Bitcoin: New plumbing for financial services

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Payment systems are systems of pipes and valves that allow monetary transfers between people all over the world. To most, they sit insulated from view. Even when in plain sight they evade comprehension. With large responsibility for errors and lack acknowledgement for progress, there has been little innovation and construction of new pipes. Bitcoin represents a new way to re-plumb the financial system on a decentralised architecture. However, much like the existing financial system, few people understand the consequences of the layout and design of its pipes.

The plumbing analogy fits far closer to Bitcoin than normal financial markets. Bitcoins are not coins, indeed there is no concept of identifiable currency units. Bitcoin should be considered a type of monetary fluid with a unit of account, Bitcoin. The monetary fluid, bitcoins, flows through a system of pipes (transaction outputs) and fittings (transactions).

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