On August 6, 2022, he participated in a conference in which he explained how bitcoin is a technological gem. On this occasion, he returns to the ability of bitcoin not to be duplicated. In the digital space, this specificity has, according to him, an immense value. Its architecture is in this sense a computer tool that can be the engine of start-ups. To avoid being duplicated, the Bitcoin network has solved the well-known double-spending problem.
Double Spending: What is it?
Double-spending is the computing problem Bitcoin solved. This prowess is the source of bitcoin’s value. Without this criterion, anyone could duplicate a transaction in which one unit was spent. In the same way as a fiduciary currency whose ticket is unique, Bitcoin had to single out each of its units.
Thus, double-spending can be defined as the fact that the same unit of a fiat or crypto currency can be spent twice. This would have the effect of blunting confidence in the currency. However, confidence is the cement of any monetary system. To avoid double-spending, cryptocurrencies use a blockchain combining a public ledger with cryptographic algorithms. Concretely, a blockchain is an unfalsifiable database while archiving all the transactions carried out within the network. For this reason, the risk of double-spending can be analyzed as a systemic risk.
Double-spending: Solving through decentralization
In a decentralized system, it is more complicated to ensure that funds are not spent twice since there is no supervisor. Equally powerful participants must coordinate around a set of rules that prevent fraud and encourage all users to act honestly. This problem was solved by the great innovation of bitcoin. This is accompanied by the white paper in which the algorithmic solution is presented with the data structure now called blockchain.
The blockchain is publicly available. As a result, it is easy to identify and then hinder fraudulent activities. These activities include transactions that attempt to double spend.
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