[PLUG-TALK] [PLUG] Bitcoin, banks, and government

[John Jason Jordan]

On Mon, 31 Dec 2012 18:04:51 -0800
Michael Rasmussen <michael at jamhome.us> dijo:

>>From http://bitcoin.org/bitcoin.pdf
>   The problem of course is the payee can't verify that one of the
> owners did not double-spend the coin.  A common solution is to
> introduce a trusted central authority, or mint, that checks every
> transaction for double spending.  After each transaction, the coin
> must be returned to the mint to issue a new coin, and only coins
> issued directly from the mint are trusted not to be double-spent.
>
>More later...

I eagerly await your "more later," as this is an area of bitcoin that I
do not understand well. 

From what I do grasp at this point, all transactions are broadcast to
the entire network. Each transaction involving a coin adds a "block" to
the signature, indicating that it was spent by a particular user.
Somehow this makes it impossible for the user to spend the same coin
again. 

There have been exploits (some apparently continuing), but my reading
so far has not revealed a successful hack of the basic security. Mostly
the exploits involve compromising a Windows computer's client to get it
to send the coins in its wallet to someone else. And lest we think
Linux machines would be immune to this, our sister OS, Android, has
been the target of similar bitcoin exploits.

Already I can see that one drawback of the bitcoin system is lack of
insurance. But I don't see how you could ever have insurance with a
system that does not involve a financial institution.