Although some of the enthusiasm for bitcoin is driven by a distrust of state-issued currency, it is hard to imagine a world where the main currency is based on an extremely complex code understood by only a few and controlled by even fewer, without accountability, arbitration, or recourse.
says the Chicago branch of the
Federal Reserve, apparently without any sense of irony whatsoever.
Yeah only the Fed could be so irony impaired.
Mr. Fed chairman where is my option for accountability, arbitration, or recourse from the actions of the Fed? Oh that right if you are a central bank then absolute power is different. "Trust us we know what we are doing". Of course I can inspect the Bitcoin source code (or pay an expert to do so for me). Even if I have a billion dollar I have no ability to inspect the federal reserve's balance sheet or methodology for adjusting the money supply.
Still broken irony meter aside the language does show some pretty good understanding of Bitcoin at a conceptual level.
When a physical object is exchanged, there is little
doubt that the giver owns it and the
recipient receives it (whether the object is what it seems to be—and not a
counterfeit—has always been a problem
for money, but one that is mitigated in
a variety of ways). A digital file is easily
created and duplicated, so how do we
avoid doubts about its authenticity as
currency? The solution is basically recursive. Assume that my ownership of
the file is ascertained. The bitcoin
protocol ensures that the transaction
by which I cede ownership of the bitcoin
is validated by adding it to a record of
all transactions. The recipient’s ownership is now validated.
Sorry for the formatting (pdf). This is actually a very good explanation of how the blockchain works for a layman. Never seen it described this way before but it is recursive validation.
Bitcoin, however, does not rely on a single recordkeeper. It solves the two challenges of controlling the creation of a unit of digital currency and avoiding its duplication at once. Validation is difficult to do, and those who do it are rewarded for doing so by being allowed to create new bitcoins in a controlled way.
A good explanation of why we have miners and why they are compensated. Sadly it is better than 90% of the explanations of this forum which usually are "run a program, solve some puzzles, and get free money" (not as much now given the risen of ASICs but it has provided a horrible perception of how and why mining occurs to non-enthusiasts).
