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The question of whether we live in a computer simulation sounds rather absurd. Yet, philosophers, technologists, physicists, and even comedians have been grappling with the idea that our reality could be nothing more than a creation by more advanced beings.
We can never know for sure whether we are in a matrix; however, technologists such as Nick Bostrom and even Elon Musk agree that advancements in today’s technology could develop to a point where it is possible for humans to realistically build a computer simulation.
Such a simulation would require a level of sophistication that enables computers to create a virtual reality indistinguishable from physical reality.
Unbeknownst to most, Bitcoin is already solving one of the key puzzles of computer science that (if solved) could help humans create virtual realities. That problem is double-spending.
Double spending is when a single currency is spent twice deceiving the recipient of the funds in the process.
In the physical world, it is impossible to double-spend as you can only spend one dollar at a time. In the digital realm, however, a digital currency can be easily duplicated to enable double-spending. That is why it is important to have banks and other third parties involved with every payment process. These third parties act as transaction validators and work to minimize the risk of double-spending.
Therefore, how does a cryptocurrency solve double spending when there are no intermediaries?
Every crypto transaction is posted on a public ledger that is secured by a decentralized network of miners. The miners work to publish new transactions on the blockchain as well as keep a record of the public ledger. This ledger is used to confirm and verify that every transaction is legitimate.
That is why every transaction on the blockchain waits for confirmations before it is confirmed and included in a block. A block represents a group of transactions and the Bitcoin blockchain produces a block every 10 minutes.
Once a transaction is included in a block, it becomes part of the public ledger that is protected from duplication by specialized cryptographic proof. The public ledger acts as the source of truth showing all the transactions that have been verified by minders in that network.
However, in a decentralized network of miners where no one can verify the identity of other members, how do miners collectively agree on what version of the ledger is the single source of truth. After all, a miner (or group of miners) can potentially create a false ledger and submit it to the network for verification right?
The answer to that question introduces us to the Byzantine general problem.
The Byzantine general problem is a theory that describes the challenge of arriving at a consensus on a decentralized network of members who are unable to verify each other's identity.
The theory is derived from a game where several generals are surrounding a city ready to attack. However, the caveat to this game is that the only chance of winning in this attack is if all the generals attack the city at the same time.
Therefore, the generals need to coordinate their attack to make sure that all the troops go in at the same time from all the corners of the city. Separated by distance and without a secure communication channel with one another, the generals have a real challenge of signaling to one another leave alone agreeing on a set time for a united and simultaneous attack.
Even if a messenger was to be sent to run with the information and deliver it to all the generals in the network, there is no solution for verifying the authenticity of that information as the generals do not know one another.
While the Byzantine Generals’ Problem is a fictitious challenge, it describes a problem that computer systems face (especially decentralized networks of computers seeking consensus).
In the same way, Bitcoin miners face a real challenge as they lack a reliable method of verifying whether the source of the information they receive from other miners is true. If everyone in the network keeps a record of the Bitcoin ledger, how can we verify whether any of the ledgers are the main source of truth?
Solving the Byzantine general problem is critical for networks such as Bitcoin that don't have a central governing authority to verify the authenticity of information coming from other network members. While preceding attempts have failed, Bitcoin solved this problem using the blockchain as the single source of truth from which all network members could agree.
The blockchain serves as an immutable source of truth all miners on the network can refer to while verifying transactions. As a ledger storing all the transactions, the blockchain prevents double-spending since it is an immutable ledger. The members of the Bitcoin network create the blockchain. They follow a proof of work consensus mechanism to create every block of the blockchain.
A proof of work consensus mechanism requires every member to prove that they have followed the rules required to publish blocks on the blockchain. Producing proof requires members to sacrifice a chunk of their resource (computing resource) to show that they have skin in the game as an incentive to publish honest information to the blockchain.
Then, cryptographic hashes are coded into every block thus enabling immutability. The code of each block is referenced to its preceding block further adding to the strength of the protection.
Therefore, to crack one of the hashes, a hacker would have to go back to the very first block of the transaction ledger.
This is how Bitcoin solves double-spending.
Are we living in a matrix? Well, if Elon Musk’s opinion is anything to go by, there is a probability that we are living in a simulation. If it were a simulation, knowing the enormous amount of resources this would take, it must be a very stable simulation as there are no loopholes that allow for the disruption of our current reality. If there were vulnerabilities in our reality, you could probably throw an apple to the ground and it would go up instead.
Likewise, if humans were to create a digital simulation in the future, such a system would require advanced super computers that run on decentralized blockchains thereby translating the same level of physical immutability to a digital plane. Consensus would be a key ingredient in such a system.
Achieving consensus in a distributed system where all the nodes agree on a certain set of rules and move forward in agreement on a particular assessment of a transaction right before publishing it to an immutable database is how Bitcoin solves the double-spending issue.
In computer science, occurrences of the Byzantine fault tolerance (instances in computer systems when the Byzantine generals’ problem remains unsolved) are an extended and complex topic. However, it is thanks to Bitcoin’s blockchain that a framework for solving consensus on distributed computer networks is achieved.
Blockchain introduces a single source of immutable truth on digital networks thus merging characteristics of the physical world to the digital. This could very well be mankind’s first step to solving the complexities of creating the matrix.
