“A remarkable conceptual and technical achievement”

The Federal Reserve Bank of Chicago has published a rather impressive four-page briefing on Bitcoin.

It does a good job of explaining how the system works and I think is fair in its assessments of the weaknesses.  Worth a read.

If I have one criticism, it is in their use of the word “recursive”. I don’t think that’s hugely helpful as it immediately puts the reader in a “programming” frame of mind and can obscure what’s actually going on. I prefer to explain it by appealing to listeners’ recollections (usually vague!) of inductive reasoning:  “bear with me for a moment and let’s assume the system already works and everybody knows who owns what… right, now let’s work from there and figure out how to spend some coins in a way that allows everybody still to agree afterwards”.  That’s pretty much what they did but I think saying “induction” rather than “recursion” helps the explanatory process.