Double spending

The double spending problem has been the catalyst to what we now call a blockchain. This problem refers to a scenario where a digital currency is spent more than once. Unlike physical currencies, this flaw is unique to digital currencies, because digital information is something that can be copied easily. To prevent this, two solutions are possible:

1. A centralised solution, whereby a third party checks every transaction and verifies that no digital currency has been spent twice. There are certain drawbacks to this solution. First, the centralised third party represents a single point of failure. Second, all members of the network have to trust this third party;
2. A decentralised solution that emerged in 2009, with the release of the Bitcoin white-paper. Its cryptographic protocol (using a proof-of-work consensus mechanism), where transactions are batched into blocks and chained together using a linked list of hash pointers, solved this problem. This is how the blockchain was born!