In traditional finance, if you try to digitalise payments, you face a core hurdle: the double-spending problem. Because digital files can be copied infinitely, centralized banks act as gatekeepers, maintaining a single master ledger to ensure you do not spend the same money twice. This setup makes the central bank a single point of failure, meaning if their system goes down or is compromised, the entire network halts.

Bitcoin bypasses this intermediary by distributing the ledger among a global network of equal participants, or nodes. Instead of trusting one central institution, every node maintains its own identical copy of the transaction history. While this peer-to-peer structure offers massive resilience and independence, it requires the network to constantly agree on the state of the ledger without a leader.