How Bitcoin prevents double-spending (press release)
Have you heard about Bitcoin double-spending and now worry about being a victim? If so, here’s how Bitcoin prevents double-spending.
Every economy has a problem with people and institutions that attempt to manipulate money. Unfortunately, Bitcoin is not immune to this problem. The Bitcoin network has bad actors that may want to double-spend this digital currency for personal financial benefits.
Despite being new, Bitcoin is publicly available, with more people buying it on digital platforms like The News Spy with fiat money. In most cases, bad actors are among the early adopters. Essentially, they want to take advantage of people that don’t know much about Bitcoin by manipulating transactions.
Being wholly decentralized and digital, Bitcoin doesn’t have a central regulator, authority, or governing body policing hackers and thieves. However, the Bitcoin network has defenses that combat attacks that may threaten the consensus mechanism of this network and the transactions’ ledger. And these defenses give confidence to people that may want to invest in this virtual asset.
Double-spending happens when a person spends a cryptocurrency more than once. A person in the Bitcoin network can alter transaction information in the blockchain if they meet specific conditions. Essentially, these conditions allow the participant to enter modified blocks into the blockchain. Thus, the person that starts the alteration may reclaim their spent coins if they do this.
Perhaps, understanding double-spending requires you to review the blockchain first. When miners create a block, it gets an encrypted number, called a hash. This hash includes the previous block’s information, a timestamp, and transaction details. The system uses the SHA-256 algorithm to encrypt this information.
After miners verify the block’s information via the proof-of-work consensus, the network closes it, and the system creates another one with transaction information, timestamp, and previous block’s hash. The miner that verifies the hash receives a Bitcoin as a reward.
Double-spending entails mining a secret block while outpacing the real blockchain’s creation. After that, the person mining the hidden block must introduce the chain to the network before the network catches up because if this happens, the system would recognize it as a new block and add it to the blockchain. The miner that does this can get back any cryptocurrency they spend and even use it again.
Preventing Double-Spending in the Bitcoin Network
The Bitcoin network has complementary safety features for preventing double-spending. Ideally, the blockchain has security features that work with miners to verify Bitcoin transactions before adding to the blockchain.
Here’s how Bitcoin prevents double-spending:
- When a transaction receives maximum confirmations from the network, typically six, it goes to the blockchain, and the network discards the others.
- Once transactions and confirmations go to the blockchain, they get a timestamp, making them impossible to manipulate or reverse.
A merchant or Bitcoin user should be sure that the transaction is valid after receiving the minimum block confirmations. Thus, this should confirm that a transaction is not a double-spend.
The Role of Proof-of-Work Consensus
Bitcoin uses the proof-of-work consensus model that resists double-spending. Essentially, this model has a block time. With this model, validator nodes or Bitcoin miners must solve complex algorithms that need significant hash power or computing power. Thus, this process makes attempts to falsify or duplicate the blockchain almost impossible since attackers must re-mine all blocks using new fraudulent transactions.
Double-spending is a concern for some Bitcoin users because this virtual currency doesn’t have a central authority verifying spending records. However, the Bitcoin network has security measures that work with miners to make double-spending almost impossible. The distributed transactions’ ledger or the blockchain verifies and records every transaction. Thus, the Bitcoin network confirms every transaction’s authenticity while preventing double-spending. Therefore, Bitcoin users shouldn’t worry about Bitcoin double-spending, at least for now.
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