@hiakuryu - what brocktice said, and:
but what is the crypto doing? ... What is it that it's doing? ... What are we actually doing with our computer cycles? What is it that we're actually decrypting or encrypting?
See
protocol specification. And you're not encrypting or decrypting anything, you're hashing.
No one knows who he is or why he's done this.
That's kind of the point, we don't know and we don't care, because it's not about him. He doesn't have more power over Bitcoin than anyone else.
People talk about transparency, trust and decentralisation in the system
People talk about transparency, decentralisation and the fact that
trust is not needed because the Bitcoin protocol relies on proof-of-work, not trust. (Compare to actually making trade with bitcoins, which requires some sort of trust, reputation or mediation).
2. All transactions are recorded in the block chain which every node has. The transactions contain no information about you, so unless you give away the connection between 1fhdjHFS98DKJjdksDS9euDH44 and yourself then no one knows it was you who sent 3.3BTC to 1HE9hd9ejwQ3QnvJKSL4LKccn. I don't know of any countries where small gifts to friends are taxed. It's pretty wrong to say that all governments tax all transactions. Governments are slow as hell.
Isn't this a vulnerability? What if a Dull starts transacting 0.01 BTC to another Dull and back again, continously?
the chain will grow bigger than my harddrive is?!
There are mechanisms in place to stop transaction spam.