Goal
A short introduction to Bitcoin. A peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending.
Proof of Work
The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work. Proof-of-work is essentially one-CPU-one-vote. The majority decision is represented by the longest chain. If a majority of CPU power is controlled by honest nodes, the honest chain will grow the fastest and outpace any competing chains. To modify a past block, an attacker would have to redo all blocks after it and then catch up with the work of the honest nodes.
Verification
It is possible to verify payments without running a full network node. The verification is reliable as long as honest nodes control the network, but is more vulnerable if the network is overpowered by an attacker. Businesses that receive frequent payments will probably still want to run their own nodes for more independent security and quicker verification.
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