What's Double-Spending? How to Double Spend Bitcoin?
It's no news that Crypto and Bitcoin use has become more popular since last year. And Bitcoin has continued to top the pack of Cryptos in the user base, market capitalization, and popularity.
For many experts, Bitcoin has been surviving and thriving because it's solving the “double spending” issue.
Double Spending has become a primary concern for Crypto developers given the rise in hacks and digital thefts.
On the other hand, the Bitcoin Double spend incident is not familiar to many casual Bitcoin buyers. However, preventing it is vital to the digital currency's integrity.
If the Bitcoin Double spend occurs and is possible, everyone will lose confidence in the network. It can make the price go down.
But what's really Double-Spending? And how can you avoid Bitcoin Double spending?
Generally, Double spending is spending the same money twice.
It's a technical problem that occurs when someone duplicates digital money and spends it concurrently more than once.
Double spending also refers to an incident where a person spends a Crypto balance more than once. This effectively creates a difference between the Crypto amount available and the spending record and the way it's distributed.
According to Investopedia, Double-spending could be a potential flaw in Crypto involving the risk that a digital currency could be spent twice.
Double spending is common in Bitcoin because digital details can be manipulated easily by a hacker or a skilled programmer on the blockchain.
The double-spending problem doesn't exist with cash. For instance, if you pay for a cup of coffee for $15, you can't use the same $15 for another thing.
This is different in digital currency. In other words, it's possible to copy already used transaction details and re-use them. A Bitcoin could be spent several times by one owner.
How to Double Spend Bitcoin
A Bitcoin double spend is a concern among Bitcoin investors. It happens when someone sends one transaction copy to make it appear legal while erasing its first transaction.
There are two major means criminals or hackers can double-spend Bitcoin:
● When someone simultaneously sends the same amount of Bitcoin more than once.
This method aims to exploit the slow 10-minute Bitcoin block time. The transactions are sent to the network. It'll be on queue to be verified and confirmed by blockchain miners.
● When someone reverses a transaction after getting the counterparty’s services or assets, he keeps both the sent bitcoin and received goods.
The person sends several packets to the network for transaction reversal. He does it to give the notion that it never happened.
Some measures used by hackers to overcome the Bitcoin verification procedure include double-spending or out-computing the security mechanism by transferring a log with a fake transaction to a seller and another log to the blockchain.
If a hacker gains a huge blockchain control, he could modify the blockchain ledger to send bitcoin to a digital wallet several times. To make it seem that the original transaction hasn't previously happened.
In addition, there's a potential double-spending issue on DEX as Crypto continues to move to decentralized platforms and exchanges.
And since there's no central intermediary or authority, the adoption and growth of DEXs will rest on security and the ability to avoid double-spending.
Despite various attempts to double spend Bitcoin, many bitcoin thefts haven't been caused by double-spend attacks. They're mostly caused by users not securing their bitcoins properly.
In fact, in the history of Bitcoin, such an attack hasn't been successful. The Bitcoin method of maintaining a general transaction ledger according to confirmations hasn't been tricked.
How Double-Spending Attacks Can occur
1. Attack 51%
Double spending can occur if an attacker or a hacker somehow captures 51% of the network's hash power.
Hash power is the computational power that verifies blocks and transactions. If anyone has this control, the person can reverse transactions and create a private blockchain that people will consider real.
However, no attack has occurred since controlling the network's 51% is cost-intensive. And it's based on the mining difficulty and the hardware and electricity cost. All these are infeasible to have.
2. Race Attack
When a hacker transfers the same coin in quick succession to two diverse addresses, the outcome is that one will be included.
If a merchant couldn't wait for the payment confirmation, there’s a 50% probability that he'd get the double-spent coin while not receiving the money.
Practically, a customer could trick you if he transfers the same coins again to his address.
After the customer executes both transactions, the two transactions will move to an unconfirmed transaction pool. The transaction that gets verified first and receives 6 confirmations would be accepted, while the other would be discarded.
A trader might receive the 6 confirmations first. However, if the hacker gets the confirmations first, the trader won’t get his funds.
This is why it's advisable to wait for at least 6 confirmations.
How Does Bitcoin Prevent Double Spending
Bitcoin’s network can prevent double-spending by joining blockchain network complementary security features and its decentralized miners to verify transactions before adding them to the blockchain.
For instance, Mr. Paul and Mr. Smith enter a store with one collective bitcoin to spend. Mr. Paul purchases an iPhone for 1 bitcoin. Mr. Smith buys a car that equally costs 1 bitcoin.
The two transactions will go into an unconfirmed transaction pool, but it's only the first transaction that will receive confirmations verified by the next block miners.
The other transaction becomes pulled from the network since it didn’t have enough confirmations after being determined invalid by miners.
● The transaction that gets the maximum confirmations (6 minimum) will be added in the blockchain, while the others will be discarded.
● After the transactions and confirmations are placed on the blockchain, they'll be time-stamped, making them impossible to change.
● More so, once the trader gets the least block confirmations, he'll be sure that the transaction is valid and not any form of a double spend.
Significantly, the proof-of-work consensus of Bitcoin is resistant to double-spending due to block time. The Proof-of-work needs validator nodes or network miners to solve complex algorithms that need a huge hash power.
This makes attempts to falsify or duplicate the blockchain harder to execute. The hacker needs to return and re-mine all single blocks with fresh fraudulent transactions.
This model compounds with time and preserves past transactions, and also records the new transaction.
Getting consensus via proof-of-work mining offers accountability by verifying the ownership of each transaction in Bitcoin and avoiding double-spending and other frauds.
Though it's technically feasible for some people to initiate a 51% hack on Bitcoin, join mining power, and alter the network for their gain, it's difficult because it'll need collusion by huge miners or one miner with more than 50% of hash power.
To execute a 51% attack or hack has been harder with time because the mining Bitcoin difficulty increases with each Bitcoin halving.
Also, the mining hardware is costly at that scale, and huge electricity will be needed to power the required huge mining operation.
Should You be Worried about Double-Spending Hacks?
You don't need to worry about Double-Spending hacks provided that you won't accept unconfirmed transactions.
Most exchanges and wallets will name transactions that aren't confirmed as “unconfirmed.”
Also, the more you wait, the safer your transaction. Getting more few blocks written on the Bitcoin blockchain at the block front with the transaction makes the reversal chance slim.
The advisable wait time is based on the sent amount and the blockchain you use.
What's Double-Spending? How to Double Spend Bitcoin? Final Analysis
Bitcoin is a decentralized digital currency with no regulators, governing bodies, intermediaries, or central authority to monitor hackers or thieves.
Thus, it has developed defenses to combat attacks that will threaten the consensus mechanism of the network and its ledger of transactions. It aims to provide confidence to Bitcoin investors.
In other words, the Bitcoin Double spend is a concern because it’s a digital currency without a central intermediary or authority to verify spending records.
It creates room to question the legitimacy, validation, monetary supply, and security of Bitcoin,
Be that as it may be, Bitcoin's distributed ledger of transactions autonomously verifies and records each transaction’s authenticity and avoids double-spending.
The double-spend issue is prevented in Bitcoin by a consensus mechanism called Proof-of-work.
This Proof-of-work is executed by Bitcoin miners who secure the past transactions fidelity on the network's ledger and prevent or detect double-spending.
The Proof-of-work makes it very hard to alter or change any part of the blockchain. It's because such alterations will need re-mining every one of the subsequent blocks.
Also, it makes it hard for users to monopolize the computing power since the power and machinery needed to finish the hash functions are costly.
Finally, it's vital to add that there's no proof that a double-spending incident has ever occurred. It might not even occur in the future!