Before we Start our journey with Crypto, we must educate our self first, so that we can easily understand Cryptocurrency as well as Blockchain. Understanding Double Spending is a great advantage for us when it comes to Cryptocurrency. This will help us understand how our transaction will be validated by Blockchain. For you to understand it easily, Let's get started....
Double Spending
Lets do Understand what does Double Spending Look like. Until the invention of Bitcoin, it was impossible for Two parties to transact electronically without employing a trusted Third party intermediary. The reason was all about conundrum known to computer scientists as the ‘Double spending problem’, which has plagued attempts to create electronic cash since the dawn of the Internet.
To understand the problem, first consider how physical cash transactions work. The bearer of a physical currency note can hand it over to another person, who can then verify that he is the Sole possessor of that note by simply looking at his hands. For example, if I, Xavier hands Bob a $50 bill, Bob now has it and I does not. Bob can easily verify his possession of the $50 bill and that me no longer has it. Physical cash transfers are also final, in the sense that to reverse a transaction the new bearer must give back the currency note. In our example, Bob would have to hand the $50 bill back to me. Given all of these properties, cash makes it possible for different parties, including strangers, to transact without trusting each other.
How does it work ?
Consider how electronic cash might work. Paper notes would be out of the picture. There would have to be some kind of digital representation of currency. Instead of a $50 bill, we might imagine a $ 50 computer file. When I, Xavier wants to send $ 50 to Bob, she attaches a $50 file to a message and sends it to him. The problem, as anyone who has sent an email attachment knows, is that sending a file does not delete it from one’s computer. I will retain a perfect digital copy of the $50 she sends Bob, and this would allow her to spend the same $50a second time, or indeed a third and fourth. I could promise to Bob that she will delete the file once he has a copy, but Bob has no way to verify this without trusting Me.
Recently, the only way to overcome the double spending problem was to employ a trusted third party intermediary. In our example, both Xavier and Bob would have an account with a third party that they each trust, such as Paypal ( Paypal is now accepting Cryptocurrency such as Bitcoin. )Trusted intermediaries like Paypal keep a ledger of all account balances and transactions. When Xavier wants to send $50 to Bob, she tells Paypal, which in turn deducts the amount from her account and adds it to Bob’s. The transaction reconciles to zero. Xavier cannot spend the same $50, and Bob relies on Paypal, which he trusts, to verify this. At the end of the day, all transfers among all accounts reconcile to zero. Note, however, that unlike cash, transactions that involve a third party intermediary are not final, as we have defined it, because transactions can be reversed by the third party.
Another example, Let's say I have a Balance of $100 of BCH and he wants to send $100 of BCH to Fred and another $100 of BCH to Bob. When he sent thesame amount of BCH to both receiver which would cost a total of $200 ( it means Xavier is Double spending his Funds ), but I only have $100 of BCH. What will happen to the transaction is, the first transaction that will be validated/Confirmed and sent to blocks first, is considered as the Succesful transaction. Let's say that first transaction was belong to Fred, so it means that Fred will received the amount worth of $100 of BCH which Xavier was sent. And the Sencond transaction that is not validated/Confirmed will remain an Unsuccessful transaction. And this is how Double spending looks like...
Like PayPal, the Bitcoin system employs also a ledger, which is called the block chain. All transactions in the Bitcoin economy are recorded and reconciled in the block chain. Unlike PayPal’s ledger, the Blockchain is not maintained by a central authority. Instead, the blockchain is a public document that is distributed in a peer to peer fashion across thousands of nodes in the Bitcoin network. New transactions are checked against the block chain to ensure that the same bitcoins have not been previously spent, but the work of verifying new transactions is not done by any one trusted third party. Instead, the work is distributed among thousands of users who contribute their computing capacity to reconcile and maintain the block chain ledger. In essence, the whole peer-to-peer network takes the place of the one trusted third party.
Trivia :
Satoshi Nakamoto announced a way to solve the double spending problem without employing third parties. His invention, Bitcoin, is essentially electronic cash. It allows for the first time the final transfer, not the mere copying, of digital assets in a way that can be verified by users without trusting other parties. This is accomplished through the clever use of public key cryptography, peer to peer networking and a proof of work system. This was around 2008.
-Xavier
This Article was based on what I understand in Double Spending by watching Youtube videos and by the Help of Experts and gathered comprehended information. Hope this will help you to your journey with Crypto. For more explaination please do go to Youtube and Search Helpful tools to understand Cryptocurrency. Please do leave a Comment below and Click the Like and Subscribe button if you liked the Article.
@Xavier! More Cryptocurrency articles to come!
Note: I will be posting starting this day about Interesting Facts about Cryptocurrency through Short post. Thanks..
good information