Double Spending Meaning
What is Double Spending?
Assume you have a blueprint for the next-gen tech that could take space exploration to another level. You stealthily sell it to five of the largest space exploration companies for $1 billion each to make more money from it. Here, you are “double spending” the exact blueprint.
In cryptocurrency, double spending is the potential for a digital asset to be spent on more than one transaction simultaneously. It often occurs due to a 51% attack, or a race attack– which involves the recipient of a cryptocurrency accepting payment for unconfirmed transactions.
While double spending in physical (fiat) money and gold is almost impossible, it is one of the primary concerns of digital currencies. This is due to the relative ease of duplicating data and the increased availability of computing power to do it. A successful double-spend would require the transaction information of a cryptocurrency to be altered to meet conditions that allow modified blocks to be added to the blockchain.
However, the likelihood of it happening is very slim since blockchains require every transaction to be validated by miners/validators before they are added to the network. The transaction validation process requires a great deal of computing resources, and any conflicting transaction information included in a block is immediately detected. This makes it exceedingly difficult to duplicate, reverse, or modify a transaction and add it to the blockchain.
Can Bitcoin Be Spent Twice? How Does Bitcoin Prevent Double Spending?
Bitcoin uses a consensus algorithm called proof-of-work (PoW) to validate transactions and add new blocks to the network. It requires the miners to check and verify that transactions are immutable (cannot be computationally modified ), irreversible, and final before the block containing them is added to the blockchain.
In addition, each transaction is timestamped and broadcasted to all nodes within the Bitcoin network. This allows every node to update its transaction records and ensure the transactions satisfy specific conditions, including the absence of any double-spending instance.
The expense of computational resources needed for miners to launch a 51% attack, coupled with the fact that Bitcoin transactions are tamper-proof, irreversible, and tied to previous blocks, makes double-spending on Bitcoin nearly impossible.