Quote from: markm on March 31, 2014, 09:01:02 PM

A point that puzzles me is how are the miners, following the implied instructions recorded in the blockchain, to manipulate the bitcoins?

Parts of the protocol seem to have the miners sending bitcoins somewhere, or holding bitcoins somewhere, but since the blockchain is the only data upon which to decide which bitcoins to send to where, how are the private keys controlling the bitcoins that are to be moved etc stored?

For example when someone uses bitcoins as collateral and gets a loan, where is the private key of the address used to hold the collateral (those bitcoins) stored?

Each individual wallet knows it's own bitcoin private key of course, and it is these individual wallets that are responsible for executing the bitcoin transactions they are required to execute for the protocol. A failure to execute these transactions would be detected and would count as default.