I’m new to Bitcoin and trying to understand how the double-spending problem can occur and implicitly, the need for “mining”.

Let’s say Bitcoin worked the following way:

  • In the network, one node is chosen as the “moderator” node. That is, the responsibility of creating a “block” from the broadcasted transactions lies on this block and nobody else. This “moderator” node is changed every N seconds or every N block creations, etc.
  • From the pool of unconfirmed transactions, the “moderator” randomly picks 100 transactions. It verifies that they are legitimate (authorized) using the public keys, and it verifies that there is no “double-spend” among the selected transactions and past transactions by looking at the blockchain.
  • Once it verifies that all transactions are legit, it creates a block simply by putting these transactions together (that is, no mining, nothing. Simply a very fast operation) and broadcasts this block on the network.
  • Every node that receives the block verifies that it is legitimate. That is, they verify that the transactions are authorized by checking the public key and they verify that there’s no double spend either within the new block itself, or within the whole blockchain.
  • Repeat.

So, what’s the problem with this scheme? How can “double-spend” occur here and how can “mining” prevent it?

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