Double Spending In Blockchain (An Overview)
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Supposing I have a $10 note, If I find a good forger, I can forge another $10 and have $20. If I then buy something with that $20, then I have double spent the original $10. However, if the person I am trying to buy stuff from checks the serial number on the notes, they will see that they are the same and I would be caught and arrested for fraud. It is because the issuer of the notes i.e. the Federal Reserve, put serial numbers on the notes to guide against that exact kind of thing as part of its regulations.
Now that you understand how double spending works, I’ll try and help you understand the concept of Double Spending in a blockchain better, by doing a little refresher on how blockchains work
A blockchain is a chain of decentralized, distributed, and immutable blocks that are used in cryptocurrency transactions. When a user makes any transactions, the transaction is recorded on a block to be validated by other users on the network. It is when it has been validated by other users that the transaction is then executed, or at least that is how it is meant to work. Note that since the blockchains don’t have a central regulator, every user has to validate transactions
Unfortunately, Blockchains are not perfect, and some malicious users often exploit them. One way they do this is by creating multiple copies of the same cryptocurrency and using them in different transactions. For instance, supposing a user has 1 BTC, they can make copies of that 1 BTC and use it for different transactions (much like someone forging the $10 note). Since crypto is a computer file, the two copies would be virtually indistinguishable from each other unless other users validate which is which.
Double spending can happen on the blockchain if there is no user to verify the transaction or the user’s wallet is not secure.
To be able to properly answer this question I will share two ways that double spending on bitcoin occurs
Most cryptocurrencies have their blockchain and each blockchain has its Transactions per second limit. The biggest crypto blockchain, Bitcoin can only do 5-7 transactions per second. Solana’s blockchain is more efficient, being able to process 3000 transactions per second and up to 65000 transactions, Algorand can do 1300TPS, and Ripple has the capacity for 1500TPS with the potential scale to up to 50,000 Ethereum aka Serenity coming in early 2023 will be able to do 100,00 TPS.
It is worthy of note though, that it is not how fast a blockchain can do transactions that matter, but how decentralized and secure it is. This is why the BTC blockchain even though it is one of the slowest is still the one with the highest population. Because it is the most secure.
Tectum (the World’s Fastest Blockchain) can do 1 million transactions per second
Apart from mining new bitcoin miners are essentially acting as auditors to forestall the problem of double spending in the following ways,
Since no system in the world is perfect, cryptocurrencies can cause double spending. However, since Blockchains are automated, double-spend usually doesn’t occur with new blocks, but it is far more likely to happen if the crypto is stolen from a wallet that is adequately protected.
However, as much as cryptocurrency analysts talk about the problem of double-spending, it has been a largely theoretical problem. There are only rare cases in which double spending actually occurred and they were all quickly stopped.
One particular mode of double-spending that analysts often warn against is the 51% percent attack, in this case, a malicious attacker can take over the majority of the network and be the one to validate all the transactions, which means they can control transactions as they want.
However even this 51% attack cannot happen to a large blockchain like Bitcoin given how many people are on it. It is only smaller blockchains that might be in danger.
