In the development of his work, Satoshi Nakamoto proposed a solution to the double-spending problem, since digital currency is actually a set of binary information stored in a device, it could be easily created, copied, and reused indefinitely. Another key point was the development of a consensus protocol called Proof-ofWork (PoW) to support a decentralized and distributed network with partners, in which trust and intermediates are not required. In short, his proposal was composed of:
- Digitally signed cryptographic currency transactions recorded in an accounting book (in Bitcoin’s terminology, one block). Each block also has its own unique signature, called a hash, which is stored in the block behind it, forming a chain of signatures (Blockchain). The signatures of the blocks are used to verify the integrity of the block and consequently of all the blocks before it.
- A server with timestamp to digitally sign the date and time of each block, serving as proof of its existence on the network.
- The Proof-of-Work protocol, which determines how each transaction should be processed, validated and registered. In addition, it also delineates how the network will behave in case of adulteration and divergence in the records. In other words, since each participant has a copy of the data, they may have every incentive to tamper with it, while presenting themselves as true and fool the network.
- The network structure and policy definitions governing the entire arrangement. 5. Financial incentive for participants who are engaged in processing transactions. 6. Digital ballast and traceability ofall currencies in the network, to prevent someone from creating money out of nothing.
- Privacy through the employment of public keys that identify participants anonymously, even though the registration of transactions is a public information.
Based on these guidelines, Bitcoin is born, a cryptocurrency enabled through the first generation of the Blockchain technology. This electronic cash is a totally decentralized and distributed system, without intermediaries and totally safe.
