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If I want to buy bitcoins, I can buy them from an online exchange, from an ATM or from another person who has bitcoins. Online exchanges and ATMs charge high premiums because they are intermediaries. If I buy bitcoins from other people, they also charge high premiums. The whole idea behind the blockchain was to get rid of third-parties. Is is possible to connect to the public ledger somehow and acquire bitcoins without a third-party?

I wonder how the first bitcoin transactions were completed when there wasn't any online exchanges, mobile wallets or ATMs. Can programmers somehow connect to the public ledger and do transactions without bitcoin wallets or fees?

Highly Irregular
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juropeli
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3 Answers3

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Do not mix the fees, and its base. Whenever you transfer amounts of value between two fiat currencies (let's say GBP to Euro), you pay a fee. So if you go from GBP to Bitcoin or from Euro to Bitcoin, you pay a similiar fee to those, who are "in fiat currency" to ramp up.

Now, when you are within the bitcoin ecosystem, and you transfer bitcoins from your account to my account, then you pay a miner fee. Miners make sure, the bitcoin network is working correctly, and this is to be paid. When you say the whole idea was to get rid of third parties, than you omit the miners. I guess you mean with third parties the "old structures" of the fiat world... They are indeed not required, once you are in bitcoin world.

connect to the public ledger somehow and acquire bitcoins without a third-party?

yes, you can setup your own mining equipment, mine some blocks, and get rewarded for it. Otherwise, if you convert Euro/GBP/Dollars, no (see above).

Can programmers somehow connect to the public ledger and do transactions without bitcoin wallets or fees?

Yes, with a mining node. No in general. Example: I have my own set of script to transfer bitcoins between wallets. In this sense I can be considered a programmer :-) I assemble a tx, and send it into the network (aka "connect to the public ledger", following specific rules). For the miners to bring my tx into a block, I have to pay a fee.

So there is no such thing as free beers :-)

I consider reading the book "Mastering Bitcoin" from Andreas (http://chimera.labs.oreilly.com/books/1234000001802/index.html) for further info.

pebwindkraft
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  • I understand the mining concept.

    However, this is an extract from Wikipedia

    "One of the first supporters, adopters, contributor to bitcoin and receiver of the first bitcoin transaction was programmer Hal Finney. Finney downloaded the bitcoin software the day it was released, and received 10 bitcoins from Nakamoto in the world's first bitcoin transaction."

    How did Nakamoto send these first 10 bitcoins to Hal Finney? I don't think there was an online exchange or mycelium wallet to send 10 bitcoins to Finney? That's what confuses me. How did people do transactions in the beginning?

     – juropeli Nov 17 '17 at 10:15
  • I can't proof it, cause I don't know this history. Given the context and the word "transaction": Satoshi sent the world's first transaction with 10 bitcoins to Hal's bitcoin address. Probably Satoshi had set up before some miners on his PCs, to create/mine blocks, and as such have the Satoshis to send to Hal. Also these miners where required to verify the transaction. So no exchange or whatsoever... – pebwindkraft Nov 17 '17 at 11:29
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I like the idea of buying BTC without intermediary!

The simplest way to acquire them without premiums is to get them from the source itself: that is to mine them. This is how first users acquired them.

Next if you buy them directly from a person and they charge more than some figure you think is market value, this is not premium, it's the market value that is higher than what you thought it is.

Note that you must trust that person (that is know him) so you are sure he gives you BTC when you send him dollars.

In reality what you want is to buy BTC from anonymous person online (without trusted intermediary) and you want each of you to be sure you get what you agreed. So this person get's your USD and you get the BTC.

How this would go I'm not really sure, but an idea would be he gives you bitcoins and somehow (through so called smart contract - that is automatic contract enforced by the code) enforces that the bitcoins return to him if he doesn't get the USD within some time limit, and you should unlock them with the key to get them. You acquire that key when you send him the USD. For example you would have a USD transfer site that generates a secret number when you send USD to his account. You would then use this random number (key) that will unlock the locked BTCs giving you control over them.

croraf
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Bitcoins from cash or real money?

Nope.

I wonder how the first bitcoin transactions were completed when there wasn't any online exchanges, mobile wallets or ATMs

You can generate new Bitcoin using Bitcoin miners ("ASIC") (See What exactly is Mining?). However, you'll need an intermediary to trade your money with an ASIC miner.

If you're an engineer, don't even try to build your own ASIC. You'll lose money due to electricity costs.

When Bitcoin network was released, Bitcoiners used to mine using their computers. That's not profitable anymore.

MCCCS
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