Back in the early 1990’s developers, cryptographers, and different groups of people were trying to solve “the double-spend problem” as it related to digital cash, previously known also as electronic cash. This was a big problem and the solution to it introduced Bitcoin to the world.
Digital currencies, like Bitcoin, are just another form of digital files. Say, for example, you have a file saved locally to your computer. You can easily copy it from file location-A and then send it to a friend who would save it to file location-B. There is nothing preventing you from copying this file many times over and sharing the same file with multiple people. The same principle applies to digital currency, but with an important difference: being able to ensure that files cannot be duplicated, so that the money isn’t copied over and over. If digital money can be counterfeited (copied), it becomes worthless. This is the double-spend problem, and Bitcoin which was developed by Satoshi Nakamoto is the first protocol to solve the problem.
Double-Spending within Bitcoin is the act of using the same bitcoins (digital money files) more than once. If I buy an apple for $1, I cannot spend that same $1 to buy an orange. If I could, money would be worthless since everyone would have unlimited amounts and the scarcity, that which gives currency value, would disappear. The Bitcoin network protects against double-spends by the verification of each recorded transaction within the Bitcoin blockchain which utilizes a Proof-of-Work (PoW) mechanism.
The blockchain, which is an open and immutable ledger, ensures that the transactions are finalized by its inputs confirmed by miners. The confirmations make each unique bitcoin and its subsequent transactions legitimate. If one tried to duplicate a transaction the original blocks deterministic functions would change showing the network that it is counterfeit and would not to be accepted.
Once a transaction is confirmed, it’s nearly impossible to double-spend it. The more confirmations that a transaction has, the harder it is to double-spend the bitcoins. By solving the double-spend problem, digital currency has now become viable.
The Bitcoin network changes fast and changes often. To stay ahead of the game it’s necessary to follow the news and discuss the latest events with other members of the community. Bitcoin.com aims to be a reliable source of information for beginners and industry insiders alike.