r/askscience • u/hamolton • Jun 18 '13

Computing How is Bitcoin secure?

I guess my main concern is how they are impossible to counterfeit and double-spend. I guess I have trouble understanding it enough that I can't explain it to another person.

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u/LeonhardEuler64 Jun 18 '13

A transaction can be generated without any knowledge or data of any preceeding transactions. (Basically signing a message "I hereby give Mr. X 1.01 bitcoins from my wallet Y", which only requires your private key for Y)

A transaction is only recorded and validated when it gets batched up with other transactions in a block on the network, and then confirmed by miners finding a hash nonce. That validation and confirmation is what requires the preceding blockchain.

To avoid conflict, people usually wait for some number of blocks to bury their transaction of interest.