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I really liked my TM112 course Block 3. The introductory text about bitcoin wallets.

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Bitcoins are exchanged between ‘wallet’ applications available for most computers and smartphones. As well as creating any number of Bitcoin addresses, the wallet creates a public encryption key pair as well as a digital signature used to verify data sent by the application.

Since we last met Alice and Bob, they have both become Bitcoin users. Alice wants to send a payment to Bob.

1. Alice’s Bitcoin application starts the transaction by creating a message containing some of her coins.
2. Alice’s wallet then signs the message using her private key. This doesn’t make the message any more secure, but it authenticates the message came from Alice.
3. The message is then broadcast to every Bitcoin user. Any user can authenticate the message’s signature with their copy of Alice’s public key. If the message is genuine and originated with Alice, the signature will match; if it doesn’t, then the message is false and can be disregarded.
4. After authenticating the message, Bob’s wallet application places the Bitcoins in his wallet.

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So lets firstly generate our crypto keys pair using GPG. Bitcoin uses ECC secp256k1 and this curve has been implemented in GnuPG since 2014.

On your shell:

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