Double spending is a potential flaw in a digital cash scheme where a single digital token can be spent more than once. This is possible because a digital token consists of a digital file that can be duplicated or falsified. The issue of double spending is a significant obstacle in the development of digital cash and is largely prevented in public blockchains by the use of consensus mechanisms.
A malicious actor sends a payment to a merchant, and then, almost simultaneously, sends another transaction using the same coins to another address they control. This could potentially defraud the merchant if both transactions are validated by the network.
Double spending typically requires a congested network, features that allow for transaction replacement, and time pressure on the part of the recipient. Congested networks can lead to miners having different transactions in their mempools, enabling the acceptance of conflicting transactions. Features like Replace-by-Fee (RBF) can be exploited to replace unconfirmed transactions, facilitating double spending.
If a network is congested and a user sends two transactions using the same coins — one to a merchant and another to an address they control — different miners might validate each transaction, leading to a double spend.
Blockchain networks use various mechanisms to prevent double spending. For instance, Bitcoin's Proof of Work (PoW) consensus mechanism ensures that all transactions are confirmed in a linear sequence (the blockchain), making it nearly impossible to double spend without controlling more than 50% of the network's hash power.
In Bitcoin, once a transaction is confirmed and added to the blockchain, any attempt to spend the same coins again would be rejected by the network, as it would be recognized as a double spend.
A more sophisticated form of double spending involves colluding with miners to validate fraudulent transactions. This is known as a 51% attack and requires significant resources, making it impractical for most attackers.
If an attacker controls a majority of the network's hash power, they could potentially validate a transaction spending certain coins, and then create a longer blockchain where those coins are spent differently, invalidating the original transaction.
* All terms and definitions may update as the Cryptionary improves.
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