Pelican,Go to the end of the clip 'What is Bitcoin' and click on the second clip "Bitcoin New Digital Currency Explained.'

"New transactions are collected in the block by the node.As a reward for participating in the network the node adds one additional transaction to the block,assigniing 50 additional Bitcoins to his own personal address.

What is keeping the nodes from flooding Bitcoin nodes with new blocks?
Ans,All nodes are doing the same thing but only one gets the reward.The ingenious principle behind Bitcoin is the proof of work algorithm by which the node has to authenicate the block,like check sum #.The proof of work # is very difficult to calculate and therefore requires worker or CPU time from the nodes computer.The amount of work required is essentially probabilistic.The chance of finding the # is proportional to the amount of CPU cycles the node computer spends finding the #.

The node that finds the # first,will transmit the block to the network where it will be received by the other nodes.Each node checks whether the proof # is valid for the block.Each node records a chain of blocks that registers all the transactions that have taken place on the Bitcoin network.

So essentially it is a money program that links computers with no central authority and uses this self verification system to keep it honest.As to the reward system and the growth of new money,I don't really understand it.What they are saying that it is virtually impossible for Govts or Banks to shut it down.

As you have noted there is much bartering of services that the Govt does not know about.If they can keep it honest then it would be a great hedge against inflation particularly in the USA.Something like this,could well save their economy.

Ask around.I'd be interested to hear from someone who has used this system.

Aside to the Bitcoin concept, yet another great 'opening/link' for hackers around the world, adding more personal details, credit card details, phone numbers, names, addresses from personal computer hardware and software.

To date, Telstra, most phone companies, credit card corporations have sold out and given out (for products) most Australians' personal details including email addresses.

Our private info as we speak is being viewed all around the world.

The fraud/hacking of Sony is just a fraction of what will occur in future.

Facebook signage (albeit not Facebook's fault) has 'linked' peoples systems right around the world with hacking businesses/Criminals enjoying field days/a lifetime of fraud wealth set up for them, all at their finger tips.

weareunique,In this system there is the whole network verifying the validity of transactions,so there is far less chance of counterfeiting or fraud than some central authority like the US Federal Reserve having control.I think it is worth investigating.

I smell a PONZI!

You may be right csteel.Apparentlty Satoshi Nakamoto has pretended to relinguish power of his central authority of this process but in reality has not.He does not say how it finances itself to exist.That is why I'm cautious.

I'm still interested though in the software concept of having a direct money exchange via computer.We cannot trust the US Federal Reserve to keep the balance of money in our economies.If the derivate market collapses then,our economies will be flooded with worthless US $. We need a new system.

I think you may be wise to de-emphasise this, Arjay. The more you look for Satoshi Nakamoto the less you seem to find. No-one is even sure whether that is a real name, or even if he is Japanese.

Most odd. But thanks for alerting us to the concept of peer-to-peer money, I suspect we will be seeing more stable versions appear in years to come.

But please don't get carried away with the idea that it is somehow external to the financial system. Even if such a concept is adopted by you and me, the chances of it surviving at a more significant level than as barter-substitute, without regulation, are zero.

The taxman can already ping you for receiving "value" rather than folding money. This will be no different, I promise you.