What is a double-spending problem and how did Bitcoin solve it? In simple terms, the double-spending problem is when someone is able to spend the same coin multiple times. Let’s understand this with an example, suppose you have 1 Bitcoin in your digital wallet and you have initiated transfer to 5 different people, 1 Bitcoin each.
You might be wondering, why does not blockchain stop a person to initiate transactions more than the amount he has in his wallet? As discussed in our previous tutorial, the User’s balance is updated only after the transaction is confirmed. In this case, when the user initiated the first transfer, his balance did not change because that transaction is still in the Memory pool with other unconfirmed transactions. Until this transaction is confirmed, the user will be able to initiate as many transfers as he wants. I hope you got an idea, how the user is able to initiate multiple transfers despite not having enough money in this wallet.
Pretty scary, right? Don’t worry Bitcoin solved this problem in 2009. Let’s go back to our example where the user transferred the same coin to multiple people. Now all those 5 transactions are sitting in Memory Pool. For example, one of the miners has picked up the third transaction where he transferred money to someone. Once this block is mined successfully, the user’s balance will be updated to 0 since he has only 1 Bitcoin in his wallet that he has spent.
The other 4 Transactions are still there in the memory pool. For example, Now the miner has picked up transaction number one initiated by the user and checked the balance in the user’s wallet which is 0, so the miner will reject this transaction. Miners will do the same thing to the rest of the transactions.
So, Bitcoin Network allows the user to initiate multiple transfers even though he does not have enough coins in his wallet but only 1 transaction will be successful and the rest of the transactions will be dropped by miners.
Do I need to worry about the double-spending Problem?
As long as you don’t accept unconfirmed transactions, you don’t need to worry about the double-spending problem. For smaller transactions, you should be okay to accept a transaction if it has 1 confirmation but for a huge amount of Bitcoin amount, you should wait for at least 6 confirmations. After 6 confirmations, a transaction is considered permanent in Blockchain.
Double-spending attacks have been studied and discussed extensively in the blockchain community. As long as you don’t accept unconfirmed transactions, you can accept Bitcoin payments confidently, the chance of a double-spending attack is quite small.
I hope this article and video gave you some insights into Blockchain technology. If you have liked this article then do not forget to share it with your friends and connect with me on Twitter for quick updates on Blockchain and Web3 Technology.
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