What Is Double Spending of Bitcoin
Updated: Jun 22
Bitcoin or any other cryptocurrency are digital numbers with a value associated with them. Since there isn't any Bitcoin in the physical state, a user can carry out the same transaction with cryptocurrency for different purposes since it involves transferring the digital number indicating the value of the Bitcoin.
A paradox arises here as to how any users can spend the same currency or, in our case, spend the same Bitcoin twice. It will result in discrepancies within the records of the cryptocurrency (Spent and Available) due to users re-broadcasting the digital transaction again. This problem is called Double Spending, and Bitcoin was one of the 1st cryptocurrencies to find a solution to this problem.
Bitcoins Consensus Mechanism (POW):
Bitcoin currently works on the principle of Proof-of-Work. The network adopts a methodology to validate each transaction occurring across the network. Let's understand that in more detail.
The Bitcoin blockchain network is nothing but a decentralized ledger of all the transactions occurring across the network. This information is available for all and is entirely transparent yet highly secure due to the Proof of work mechanism it works on. If the transaction is found to be legit, a block is created with other such legit transactions which are permanent and can not be edited in any form.
Let's get a little more technical now. In practice, users detect tamperings, such as an attempt to double-spend using hashes or strings of numbers. A given set of data will only ever produce one hash. However, due to the "avalanche effect," minor changes to any portion of the original data will result in an entirely unrecognizable hash. Likewise, a function will generate a hash of the same length regardless of the transaction data.
Because generating any hash for a set of bitcoin transactions would be trivial for a modern computer, the network sets a certain level of "difficulty" to turn the process into "work." This setting is set so that a new block is "mined" by generating a valid hash – every 10 minutes. This block contains 2,012 transactions involving slightly more than 1,000 bitcoin and the previous block's header. If a user changed the amount of one trade by 0.0001 bitcoin, the resulting hash would be unrecognizable, and the network would reject the fraud.
After the transaction is verified, miners change the input (hash) by appending an integer known as a nonce ("number used once"). Once a valid hash is discovered, the block is broadcast to the network and added to the blockchain. Changing any transaction history on the network will involve changing all the earlier records, which is practically impossible. (It can be done by commanding more than 50% of the networks computational authority). Because the machinery and power necessary to complete the hash functions are expensive, making a single user or group of users can't monopolize the network's computational capacity.
Written By: Arjun Patil