proposals, or BIPs. BIPs are voted upon (and often simply argued about) by developers and the community. Eventually one or more BIPs is incorporated into the Bitcoin Core Code, and a new version of the Bitcoin Core Wallet is released.

A number of developers have become closely associated with the Bitcoin Core development, including Luke Dash, Jr., Gavin Andresen, and others. Because changes to Bitcoin Core are heavily debated in the Bitcoin community, developers like these are sometimes (read: always) controversial.

Why Does the Bitcoin Core Wallet Matter So Much to Bitcoin?

Bitcoin (the network, the cryptocurrency) won’t work without the Bitcoin Core wallet. This is because the Bitcoin Core wallet on your device is more than a wallet, it’s a small but necessary part of the entire Bitcoin network. The Bitcoin network is made of Nodes, and each Bitcoin Core wallet is a full node. Together, all of the nodes in the world are a gigantic distributed technology that uses the internet to send Bitcoins all around in a secure and trackable manner.

So Bitcoin wouldn’t work without Bitcoin Core. That’s why changes to the Bitcoin Core software are so contentious in the cryptocurrency industry. Software updates are made periodically, but large portions of the community don’t agree about what those changes should be. When a consensus (or something close to a consensus is released), a new version of the Bitcoin Core software is released, and miners and node runners around the world download it and use it.

Bitcoin Core Wallet Controversies

Anyone can write updates to Bitcoin Core, but unless miners and node holders run the software, it doesn’t matter. Occasionally, however, significant interests arise in Bitcoin and a large group of miners will start to use an alternative version of Bitcoin Core. This is what gave rise to alternative forms of Bitcoin, including the still popular Bitcoin Cash. These alternative visions of what Bitcoin should be cause turmoil in the Bitcoin community, and the occasional schism, but nonetheless Bitcoin remains going strong to this day.

How to Use the Bitcoin Core Wallet

The Bitcoin Core wallet is pretty easy to use, but you’ve got to understand some basic functionality about Bitcoin to make it work. The good thing is, this will help you become adept at using all cryptocurrencies, not just Bitcoin, so it’s definitely worth your time to learn this stuff. Let’s start by downloading the Bitcoin Core Wallet so that you can poke around on your own. Do this by going to Bitcoin.org and downloading the software for your operating system (Bitcoin Core Windows, Bitcoin Core Linus, Bitcoin Core Mac, and Bitcoin Core Ubuntu are all options).

Downloading and Installing Bitcoin Core Wallet

Bitcoin Core is currently in version 0.16.0. To run a full node as well as using the wallet, you’ll have to download the 155 GB Bitcoin blockchain. We won’t go over that here, but there are endless resources about how to do just that if you are interested.

For Mac users (and those with certain settings on other operating systems), you’ll have to confirm that you do wish to open the software using the option in System Preferences > Security. This means that even though the Bitcoin Core wallet wasn’t created by a big developer like Apple, it’s still OK to run on your computer.

As you open the wallet, it will undergo a fairly long process (several minutes) during which time your copy of Bitcoin Core’s “Ledger” (a complete record of every transaction that has ever occurred on the Bitcoin network) will be checked against every other node and miner in the network. Be patient. Eventually your wallet will open up and you’ll be able to use it.

Using Your Bitcoin Core Wallet to Send, Receive, and Store

There are a number of things to note in this simple interface. We’ll go through all of them so you have no confusion.

• Overview: this shows you most of the most relevant information related to your Bitcoin core wallet.On the left you can see how much Bitcoin you have in your wallet, any Bitcoin that is currently being transferred into your wallet, and how many transactions you have performed with this wallet. On the right you can see your most recent transactions, including the address of the sender or recipient related to each transaction.
• Send Coins: This button takes you to a screen with an address line.  Every Bitcoin transaction (and every cryptocurrency transaction, for that matter) requires the sender to know the address of the receiver. Your Bitcoin Core wallet address can be seen in the next button. It’s a long alpha-numeric code. Anyone who wants to send Bitcoin to you needs to have this code. More on that in a second. When sending coins using the “Send Coins” window, always be careful to double check the address to which you are sending the transaction. Transactions sent to incorrect addresses usually cannot be recovered. Also be careful to send the amount of BTC you intend.
• Receive Coins: This is where you’ll find your Bitcoin Core wallet address. This is the address anyone wishing to send Bitcoin to you will use to do so. It’s like your street address at which you receive snail mail. This address isn’t sensitive, and you shouldn’t worry about keeping it safe. Anyone can have it, and they would not be able to derive your Private Key (more on this soon).
• Transactions: The transactions button shows all of the transactions that you have ever performed using the Bitcoin Core wallet, both sending and receiving.
• Address Book: The address book is where you can save all of the important addresses you use. These can include friends’ addresses, Bitcoin addresses used by retailers, addresses associated with charities or political campaigns, etc.
• Export: This last button allows the Bitcoin Core Export Private Key function. Private Keys are an important idea to understand. Just like your wallet address, your private key is a long alpha-numeric code associated with your account. If you were to take your computer that holds the Bitcoin Core software and throw it into the Sun, you could simply get another computer and recreate your wallet using your Private Key. Think of it as the secret code that can clone your Bitcoin core wallet (and the Bitcoins it contains) anywhere in the world.
  The thing is, anyone else who has the private key could do the same thing. You should keep your Private Key as safe as possible. This writer writes private keys down in two different locations, where a flood or fire could destroy one but not the other. This writer also never stores private keys online, as they could be hacked. Keep your private key safe, and your Bitcoins should be safe forever.

Other Important Ideas About the Bitcoin Core Wallet

Here are some important ideas which will help you understand Bitcoin and keep your Bitcoins safe.

• Your wallet doesn’t “store” your Bitcoin. Instead, it’s just an interface through which you can interact with your Bitcoins. Your Bitcoins “live” on the blockchain, and are linked to your Private Key. Only those with the private key can use the Bitcoin Core wallet interface to view, send, and receive Bitcoins linked to your Bitcoin core wallet address. All of this means that even if your Bitcoin core wallet device is lost, stolen, or destroyed, your Bitcoins still exist safely on the blockchain. As long as you have your Private Key, you can recover them.
• Bitcoin is not truly anonymous as is sometimes supposed. A complete record of every Bitcoin transaction is captured in the public ledger system shared by Bitcoin nodes and miners. Though it would be time- and resource-consuming to retroactively assemble a user’s transaction record, it would be possible. Some users use “tumblers” and other methods to achieve something resembling Bitcoin anonymity.

Final Thoughts About Bitcoin Core Wallet

Bitcoin and the Bitcoin Core Wallet are innovations in global economics and computer science. To learn them is to learn the heart of cryptocurrency as a whole, and the ripples of this innovation will continue to be felt for years, if not decades, to come. The basic functionality of the Bitcoin Core wallet front-end is easy for the beginner to appreciate, but the backend takes months of research and experience to fully appreciate.

It’s unknown how long Bitcoin will remain dominant over the blockchain industry, or whether it will achieve the million dollar mark various analysts have prophesied. It’s true that Bitcoin’s value results from an elegant application of supply relative to global demand, and a simple software solution to keeping track of all of the bookkeeping.

Whatever becomes of Bitcoin, the Bitcoin Core wallet will remain useful for many years to come, and will be a testament to a significant innovation in history. Whether or not the history of global finance will hinge on Bitcoin will be decided by future generations. But as members of the present, an acquaintance with the Bitcoin wallet is essential both to using Bitcoin and to using its elegant design.