What Is the Byzantine Generals Problem? | River Financial

the problem of the Byzantine generals

The Byzantine Generals Problem is a game theory problem, describing the difficulty decentralized parties have in reaching consensus without relying on a trusted central party. In a network where no member can verify the identity of other members, how can members collectively agree on a certain truth?

The game theory analogy behind the Byzantine Generals problem is that several generals are besieging Byzantium. they have surrounded the city, but they must collectively decide when to attack. if all the generals attack at the same time, they will win, but if they attack at different times, they will lose. Generals do not have secure channels of communication with each other because any messages they send or receive may have been intercepted or misdirected by Byzantium’s defenders. how can the generals organize to attack at the same time?

Reading: Byzantine generals problem bitcoin

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centralized and decentralized systems

Only decentralized systems face the Byzantine Generals problem as they have no reliable source of information and no way to verify the information they receive from other members of the network. in centralized systems, one authority is trusted to publish true information and prevent false or fraudulent information from being spread on the network.

For example, in the traditional financial system, banks are trusted to show customers their balances and transaction history honestly. if a bank attempted to lie or defraud its customers, a central bank or government is relied upon to rectify the breach of trust.

Centralized systems do not solve the problem of the Byzantine generals, which requires that the truth be established without trust. rather, they sacrifice lack of trust for efficiency and choose not to face the problem at all. however, centralized systems are vulnerable to corruption by the central authority.

money and the problem of the Byzantine generals

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money is an excellent example of the Byzantine generals problem. how should a society establish money that all members of a society can trust and agree on? For much of history, societies have selected precious metals or other rare goods, such as shells or glass beads, as money. Somehow, gold solved the problem of the Byzantine generals: it was trusted and recognized in all decentralized systems, such as international trade. however, its weight and purity remained unreliable, and still are to this day. the failure of gold to completely solve the problem for the Byzantine generals resulted in trusted central parties, usually governments, taking over the establishment and issuance of money. governments monopolized mints to inspire confidence in the weight and purity of money. centralized systems obviously did not solve the problem of the Byzantine generals. Governments, the central trusted authorities for money, consistently violated that trust by seizing, debasing, or exchanging money.

– satoshi nakamoto discussing the importance of the decentralized nature of bitcoin.

For money to solve the Byzantine generals problem, it would have to be verifiable, counterfeit-resistant, and trustless. it was not until the invention of bitcoin that this feat was achieved.

how bitcoin solves the byzantine generals problem

Bitcoin was the first realized solution to the Byzantine generals problem regarding money. many pre-bitcoin proposals and projects tried to create money separate from the government, but they all failed in one way or another.

➤ learn more about bitcoin’s predecessors.

blockchain solves the problem of double spending

As a monetary system, bitcoin needed a way to manage ownership and prevent double spending. To achieve this without trust, Bitcoin uses a blockchain, a distributed public ledger that stores a history of all transactions. In the Byzantine generals analogy, the truth that all parties must accept is the blockchain.

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➤ Learn more about the double spending problem.

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 functional, trustless money with no 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 to establish a set of clear and objective rules for the blockchain. To add information, called blocks, to the blockchain, a network member must post proof that they put considerable work into creating the block. this work imposes large costs on the creator and thus incentivizes the creator to post honest information.

Because the rules are objective, there can be no disagreement or meddling with information on the bitcoin network. the set of rules governing which transactions are valid and which are invalid is also objective, as is the system for determining who can mint new bitcoins. Furthermore, once a block has been added to the blockchain, it is extremely difficult to remove it, 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 on it. each node checks for itself if the blocks are valid according to the proof-of-work requirement and if the transactions are valid according to other requirements.

If any member of the network tries to transmit false information, all nodes in 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 network members, making bitcoin trustless.

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