You find your dream smartphone and you want to buy it with cash online… WHAT?! How are you going to pay with cash online?
If you take a photo of the cash and send it to the seller, the seller isn’t going to accept it as payment because you can still use the same money and buy something else. You cannot pay this way because you can double-spend the money. Such a medium of exchange would be worthless.
In order to tackle the double-spending problem in online payments we can use trusted institutions like banks and payment processors. These trusted institutions guarantee that the buyer won’t double-spend the money, but without trusted third-parties the double-spending problem wasn’t trivial for many years.
Satoshi, the creator of Bitcoin, managed to solve this problem. On the Bitcoin network you can send bitcoin peer-to-peer. The solution is possible through a public ledger (blockchain) and a Proof-of-Work based implementation. Proof-of-Work is the reason Bitcoin consumes a lot of energy, but it is also the method Satoshi used to solve the double-spending problem.
Read the original whitepaper here.