What Is the Double Spend Problem?

The double spend problem is central to the creation of Bitcoin and cryptocurrency.

But what exactly is it?

What Is the Double Spend Problem?

The double spend problem is the risk that money could be used more than once; hence, the name “double spend.”

Digital currencies are especially susceptible to this risk, as it’s less clear when the same unit has been used more than once.

With physical cash, you can empirically tell when a note or coin has been spent, so there’s no need to worry about a double spend.

Anyone who has played video games knows someone who claims they can infinitely spend their in-game coins without a sufficient balance. If they aren’t lying, this could be the result of a double spend exploit.

The user could be sending two Roblox transactions out to use the same coins, and the system fails to notice it. The transactions are completed, and the user has effectively doubled their spending power.

Why Is It an Issue?

It should go without saying, but someone who exploits digital currency to double spend is sort of stealing from the market. This is not only unfair to other people who use the same currency, but it could result in the price of the digital currency to fluctuate — double spending is similar to printing more tokens, making the currency inflationary.

If a network falls victim to a double spend attack, the security of the digital currency will be called into question. And, in fixing the issues the double spend created, you may leave someone unpaid for a service they’ve already provided.

So yeah, it’s just not ideal.

How Does Crypto Fix the Double Spend Problem?

The creation of Bitcoin solved the double spend problem for digital currencies. Satoshi Nakamoto, the founder of Bitcoin, even said in the Bitcoin whitepaper that it was a proposal to solve the double spend problem.

When a transaction is sent to the network, it sits in a pool of unconfirmed transactions until the network is ready to process it.

Every 10 minutes, transactions are pulled from this pool to be processed — this will form what is called a “block”. These blocks act as a permanent record of all of the transactions on Bitcoin. For example, this block will show that Paul sent Sally 1 BTC, which affects the balance of both of their wallets.

As all blocks are recorded on the blockchain, everyone’s transaction history is traceable. When a transaction is processed, it’ll reference your wallet through this recorded data to ensure you have the money you’re attempting to spend.

As Bitcoin is a distributed ledger, this means that all of this data (including transaction history, wallet balance, etc.) is stored on thousands of nodes across the world. This ensures Bitcoin is decentralized, reducing the risk of someone directly changing this data.

This eliminates the double spend problem; if you were to spend the same Bitcoin twice, the network would check with the data on the blockchain to find that your wallet has an insufficient balance. In this case, either one or both transactions will fail to process.

How Does the Network Quickly Notice Changes in the Ledger?

When a block is successfully mined, it’s stored as an encrypted number called a hash (Bitcoin uses the SHA-256 algorithm). This hash will include the previous block’s information, a timestamp, and transaction details.

Due to the avalanche effect, even one tiny change to any part of the original data will cause a completely different hash. This makes it easy for the network to notice any change in data on the blockchain.

How Would the Double Spend Problem Happen?

Although double spend is now unlikely, it’s still possible. There are (at least) four possible attacks that could result in a double spend attack.

Race Attack

The race attack is where two transactions are broadcasted at the exact same time (one to a merchant providing a good or service, and the second to a separate wallet controlled by the attacker). For the attack to be successful, the payment to the…