Notes on the Introduction

Commerce is the first word in the Bitcoin whitepaper.

Bitcoin exists to solve the problem of settling payments on the internet without a trusted third party.

Emphasis is laid on the fact that completely non-reversible payments like with cash in real life have not been hacked with traditional e-payment methods.

This is because the presence of a trusted third party, the financial institution, creates a possibility for mediating disputes between buyer and seller.

When reversal is possible, the need for trust spreads.

For example, a buyer would have to provide a lot more information about themselves to aid reversal in the event of dispute mediation.

The buyer would also have to trust that their data is not getting into the wrong hands.

This trust-based model also makes merchants more cautious of their customers, hassling them for more information than is necessary.

All these costs and payment uncertainties are avoided by using cash in person but were not possible online pre-bitcoin.

Satoshi suggested an electronic system based on cryptographic proof instead of trust that allowed any two parties to transact directly with each other without the need for a trusted third party.

Sellers would be protected from fraud if transactions are computationally impractical to reverse, while buyers would be protected by routine escrow mechanisms.

The Bitcoin whitepaper proposes a way to solve the double-spending problem by utilizing a peer-to-peer timestamp server to provide computational proof of the chronological order of transactions.

As long as honest nodes control more CPU resources than any cooperating group of attackers, the system is secure.

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