Digitial Scarcity: The "Irreducible Core" of Bitcoin

http://gendal.wordpress.com/2014/01/25/what-is-the-irreducible-core-of-bitcoin/

“Bitcoin is the world’s first system of digital cash, which allows peer-to-peer value transfer over the internet with no reliance on third parties. It is built on a new invention, the decentralized global asset register. This global asset register is the world’s first decentralized consensus system.”

The world’s first internet-scale decentralized platform for value exchange

First, Bitcoin is the world’s first true system of digital cash, which allows peer-to-peer value exchange over the internet with no reliance on third parties. This is the key feature of Bitcoin as a currency and payment system and explains most of the current infrastructure build-out.

… implemented on a decentralized global asset register…

Secondly, Bitcoin works because it is based on a new concept: decentralized global asset registers.

Decentralised global asset registers are also an entirely new invention. They can be used to register and transfer ownership of any digital asset.

It is this that people are talking about when they say things like “currency is just the first application” for the Bitcoin platform.

… which is a decentralized consensus system

However, the story doesn’t stop here. There’s a third element: how do these asset registers work? They work because of a third breakthrough: the invention of “decentralized consensus systems”. That is: internet-scale systems that can reach and maintain a common state without the involvement of any third party and in the presence of malignant adversaries. This is a breathtaking breakthrough in computer science; we should expect to see the most forward-looking computer science schools undertaking active research in this space.

What is Digital Scarcity?

"...a system that allows you to make objects in the digital world “scarce”. The obvious intuition here is to think of .mp3 files. If I email one to you, it hasn’t been transferred, it has been duplicated and is no longer scarce. We know what happened to the recorded music industry when this happened on an industrial scale. Back’s concept, thus, is the problem of how to enable transfer without duplication. Clearly, this property is key to making Bitcoin work and Back’s phrase captures it perfectly: “digital scarcity”."