Why You Can’t Copy Bitcoin

Digital files can be copied infinitely. A photo, a song, a document — you can duplicate it a million times without destroying the original. That’s what makes digital things so easy to share.

So here’s an obvious problem: if Bitcoin is just a digital file, what stops someone from copying it and spending it twice? Copy your Bitcoin, send one copy to a merchant, keep the other for yourself. Free money, infinitely.

This is called the double-spend problem. And it’s the reason every attempt at digital cash before Bitcoin failed.

The old solution was simple but flawed: have a central authority keep track. One trusted institution maintains the ledger, checks every transaction, and prevents double-spending. Your bank does this today. The problem? Now you’ve recreated exactly what you were trying to avoid — a central authority with power over your money.

For thirty years, the brightest minds in cryptography tried to solve this without a central authority. All of them failed.

Bitcoin’s solution was elegant: instead of one central ledger controlled by one institution, use thousands of identical ledgers maintained by thousands of independent computers simultaneously. Every transaction is broadcast to the entire network. Everyone checks it. Everyone records it. To spend the same Bitcoin twice, you’d have to fool not one institution but thousands of independent participants at the same time.

Nobody controls the ledger. Everyone maintains it.

The double-spend problem — solved. Without a bank. Without a company. Without anyone’s permission.

Tomorrow: who controls Bitcoin? The answer is stranger than you’d expect.

— The Daily Bit