Bitcoin solves the Problem of Byzantine Generals

The Byzantine Generals problem describes the difficulties that can arise in reaching a common consensus in a distributed system, especially when some participants are untrustworthy or malicious. The issue is how to reach agreement in a decentralized environment without relying on a trusted central party.

What is the Problem of the Byzantine Generals?

The problem was first described in the context of a war situation in which several divisions of an army besiege an enemy city and must communicate with each other indirectly via messengers to agree on a common strategy.

In the process, each general must decide whether to attack or retreat. The problem arises due to traitors who can spread false information and thus sabotage the strategy. None of the generals knows what information is correct and who to trust.

Money and the Problem of the Byzantine Generals

The problem of Byzantine generals has great significance in the world of digital currencies as well. When there is no central authority overseeing transactions, it can be difficult to ensure that all participants have the same transaction history.

Bitcoin has solved this problem by introducing «Proof-of-Work», a method of ensuring that all transactions are correct and cannot be duplicated.

Proof-of-Work solves the Problem of Byzantine Generals

The principle of Proof-of-Work (PoW) is a central aspect of the bitcoin network and the method used to validate transactions in a decentralized system. PoW requires bitcoin network miners to solve complex mathematical puzzles to confirm the validity of transactions and receive new bitcoin as rewards.

The puzzles that miners must solve require significant computing power, guaranteeing that every miner in the network contributes. The network requires miners to do a certain amount of work before they can append a block to the blockchain and thus confirm a transaction.

The PoW algorithm ensures that the bitcoin network is secure and resistant to fraud and manipulation. If someone tried to perform a duplicate transaction or defraud the network, that person would have to attack the entire network to succeed. This would require them to control more than 50% of the network's total computing power, making it a so-called «51% attack».

Since the computing power required for such an attack is enormous, it is extremely unlikely that this will ever succeed. This makes the bitcoin network very secure and guarantees that all transactions are correct and trustworthy.

Conclusion

The Byzantine Generals problem is an important aspect of decentralization and shows how difficult it can be to reach agreement in a distributed environment.

However, by creating mechanisms such as proof-of-work, this problem can be solved, enabling a secure and reliable decentralized financial infrastructure.