_*To solve this, we proposed a peer-to-peer network using proof-of-work to record a public history of transactions that quickly becomes computationally impractical for an attacker to change if honest nodes control a majority of CPU power.*_
To solve the double spending problem, a peer-to-peer network of economically incentivised to validators was implemented using a publicly auditable trail.
Where the Whitepaper states, "to solve this", it refers not to trust or a concept of ownership, very specifically to the way that all solutions have been "incomplete without a way to prevent double-spending".
Bitcoin implemented an overlay network of users and validator nodes. Uses of the bitcoin system are able to exchange transactions directly over methodologies such as IP to IP or by leaving transactions on the blockchain that can be collected later. In this, the validators act in place of a trusted intermediary to ensure that no double spends, or invalid transactions are allowed. There is a public auditable record of all transactions that occur on the bitcoin network. Any individual can choose to select and view any transaction on the blockchain and ensure that it is accurate.
This however is not necessary due to the competitive nature of the proof of work system within bitcoin. Miners will validators do not seek to get the solution to a block, they seek to find a valid block solution and hash puzzle and have this propagated to all other miners, or at least the majority of them, prior to any other solution being discovered. When a block is discovered, each miner validates that block. They do this as bitcoin is a zero-sum game. Where a miner has discovered a solution to invalid block, the other miners will quickly invalidate it as there are a fixed number of blocks to be discovered in any time period. The system is constructed with a two-week difficulty period that leads to a fixed adjustment every 2016 blocks. The consequence of this is that miners compete not only to find a solution but to invalidate erroneous blocks from other miners. Miners self-regulate and self-enforced their own network.
The system works as long as the majority of miners remain honest and are not able to collude to cheat the system. The only real attack is the ability to double spend. This would allow a miner or other individual to collude in order to defraud a merchant or other party out of a payment. In doing this, the person submitting the transaction to be double spend and the miner colluding with them would be using a false representation or engaged in other forms of deceit. This is analogous to criminal cases where the defendant has used their credit card in full knowledge that they have exceeded their credit limit. They have made a purchase using a false representation that they had the authority to use the card and that the card issuer would honour the transaction (R v Lambie [1982] A.C. 449 HL).
This is a deceit-based crime as the perpetrator will have needed to sign multiple transactions using the same input coin. That is, they have fraudulently represented that the coin that they are giving to a merchant is unencumbered.
This scenario is possible where an individual believes they will get away with the act. One of the key aspects of fraud is a belief that you can commit the crime and not be detected. In the case of miners, both transactions would be available on the network. In particular, both the merchant and the miner would hold separate signed transactions. The merchant would be able to demonstrate that other miners had a copy of a publicly available double spent transaction. In some ways, this is analogous to a scenario where a criminal tries to pass off a fraudulent check and then comes back and delivers a signed statement that they have committed a crime around 10 minutes later.
CSW
Sep 24, 2019
https://metanet-icu.slack.com/archives/C5131HKFX/p1569339721257300?thread_ts=1569339673.256900&cid=C5131HKFX
To solve the double spending problem, a peer-to-peer network of economically incentivised to validators was implemented using a publicly auditable trail.
Where the Whitepaper states, "to solve this", it refers not to trust or a concept of ownership, very specifically to the way that all solutions have been "incomplete without a way to prevent double-spending".
Bitcoin implemented an overlay network of users and validator nodes. Uses of the bitcoin system are able to exchange transactions directly over methodologies such as IP to IP or by leaving transactions on the blockchain that can be collected later. In this, the validators act in place of a trusted intermediary to ensure that no double spends, or invalid transactions are allowed. There is a public auditable record of all transactions that occur on the bitcoin network. Any individual can choose to select and view any transaction on the blockchain and ensure that it is accurate.
This however is not necessary due to the competitive nature of the proof of work system within bitcoin. Miners will validators do not seek to get the solution to a block, they seek to find a valid block solution and hash puzzle and have this propagated to all other miners, or at least the majority of them, prior to any other solution being discovered. When a block is discovered, each miner validates that block. They do this as bitcoin is a zero-sum game. Where a miner has discovered a solution to invalid block, the other miners will quickly invalidate it as there are a fixed number of blocks to be discovered in any time period. The system is constructed with a two-week difficulty period that leads to a fixed adjustment every 2016 blocks. The consequence of this is that miners compete not only to find a solution but to invalidate erroneous blocks from other miners. Miners self-regulate and self-enforced their own network.
The system works as long as the majority of miners remain honest and are not able to collude to cheat the system. The only real attack is the ability to double spend. This would allow a miner or other individual to collude in order to defraud a merchant or other party out of a payment. In doing this, the person submitting the transaction to be double spend and the miner colluding with them would be using a false representation or engaged in other forms of deceit. This is analogous to criminal cases where the defendant has used their credit card in full knowledge that they have exceeded their credit limit. They have made a purchase using a false representation that they had the authority to use the card and that the card issuer would honour the transaction (R v Lambie [1982] A.C. 449 HL).
This is a deceit-based crime as the perpetrator will have needed to sign multiple transactions using the same input coin. That is, they have fraudulently represented that the coin that they are giving to a merchant is unencumbered.
This scenario is possible where an individual believes they will get away with the act. One of the key aspects of fraud is a belief that you can commit the crime and not be detected. In the case of miners, both transactions would be available on the network. In particular, both the merchant and the miner would hold separate signed transactions. The merchant would be able to demonstrate that other miners had a copy of a publicly available double spent transaction. In some ways, this is analogous to a scenario where a criminal tries to pass off a fraudulent check and then comes back and delivers a signed statement that they have committed a crime around 10 minutes later.
CSW
Sep 24, 2019
https://metanet-icu.slack.com/archives/C5131HKFX/p1569339721257300?thread_ts=1569339673.256900&cid=C5131HKFX
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