I was reading about the Byzantine Generals Problem and how Bitcoin solves it by using a Proof-of-Work mechanism. It is fascinating!
I'm sharing here a simple explanation of it for other new Bitcoiners who want to read about it.
How Bitcoin Solves the Byzantine Generals Problem
Bitcoin was the first realized solution to the Byzantine Generals Problem with respect to money. Many proposals and projects preceding Bitcoin had attempted to create money separate from the government, but all had failed in one way or another.
Blockchain Solves the Double Spend Problem
As a monetary system, Bitcoin needed a way to manage ownership and prevent double spends. To achieve this in a trustless manner, Bitcoin uses a blockchain, a public, distributed ledger which stores a history of all transactions. In the Byzantine Generals analogy, the truth that all parties must agree to is the blockchain.
If all members of the Bitcoin network, called nodes, could agree on which transactions occurred and in what order, they could verify ownership of bitcoin and establish a functioning, trustless money without a centralized authority
Proof-of-Work Solves the Byzantine Generals Problem
Bitcoin managed to solve the Byzantine Generals Problem by using a Proof-of-Work mechanism in order to establish a clear, objective ruleset for the blockchain. In order to add information, called blocks, to the blockchain, a member of the network must publish proof that they invested considerable work into creating the block. This work imposes large costs on the creator, and thus incentivizes them to publish honest information.
Because the rules are objective, there can be no disagreement or meddling with the information on the Bitcoin network. The ruleset governing which transactions are valid and which are invalid is also objective, as is the system for determining who can mint new bitcoin. Additionally, once a block has been added to the blockchain, it is extremely difficult to remove, making Bitcoin’s past immutable.
Thus, at all times, members of the Bitcoin network can agree on the state of the blockchain and all transactions therein. Each node verifies for itself whether blocks are valid based on the Proof-of-Work requirement and whether transactions are valid based on other requirements.
If any member of the network attempts to broadcast false information, all nodes on the network will immediately recognize it as objectively invalid and ignore it. Because each node can verify all information on the Bitcoin network itself, there is no need to trust other members of the network, making Bitcoin a trustless system.