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Saturday, February 27, 2021

The Bitcoin Protocol, And The Problem Of Double-Spending

Ever since its conception, Bitcoin has genuinely excited curiosity and passion whilst receiving media attention at the same time. The effect got amplified when this digital currency started ascending the ladders of the most profitable financial assets in this decade. Yet, the conundrums always rise up when the price of Bitcoin goes up- with quite a few questions and doubts being thrown helter-skelter. 

The Bitcoin protocol has created a unique digital asset

When the question of Bitcoin’s profitability is brought up, the key to understanding it is the problem of double-spending. Before the conception of Bitcoin, there wasn’t any value, digital or otherwise, which could be transferred, not divided into several different parts. To put it simply, if you were to scan a bill worth $100, you would have to send a copy of the receipt- not the original bill. The basis is- we don’t send the original. A copy is sent to the receiver, but the main authenticated copy remains with us. 

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In the event of financial transactions, a click of our button leads to an intermediary who would then enable the money transfer. The utility of a middleman, or rather the problem of it all, is what Bitcoin is trying to do away with. In the event of a bitcoin transaction, you would do well to remember that you are actually sending someone part of your Bitcoin, rather than sending them copies. The contents delivered are the original, and shouldn’t be tampered with. 

It is because of these reasons that there is no possible way to do away with a transfer through Bitcoin. The blockchain network validates the entire process, which implies that the protocol of Bitcoin has dealt with the double-spending issue. 

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