What Is Double Spending in Blockchain?

Double spending in blockchain is a critical flaw that has worried the crypto community. It involves exploiting cryptocurrencies’ digital nature. Double spending isn’t limited to crypto but is also a problem in all blockchain designs.

This guide will provide insights into how these attacks occur and what you can do to prevent them.

What Is Double Spending in Blockchain?

Blockchains are a series of transaction blocks, and every new block has to have a hash, a cryptographic function containing all the public transaction data details and the date of the new block addition.

Double spending occurs when someone spends the same crypto twice. In other words, it’s when services mistakenly treat a non-final block as a final one. Other causes include services failing to properly confirm transactions and unintentionally spending the same amount more than once. Faulty smart contract logic can also cause double-spending issues, as users can spend the same tokens twice in the absence of sound signature validation to checkmate the act.

Let’s go through an example to understand better the double spending problem:

Double Spending Attacks

Double-spending attacks can manifest in different forms.

Race Attack

In this double-spend attack, there’s a “race” between two transactions. The attacker uses different machines to send the same crypto — one to the merchant and the other to the blockchain. The first transaction seems to transfer a token to the merchant, so it appears the merchant is getting paid.

The second transaction, which was almost immediately sent to the blockchain, keeps the token in the sender’s possession rather than transferring it to the merchant, so the payment doesn’t go through.

51% Attack

This double-spending-in-blockchain attack is common for small blockchains and involves multiple blockchain nodes being created to try to gain influence over the network. If a node controls most of the network’s hashing power for PoW or the crypto to stake for PoS blockchains, it can mine faster than the rest of the network and gain control over the confirmation process.

So, hackers typically take over 51% of the blockchain’s mining power, allowing them to dictate actions on the network.

Finney Attack

The Finney Attack is named after Hal Finney, a developer who identified this weakness. In this attack, a miner is the attacker and holds a block that contains a legitimate transaction for buying services or goods. The attacker gets the goods and services, assuming the transaction will be confirmed later.

Then, the attacker broadcasts the withheld block, containing a manipulated conflicting transaction, to the network. This transaction redirects the crypto to an address the attacker controls. Even though this transaction invalidates the original valid transaction, the attacker, who’s already gained goods or services, also keeps the crypto used for buying as they redirected it to themselves.

Preventing Bitcoin Double-Spending

So, what was the proposed solution to the double spending problem with Bitcoin? Here are a few ways to prevent this attack:

How to Manage Double Spending Successfully

Since companies are using many security features, double spending has been greatly reduced. Some of the strategies to use are:

Conclusion

Double spending in blockchain occurs when someone spends the same crypto twice. It can manifest in three primary forms: race attacks, 51% attacks, and Finney attacks.

However, there are many strategies to prevent these flaws. In fact, Bitcoin prevents them by timestamping, network participation, and PoW consensus.

Other strategies companies and users should use are waiting for a minimum of six confirmations, deleting spam mail and avoiding phishing mail, keeping hardware resources safe, and regularly updating software and installing the latest antivirus.

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