What is Double Spending?
Double Spending is the action of spending one digital currency repeatedly, which can occur easily without proper prevention mechanisms. Double spending can be performed when loopholes in processing transactions are found, much like when forging banknotes, which can lead to inflation.
How does Double Spending Occur?
In the case of cash, double spending is rare. In the event that a customer pays for their meal in a restaurant with a 100 baht banknote, unquestionably, the same banknote cannot be spent elsewhere anywhere anymore as it would remain in the restaurant’s cash register.
However, digital cash would instead appear in the form of digital files that can be easily duplicated or forged, much like the previous banknotes illustration. In depth, the action is much similar to recording document files and creating copies for others afterwards. If it were a currency, the following issue would undeniably be inflation in an economic system.
51% attacks can also cause double spending. 51% attacks are the malicious actions of hackers that control over 51% of a network’s mining power, hence being able to manipulate the consensus mechanism, further allowing double spending and many more dishonest acts to take place.
How to solve Double Spending
Though Bitcoin’s blockchain network addressed the issue through its Proof-of-Work (PoW) algorithm, the matter of double spending is still ever-present.
Double-spending is still being attempted in numerous ongoing transactions, wherein a block with 2 identical transactions would be reserved. However, with the integration of blockchain technology, the chain with the longest length would be proved trustworthy and all others would be cancelled and deemed malicious.