Double spending: what is it, and how does Bitcoin prevent it? (Revamp)

Counterfeit cash or currencies exist all over the world. People with the means and intention have sought to create fake versions of currencies, minerals or stones, resources, art, etc. This is prevalent in every economy globally, and these dubious individuals also exist in the crypto market. Fake transactions operate in the crypto market.

These bad actors are often the early adopters of the cryptocurrencies because, at that stage, the asset is still very untested, unregulated and easy to manipulate.

Let’s get into understanding double spending and how Bitcoin acts to prevent it.

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What is double-spending?

This is a type of crypto fraud whereby a cryptocurrency is spent more than once. A person could enter modified blocks into the blockchain. They could then submit a false transaction and reclaim already spent coins.

Remember how the blockchain works? The blockchain is created by linking blocks generated by miners. When a block is created, it gets an encrypted number called a hash.

The hash contains the previous block information, a time stamp, and transaction details. Once the block is verified using the proof of work consensus, the network closes it. The system then creates another one with a time stamp, transaction details, and the hash for the previous block. There are many blockchains that exist in different cryptocurrency ecosystems.

A common type of double-spending attack is the 51% attack, also known as the majority attack. In this scenario, one or multiple entities take over the majority of the mining power or hash power. They’ll have enough control to confirm incorrect transactions or invalidate real transactions as long as they benefit.

How the Bitcoin network prevents double-spending

On the Bitcoin network, After a transaction receives over six confirmations from the network, it is entered into the blockchain. Once there, the transaction gets a timestamp, making it impossible to manipulate or tamper with.

Could you get affected by a double-spending attack?

Some Bitcoin users like to wait until their transactions are finalized before issuing out goods or services. Finalization involves waiting for several blocks to be confirmed after a transaction is made to minimize the chances of double-spending.

Although users should be aware of these potential risks, the good news is that they are rare on the Bitcoin blockchain. The chances that you’ll experience a double-spending attack on the Bitcoin blockchain are very low.