What Is Double Spending?
Double spending is the possibility of a digital currency being spent twice. Double-spending is a problem in a digital cash scheme in which a single digital token may be used multiple times. A digital token, unlike tangible currency, is made out of a digital file that may be replicated or faked.
Because digital information may be quickly replicated by intelligent persons who understand the blockchain network and the computational power required to modify it. It is a potential problem specific to digital currency.
Physical currencies do not have this problem since they are difficult to duplicate, and the parties engaged in a transaction can quickly verify the currency’s legitimacy and previous ownership. Of course, this does not apply to instances involving monetary transactions.
When it comes to digital currency, there’s always the possibility that the holder may make a copy and transmit it to a merchant or another party while keeping the original.
Because bitcoin, the most popular digital money or “cryptocurrency,” is a decentralized currency with no central agency to verify that it is spent only once, this was a concern at first. On the other hand, Bitcoin uses a method called the blockchain. This is based on transaction logs, to verify the legitimacy of each transaction and avoid double-counting.
All bitcoin transactions, without exception, must be recorded in the blockchain. This technique eliminates double-counting and other forms of fraud by ensuring that the party spending the bitcoins owns them. As more and more transactions are added to the blockchain of validated transactions, it grows over time.
Verifying Bitcoin transactions takes some time since it requires a lot of number crunching and complicated algorithms that require a lot of processing power. It is impossible because of the massive amount of computer power necessary to clone or falsify the blockchain.
Double Spending Example
When a blockchain network is interrupted, bitcoin is effectively stolen, which is known as double-spending. The thief would either transmit a duplicate of the currency transaction or wipe it entirely to make it appear real. Double-spending does happen, albeit it is uncommon.« Back to Glossary Index