The potential for a digital currency to be spent twice.
Double spending is an issue associated with digital currencies because of the relative ease with which data can be reproduced, and the increasing availability of the computing power required to do so.
This event can occur in a cryptocurrency
when it is disrupted by bad actors. Most commonly, thieves send multiple packets related to a transaction
to the currency’s network
, but then reverse those transactions with the intention of making it appear that they never occurred.
Double spending was one of the primary concerns associated with digital currencies when they first emerged. The first experiments began in the 1980s, but they never gained much traction — primarily because of the double spending problem.
Bitcoin, however, is now considered to have solved double spending. It achieves this through the requirement that all transactions are recorded on the blockchain
. This record is theoretically immutable
because every new block mined
has to contain references to previous blocks. Because the blockchain is distributed across many thousands of computers and locations, the computing power required to make a single change to the ledger is so high that it is considered impossible to do so.
However, there have been challenges to Bitcoin's impermeability. On several occasions fraudsters have attempted to double spend through the use of sheer weight of computing power. On others, Bitcoin thieves have used other techniques to essentially steal cryptocurrency from poorly secured wallets
. The latter is perhaps the most common form of fraud now occurring on the Bitcoin blockchain, and in the wider crypto sector.