Trust hacking: How the Bitcoin system works

how-bitcoin-network-functions

[Scott Driscoll] sent us a link to his Bitcoin explanation a couple of weeks ago. We glanced at it but moved on rather quickly. It’s been popping up here and there and we finally gave it the time it deserved. This video is interesting in that it doesn’t just focus on what the Bitcoin actually is, but how the Bitcoin system works when it comes time for money to change hands.

Quite early on in the explanation he mentions that “The Bitcoin system is amazingly designed so that no trust is needed”. That’s a powerful statement. For instance, if you sell your car, one of your friends will probably tell you not to take a check. That’s because a check means you’re trusting that the buyer actually has a balance in their account to cover the transaction. With Bitcoin the transaction carries its own proof that the currency is available by including information about the past transactions through which those Bitcoins were acquired.

If you have some idea of what public/private key pairs are you’re already equipped to understand [Scott's] lecture. After you make it through the 22 minute video maybe you should get down to work doing some Bitcoin mining at home.