Counterfeiting has always been a massive challenge in any monetary system, be it banknotes or online transactions. In order to experience hassle-free trading, sign up at the profit builder website. Moreover, you will get live customer support. However, double spending is the phenomenon of counterfeiting in the cryptocurrency industry.
Bitcoin is extremely valuable right now; people still wonder whether an individual can double-spend bitcoin or not. To double-spend a bitcoin or any cryptocurrency, the individual has complete governance over that particular cryptocurrency’s blockchain. So let’s see whether it is possible to double-spend a bitcoin or not.
What is double spending?
Before diving in, double spending should define what “double spend” is. For example, if a user sends currency through an electronic payment system, they pay one merchant and then use it to pay another merchant directly.
It’s like taking a single dollar bill in a cash register and splitting it up between two different merchants (or withdrawing it from your bank account and using it at two separate ATMs). Unfortunately, it is technically impossible with bitcoin because of something called a “51% attack”, which under certain (not likely) conditions could be used to double spend bitcoins.
How is double-spending possible in the cryptocurrency space?
Double spending is possible in the cryptocurrency world due to a few reasons:
As stated above, Bitcoin is not vulnerable to a 51% attack. A 51% attack requires the attacker to control over half the network’s mining power (bitcoins) and thus create a double spend.
Classification of bitcoin blocks
Bitcoin blocks are classified into three types: New block – The block with no transactions in it, Old block – A block with only one outstanding transaction in it, and Dead block – A block with no transactions or only one transaction in it. Double spending can only happen within old blocks as there is no way that new blocks can be double spent. Therefore, old blocks are vulnerable blocks.
If a person can identify this information, they can then decide to re-use addresses. One of the biggest bitcoin scams was by re-using a well-known address with a large number of bitcoins in it. It allowed MtGox to claim they were hacked and have the bitcoins that should have been credited to another account disappear into their account instead. Here are some ways to ensure that you do not double spend: Scrutinize the transaction
Bitcoin transactions are public. Therefore you can always look up the transaction history on blockchain.info to see what has taken place with specific wallet addresses. It is important because sometimes new addresses can reshare, and you may receive payments using the old address and spend using a new one.
Also, if one receives bitcoins from an exchange, they will have to verify that they have control of their private key and are only transferring bitcoins to another exchange.
Use cold storage
It is when you keep your bitcoins in a place where you do not have access to it through exchanges or third-party wallets such as Bread wallet or Mycelium wallet. Cold storage makes it difficult, if not impossible, to spend double.
Use exchanges with good reviews
Exchanges such as Coinbase, Bitfinex, and Poloniex are trusted and have a long history of having the bitcoin they hold in custody. In short, they have control over their private keys.
How many times did double spending happen in the cryptocurrency community?
There have been many instances of double spending in the cryptocurrency community. It’s a massive question whether they will happen to bitcoin or not, but this is a concern people have, and rightfully so.
Many people believe if there can be a 51% attack on Bitcoin, it would be easy to double spend. However, if anyone has thought of this, they would know it can never happen as Bitcoin is distributed with different types of mining (proof of work) to ensure that no single miner can affect the blockchain for too long. A 51% attack can only happen by replacing the bitcoin client that is running on everyone’s computers, which is impossible.
Most Types Of Double Spending Cryptocurrencies
There are many types of double spending, and the list is endless. However, a type of double spending called a “CoinJoin” (CoinJoin ) was first conceived by Greg Maxwell in 2013. It will allow bitcoin users to mix their cryptocurrency with another user’s cryptocurrency without having to send the cryptocurrency back and forth. The idea is that this will be able to obscure which particular address sent where bitcoins to another address, therefore providing further privacy for Bitcoin users.