How It Works: Bitcoin Edition

Nothing like avoiding end-of-the-year physical cleanup with end-of-the-year virtual cleanup! I finally got around to reading this detailed description of how Bitcoin works, recommended by Schneier on his weblog, and I need to hang on to this for next time I’m teaching security. From a teaching perspective, it does a nice job of showing how all of the various types of cryptography come together in an interesting way in this protocol. This is the part that always seems sort of wild to me:

The idea is to make it so everyone (collectively) is the bank. In particular, we’ll assume that everyone using Infocoin keeps a complete record of which infocoins belong to which person. You can think of this as a shared public ledger showing all Infocoin transactions. We’ll call this ledger the block chain, since that’s what the complete record will be called in Bitcoin, once we get to it.

The article does assume you have some cryptographic background, but I suspect that reading along as far as you can through the article would at least explain what some of the problems that Bitcoin has to solve are. A nice read with a cup of tea on a snowy day, especially if you’re a student getting your brain back into gear for school in another day or two!

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