There’s no doubt that bitcoin is continuously gaining popularity and adoption throughout the world. It’s redefining the way people use their money by being the world’s first fully-functional virtual currency. But you might be astonished to know that even before Bitcoin, there were efforts to create a sustainable virtual monetary system. Don’t believe? Check our dummies’ guide to buy Bitcoin. Eventually, all of those efforts failed as an obvious issue with virtual currency is that transactions can be copied and spent more than once.
Let’s make it simple!
Bitcoin is able to thrive exponentially because it solves the problem of Double Spending.
As the name suggests, double spending means spending the same amount twice. For example, you go to a coffee shop and order a cappuccino worth $10. You pay the amount in cash. Now, that amount is in the cash vault of the coffee shop. You cannot spend the same amount somewhere else to make another purchase, unless you, somehow, steal it.
As you paid your bill worth $10, the service provider at the coffee shop instantly confirmed that you had paid your bill, and you got your coffee in exchange for the money.
But, Bitcoin is not physical cash. It’s a digital currency. Therefore, Bitcoin transactions have a possibility of being copied. Thus, it opens up the possibility that the same Bitcoin could spend twice by its owner.
In a coffee shop example given before, you paid cash, and the payment was confirmed immediately by another human. But with the digital money like Bitcoin, if this verification mechanism is missing, then it can lead to double spending.
Anyone can simply copy that digital money to pay elsewhere. And the unique solution to this problem lies…
Though being a digital currency, Bitcoin solves the problem of being copied and getting spent another time. But How?
Double spending within bitcoin is the act of using the same digital currency files more than once. Imagine that you have bought something for $1, you cannot spend that same $1 to buy an orange. In case you could, then the money would be worthless since everyone would have unlimited amounts as well as the scarcity, that gives this currency a value that would disappear. The Bitcoin Core network protects against this double spending issue by the verification of each recorded transaction inside the Bitcoin blockchain that uses a Proof of Work mechanism.
The open and immutable ledger technology, blockchain makes sure that the transactions are confirmed by its inputs which are verified by the miners. How Bitcoin mining works is our guide to help you understand this process precisely. The confirmation makes each unique bitcoin as well its subsequent transactions even more legitimate. In case anyone tried to duplicate a transaction, then the original blocks deterministic functions would alter showing the network that it’s counterfeit and wouldn’t be accepted.
Once a transaction is confirmed, it’s almost impossible to double-spend it. The conformations which a transaction has makes it harder to double-spend the bitcoins. By solving this major issue, the digital money has now become viable to the people.
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