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In the present article we’ll try to explain what Bitcoin is, and how it works. The topic is tricky because Bitcoin’s implementation relies on distributed computational procedures (carried out by a network of different machines) and encryption. So in this first article of a series, we will simply try to give an analogy for the big-picture understanding of how Bitcoin actually works, where we hope to strike a balance between accuracy and comprehension for those not familiar with “mathematical trapdoor functions” and “public/private key protocols.” In future articles, we’ll talk more about its implications, and how it relates to commodity monies like gold in an Austro-libertarian framework.
http://consultingbyrpm.com/blog/2013/04/bitcoin-from-an-austro-libertarian-perspective-part-i.html