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Satoshi Nakamoto references double spending in the abstract of the Bitcoin whitepaper
Bitcoin has never experienced a double spending attack, but other networks have
What is double-spending and how does Bitcoin mitigate it?
It’s something that Satoshi Nakamoto clearly thought important enough to mention in the abstract of the Bitcoin whitepaper, but it’s something that is rarely talked about in Bitcoin circles. This is because double-spend attacks are mercifully rare in the crypto space (Bitcoin has never experienced one), but its importance to Satoshi Nakamoto and the founding principles of Bitcoin means it’s something that is certainly worth being aware of.
The Double-spending “Problem”
Satoshi Nakamoto referenced double spending in the third sentence of the Bitcoin whitepaper, saying that his vision for Bitcoin mitigated it:
We propose a solution to the double-spending problem using a peer-to-peer network.
But what exactly is the “double spending problem”? Double spending refers to a potential flaw in digital currencies or electronic payment systems where the same unit of currency is spent more than once. This, of course, isn’t possible with cash, but with digital transactions there is a risk that a user could make a copy of their digital currency and spend it in multiple transactions before the network has a chance to update and validate the transactions.
Bitcoin’s predecessors, the various attempts at digital cash that came and went in the 1990s and early 2000s, didn’t have mechanisms in place to deal with this, but Satoshi Nakamoto designed Bitcoin to eventually be impervious to such attacks by implementing a proof-of-work consensus mechanism.
How Bitcoin Mitigates Attacks
When a transaction is initiated, it is broadcasted to the network, and the miners work to validate and add the transaction to the blockchain. Once a transaction is confirmed and included in a block, it becomes difficult to alter or reverse. This decentralized and time-consuming process helps to ensure that a double spend cannot occur because the network will reject any conflicting or fraudulent transactions that attempt to spend the same funds twice.
However, double-spend attacks can occur if a network doesn’t have much hash power from miners. If this is the case then a malicious actor can overwhelm the existing miners, reverse recent transactions, and send the same coins again, spending the same coins twice, hence ‘double spend’. When Bitcoin was just getting going such an attack was possible, but today the strength of the network such that it would take an enormous amount of mining power to even attempt it.
Other Networks Have Experienced Them
Double-spend attacks may no longer be possible on Bitcoin, but they have been executed on other blockchains: Bitcoin Cash was attacked in 2019 while Ethereum Classic suffered twice in 2020, as did BSV the following year. The reason these attacks were successful is due to the small number of verifiers in the network; the lower the number of nodes that verify a transaction, the more opportunity there is of compromising them.
The BSV case is notable because the people that pulled it off sent some of the duplicate coins to the exchange Bitmart, which filed a court order to have the coins seized. BSV accused BitMart of having double standards over the incident and suggested that the double-spend attacks were the reason why the value of the coin fell, and has continued to fall ever since.
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