The Bitcoin White Paper introduces a groundbreaking concept: a decentralized electronic cash system that facilitates peer-to-peer transactions without the need for intermediaries like banks. While digital signatures offer some security, reliance on trusted third parties for preventing double-spending undermines the system’s core benefits. To address this, the paper proposes leveraging a peer-to-peer network.
In this network, transactions receive timestamps through hashing, creating an immutable chain of proof-of-work. This chain ensures that transactions cannot be altered without redoing the proof-of-work, effectively solving the double-spending issue. The validity of transactions is confirmed by the longest chain, which not only records the sequence of events but also signifies the contribution of the largest pool of CPU power.
Crucially, as long as the majority of CPU power remains in the hands of honest nodes, they will continue to generate the longest chain, thwarting potential attackers. The network itself operates with minimal structure, allowing nodes to freely join or leave. Messages are disseminated on a best effort basis, with nodes accepting the longest proof-of-work chain as the definitive record of transactions during their absence.
Overall, the Bitcoin White Paper lays the foundation for a revolutionary system that promises secure, decentralized transactions, paving the way for the future of digital currency.