Double-Spending Problem
The double-spending problem is the risk that a unit of digital money is spent more than once. Because digital data can be copied, a payment system needs a mechanism that makes sure each unit is only used once.
Why digital money has this problem
If you hand someone a banknote, you no longer have it. A digital file is different: you can copy a photo and send it to ten people. Without protection, the same is true of a digital coin. Someone could send the same coin to two shops at the same time and both would think they had been paid.
Traditional online payments solve this with a trusted central party. Your bank keeps the ledger, checks your balance and refuses a second payment from money that is already spent. That works, but it means everyone has to trust and depend on the intermediary.
How Bitcoin solved it
Before Bitcoin, several digital cash projects existed, but they relied on a central server or never solved the problem in a fully decentralized way. Bitcoin's breakthrough was a public, shared ledger, the blockchain, plus a way for strangers to agree on the order of transactions without trusting each other.
Nodes reject any transaction that spends coins already spent in the ledger. If two conflicting transactions are broadcast, only one can make it into a block. Proof of work orders blocks over time, and the network follows the chain with the most accumulated work, so once a transaction is buried under several blocks, reversing it would require redoing all that work.
An example
Say Alice has 1 BTC and sends it to both Bob and Carol at once. Both transactions reach the mempool, the waiting area for unconfirmed transactions. A miner includes one, say Bob's, in the next block. Every node then rejects Carol's transaction as invalid because those coins are already spent.
Remaining risks
Double spending is not impossible, it is expensive. An unconfirmed transaction can still be replaced, so accepting zero-confirmation payments for large sums is risky. An attacker with most of the network's mining power, a so-called 51 percent attack, could rewrite recent blocks; smaller proof-of-work chains have suffered such attacks. This is why services wait for a number of confirmations before treating a deposit as final.
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Frequently asked questions
Has Bitcoin ever been double spent?
Bitcoin's main chain has not suffered a successful 51 percent attack. Smaller proof-of-work coins have, which is why confirmation requirements vary by network.
How many confirmations prevent double spending?
Each confirmation makes reversal harder. Six confirmations is a common convention for Bitcoin, while small payments are often accepted with fewer.
Do banks have a double-spending problem?
Not in the same way, because a bank's central ledger checks every payment. The trade-off is that you must trust the bank.
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