Double spending is the use of money or assets more than once. This is a very important problem especially for digital assets. Because digital data is easier to copy than other assets. When it comes to digital assets, it is necessary to take serious measures regarding the double-spending problem.
Using a digital asset more than once at the same time is called double spending. Since blockchain networks work with a distributed ledger system, every transaction is verified. Transactions performed on networks such as Bitcoin are processed on the blockchain with the approval of the miners. If the same transaction is attempted a second time, full nodes indicate that the transaction is fraudulent. This protects users against the possibility of double spending.
In the case of double spending, one of the paid parties suffers because they did not receive the payment. Let’s explain with an example. You have 100 liras and you buy a coat. Then you want to buy a pair of shoes with the same 100 liras. Such a situation is not possible with fiat money (i.e. with a physical asset). However, it was a significant threat to digital assets until recently.
Bitcoin is not the first digital currency. However, we can say that it is the first successful digital currency. Previous digital currency projects had failed due to many problems. However, the most important reason why Bitcoin survives and is so popular is that it provides solutions to many problems encountered in the infrastructure of digital currencies. One of them is the double spending problem.
Double spending on the Bitcoin network is usually due to user error. Transactions taking place on the Bitcoin network are added to blocks after miners approve them and these transactions cannot be changed. Malicious users can also use the same asset for a different transfer before it is confirmed on the Bitcoin network. People who accept unconfirmed transactions on the Bitcoin network may be the target of a double-spend attack.
On the Bitcoin blockchain, transactions are confirmed by miners. In this way, each transaction is unique but justified for further transactions. Approved data entries prevent transactions from occurring a second time. If the same transaction is desired to be repeated, the nodes participating in the network realize that the transaction is fake and invalidate the transaction.
Bitcoin did not enter our lives only as a currency. The philosophical thought system behind it changed the perspective of monetary systems. At the same time, thanks to its technological infrastructure and open source code, it has enabled the development of many new systems and digital assets. With double spending and solving many problems, thousands of crypto and digital assets have emerged after bitcoin and will continue to do so.
When users perform a transaction on the Bitcoin network, transactions are not added to the blockchain without the miners’ approval. In order for the transaction to be considered valid, it must be processed on the blockchain. The receiving party’s waiting for the transaction to be verified and processed to the blockchain prevents it from being exposed to a double-spend attack. After the transaction is added to the blockchain, crypto assets pass to the receiving side.
The seizure of 51% of the blockchain network by a group or individual and changing the transactions in the blocks is called a 51% attack. Anyone who has taken over half of the Bitcoin network can double-spend within the Bitcoin network. The probability of a 51% attack on the Bitcoin network is possible, but the size of the blockchain network and the large amount of processing power required make the probability of this attack impossible.