Let’s put things straight right away. The Bitcoin Double spending Never Happened and is nothing but fake news created by scaremongers.
A well-known name in the crypto space, BitMex tweeted that the much dreaded double-spend attack has occurred for real in the Bitcoin blockchain. But the news died out soon as it turned out that no double-spending took place. So, what exactly happened that made BitMex believe that the Bitcoin double spend took place recently? Let’s find that out.
What did BitMex Research Tweet?
A tweet by BitMex Research pointed out that a Bitcoin double spend took place. The transaction amount was 0.00062063 BTC. It is a small amount as the Bitcoin transaction was worth only $21 at the time. Major news outlets such as Business Insider picked up the news.
Such news from popular news outlets like Business Insider made many novice bitcoin investors wary of Bitcoin. They started selling their Bitcoin holdings, expecting a rapid downslide in the Bitcoin prices. Can we blame them? Many crypto investors do not know that Bitcoin double spending can never happen as it is impossible to pull it off.
BitMex came out with a second tweet and neglected that any double-spend took place. They said that the spend was an RBF transaction. The transaction worth 0.00062063 BTC that BitMex claimed to be double-spending, was replaced by a new transaction as the previous one remained unconfirmed. The fee involved was higher than what they paid initially. BitMex believed this Bitcoin transaction to be a double spend as their Fork Monitor failed in detecting the RBF fee bumps.
What is Double Spend, and is it possible?
Bitcoin double spend is a hypothetical scenario where the same amount of bitcoin is spent twice by the transactor. In this scenario, the sender tricks the recipient by sending them a transaction that they sent to themselves, as well.
Let’s say that someone goes to a coffee shop. There, they get a coffee from them for $5. Once they spend $5 there, they won’t be able to spend that $5 again somewhere, unless they resort to stealing it from the coffee shop. That’s why the issue of double-spending does not crop up when dealing with physical cash.
Unlike physical cash, Bitcoin is a digital form of money. It means that some people fear that copying and rebroadcasting bitcoin transactions is a real possibility. The fact is that a double-spending attack will never take place in the Bitcoin network. The reason behind this is that the Bitcoin network prevents double-spending from an innovative mechanism.
The verification feature in Bitcoin transactions prevents double-spending from happening in reality. A transaction is only considered successful after six confirmations. It means that the confirmation mechanism, along with the blockchain technology, safeguards Bitcoin from double-spending.
Why is Bitcoin Double Spending Impossible?
Theoretically speaking, there are two ways to pull off a Bitcoin double-spending. These two ways are known as Race Attack and 51% Attack.
In the race attack, a malicious actor creates two transaction IDs. The tx id that they don’t want to succeed, is sent to the merchant or the service provider. Now, the second tx id is sent to a wallet that the malicious actor controls. Thereafter, the sender submits the tx id of the transaction that they sent to themselves to a larger number of nodes. It increases the chances of successful transactions.
If the sender pulls this off successfully, they would be able to retain their bitcoins and also be able to receive the services and products that they were paying for. There have been no records of a successful race attack on Bitcoin yet. The reason is that a merchant will only consider a transaction successful after six confirmations. In the race attack, the Bitcoin transaction that the malicious actor sent to the merchant fails. Hence, the merchant will never release the product or services to the malicious actor.
A 51% attack is the most well-known form of double-spending attack. In the 51% attack, a malicious actor or actors control more than half of all network hash power. As they hold the majority share of the mining hash power, a malicious actor with 51% or more share of hash power will be able to control the network at their will. Other miners on the network will become hapless against the malicious miner in 51% attack.
The chain that is being mined by the malicious miner will always become the legitimate chain the blockchain network is under the 51% attack. It will happen regardless of when the miner with a majority share of the network’s mining hash power starts mining an alternative chain. It results in the overruling of all published tx to date by the malicious miner’s alternative history.
Bitcoin double spending is not possible, and it will never happen in reality. The reason behind it is that it’s not possible to muster the kind of resources one needs to override the inbuilt safeguards of the current bitcoin blockchain to pull off successful double-spending.
There’s a thumb rule for any blockchain network to prevent double-spending. The higher the amount of resources one needs to carry out double-spending in a blockchain network, the harder it gets to pull off double spending successfully. Here, we are talking about the Bitcoin blockchain, which is the top-most blockchain in existence today. Let’s say that no one will ever be able to outgun the bitcoin blockchain ever. It means that Bitcoin double spending will never occur, and this is a fact.