Cryptocurrencies are gaining a large amount of popularity in today’s world. They make transactions secure and easy. The most popular among them is Bitcoin. Even though they are secure, there are many loopholes in this technology. In this article let’s talk about one of the loopholes in cryptocurrency, Double Spending.
What is Double Spending?
Double Spending is defined as the risk of spending a particular cryptocurrency more than once. This potentially happens for a digital currency because it is easy for a person who has programming knowledge to replicate the code and create a counter currency. In a cryptocurrency like bitcoin, the entire transaction is made digitally. For a physical currency, it is very difficult for double-spending. But for digital currencies, the code used for one transaction can be recreated and the same coin can be spent multiple times.
How Bitcoin Handles Double spending?
As bitcoins are the most widely accepted and used cryptocurrency, they use a technology called Blockchain to prevent double-spending. Blockchain is a universal ledger that uses a confirmation mechanism to accept transactions. The bitcoin blockchain has all the transactions since 2009 time stamped in it. Every successful transaction is also added to this blockchain.
The main advantage of blockchain is it uses a confirmation mechanism for approving transactions. If a user uses the same coin for making two transactions, both of the transactions are kept in a queue awaiting confirmation from the miners. The transaction which gets the maximum number of confirmation from the miners will be included in the blockchain and the other one is discarded.
Drawbacks in Blockchain
Even though blockchains reduces the risk of double-spending, there is some theoretical risk of attacks. They are:
- Attack 51%: Even though blockchain reduces double spending, an attacker can make double-spending possible by gaining control over 51% of the entire blockchain computational network. In this way, he/she can insert a private blockchain and make transactions possible. Controlling 51% of the network is an impossible task as it requires lots of resources and money to make it possible.
- Race attack: This problem is caused mainly due to the carelessness of the receiver. In a blockchain network, the transaction is accepted only if a minimum of 6 numbers of confirmation is achieved. If the receiver does not wait for this, there is a chance for getting the double-spent transaction and as a result, no money is credited.
These attacks are not reported since the bitcoin development, so we can say that double spending is handled successfully in blockchain technology. Hope you all got the right information regarding double-spending. If you have more knowledge, please share it with us through the comment section.