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Bitcoin Double Spending: Is It Possible?

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Two Bitcoin
Image Source: Pixabay

The entire existence of bitcoin is built on the premise that it can be transferred from one person to another without the help of a third party. It was built to transfer payment as easily as we transferred files from one device to another. 

But when money can be transferred as easily as a document or music file, it means a copy of the original money can be spent several times. Double spending therefore became a major challenge for digital money. 

The powerful and perhaps the most important technology of this century, blockchain is what solves the problem of double spending. This distributed ledger technology makes double spending practically impossible. Once transactions have been validated and a new block has been added, it is impossible to alter the distributed ledger as there’s no centralized ledger. 

Digital information is relatively to reproduce, this is why pro double spending is a major problem of digital currencies. Fiat currency doesn’t have this problem. Cash handed to a cashier, or anyone cannot be reused again. With the technology behind bitcoin one can say – bitcoin double spending is impossible but is it really? 

Has double spending occured on the bitcoin network?

On 21st January there was news that a possible bitcoin double spend caused bitcoin to fall 11%.  A BitMex research suggested that there was a double spend flaw and double spending had occurred on the bitcoin blockchain. If this was true it could mean the 12 year old digital currency was just a hoax and Satoshi’s whitepaper wasn’t exactly true. 

BitMex research tweeted at first that there was a possible double spend of 0.00062063 BTC ($21). Then there was another tweet that the transaction was actually an RBF. A situation where a transaction has been unconfirmed and replaced by a new one. When this happens there should be a bump in transaction fees but there wasn’t. 

After another tweet by BitMex research it was concluded that there was no double spending. Insider reported according to Bitfinex CTO, Paolo Adriono that “In fact, what happened is that two blocks were mined simultaneously. As a consequence, there was a chain reorganization, which did not result in double-spending.”

The news did have some investors worried. If bitcoin wasn’t really solving the very problem it was designed to solve things could end badly for the crypto market. The clarification however doused tensions.

COO of OKcoin Jason Lao also told Coindesk  that the chain reorganization that occured was a common one. 

What caused a reorganization.

Bitcoin mining is highly competitive. Sometimes mining pools mine the same block at the same time which causes a split in blockchain history. 

Now there’s a chain A and a chain B but there can only be one chain. If the next miner decides to add a block to chain A and the next 4 miners decide to add to chain B, chain B wins out over A and chain A becomes an irrelevant chain. 

It is for this reason however, that Satoshi said a transaction should only be considered final after six more blocks have been mined to the chain that recorded the transaction. 

Events such as this goes to prove how solid blockchain technology is and how accurate the bitcoin whitepaper is. 

Double spending is the reason many proposed digital currency projects before bitcoin failed. Satoshi Nakamoto’s whitepaper solves this problem and in the last 12 years of bitcoin’s birth there hasn’t been any flaw in its security protocol. 

Blockchain technology makes makes bitcoin double spend impossible. However, there is a scenario where blockchain might fail. This scenario is the 51% attack. This attack can happen if 50% of the computing power needed the run the distributed ledger is held by one user. This user will be able to process transfers and reverse them as if they never happened.

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Bolu Abiodun is a recent graduate of Theatre and Media Arts, Federal University Oye-Ekiti. A journalist with over a year's experience on the job. A former editor at American Media company Project Forward, he is a skilled content creator, social media manager and digital marketer.

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Bitcoin.org gets hacked, scammers run BTC giveaway scam

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Earlier today, Bitcoin.org, the oldest cryptocurrency website registered by the founder of Bitcoin, Satoshi Nakamoto, recently got hacked. Scammers ran a BTC giveaway scam with a promise to return double the amount users send to the named address. In the end, the scammers were reported to have collected $17,764 before the website was taken down. The website was inaccessible for a few hours after the incident, but normal service has been resumed.

To bring users’ attention to the hack, a pseudo-anonymous Twitter account with the name Cobra took to Twitter to reveal the news and claimed that the website may be offline for some days. He also clarified through his tweets that Bitcoin.org has never been hacked and that the breach must have been due to a lapse on the part of Cloudflare- the web provider that the website is hosted on.

“Bitcoin.org hasn’t been hacked, ever. We move to Cloudflare, and two months later we get hacked. Can you explain where you were routing my traffic too? Because my actual server didn’t get any traffic during the hack” he tweeted.

The scam on the website was perpetrated through a giveaway. Visitors on the website were greeted with a popup, asking them to send crypto to a Bitcoin wallet via a QR code and receive double the amount in return. The fake message showed that the Bitcoin Foundation was giving back to the community and that the giveaway will be limited to the first 10,000 people. This was made to draw more people into the scam.   According to an analysis on the scam address done by Reddit Sleuth, it was presumed that a chunk of the 0.4BTC came from the scammers themselves to add an element of credibility to the claim. At the time of writing this report, Bitcoin.org is once again, back to life.

How popular is the Bitcoin giveaway scam?

Bitcoin giveaway scam is quite popular among hackers as it allows them to make fast money without tampering with anyone’s wallet. In 2020, Twitter handles of top crypto celebrities, politicians and influencers were hacked to run Bitcoin giveaways. While the scammers were apprehended, the value of Bitcoin was not affected.

Today’s scam on Bitcoin.org did not affect the price of the coin either. Despite the Evergrande debt crisis and the fluctuations bedevilling the crypto market within the week, Bitcoin increased by 2.05% within the last 24 hours, thereby moving from $42,789 to $44,378.

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El Salvador’s Bitcoin adoption – What you need to know

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El Salvador made history (and headlines) after becoming the first nation to endorse and approve the world’s most popular cryptocurrency, Bitcoin, as a legal tender. The move makes Bitcoin acceptable for transactions within the Central American country alongside the U.S dollar, which has been serving as the paper currency since 2001. This comes after the so-called “Bitcoin Law” came into force after passing legislation in June of 2021. El Salvador’s government announced that it had purchased 400 Bitcoin in 2 tranches of 200 each and plans to get more in the future.

The move to adopt Bitcoin has been justified by the government’s need to boost financial inclusion in the country. It is estimated that 70% of El Salvadorans do not have access to financial services and the government believes that Bitcoin can help close the gap. The Bank of America has outlined a few benefits that they believe will result from El Salvador’s bitcoin adoption. These include promotion of financial digitization, streamlining remittances as well as opening the country to digital currency miners. However, not all agree that the move is a step in the right direction.

Amongst the detractors of the scheme are the International Monetary Fund and the World Bank, each having warned El Salvador about the risks of Bitcoin’s use as legal tender. The World Bank has been irked by what it described as “environmental and transparency shortcomings” with bitcoin, while the IMF cited “economic and legal concerns” in relation to the move.

Other than the push back from these international bodies, there has been some internal opposition to the adoption of Bitcoin. Citizens had held protests over Bitcoin’s adoption in August and about 67.9% of respondents in a poll said they disagreed with the government’s decision to adopt crypto. The results of the poll showed that 8 in 10 people had little confidence in the use of bitcoin as the currency.

In spite of the criticism, El Salvador’s government is moving forward and has reportedly installed 200 Bitcoin ATMs across the country. And in response to the World Bank’s environmental concerns, El Salvador’s president, Nayib Bukele, has said the country plans to power mining activities using renewable energy from the country’s volcanoes. In order to incentivize the use of Bitcoin in the country, any citizen who signs up for the country’s “Chivo” wallet will get 30$ worth of bitcoin.

All in all, the adoption of a cryptocurrency by a sovereign nation is seen as a testing ground for many, as this is a use case Bitcoin has never experienced in its 12-year history. Countries such as Brazil and Panama seem to be watching the move to draw insights on whether to follow suit.

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Is Bitcoin Still a Good Investment?

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Source: Decentralize Africa; Bitcoin Investment

The above question is being asked a lot due to the surge and drop of bitcoin over the past months – so aspiring investors are curious about whether the coin remains a lucrative investment. Bitcoin is the world’s most treasured and appreciated digital currency in terms of its worth in the open market and this fascinates a vast scale of investors. While there have been ups and downs, Bitcoin still poses to be a good investment. 

When compared to various cryptocurrencies, Bitcoin has been proven to have innumerable benefits; 

Diversification

Diversifying your crypto portfolio is very important and investing in bitcoin, amongst others, can help you do just that. Several foundations and pension funds have added bitcoin to their portfolio over the years. Investment strategists have gone on to say that adding bitcoin to your portfolio may improve returns without notably increasing volatility. 

Working Capital and Cash Flow 

Bitcoin has shown to be a financial strong suit in terms of liquidity. At inexpensive prices, you can quickly swap Bitcoin for fiat currency or gold. The level of cash flow is often dependent on how many users, or in this case investors, a platform has. The liquidity of cryptocurrencies is likely to skyrocket if adoption rises and more people invest in Bitcoin as a viable means of exchange. 

Basic Trading And Operations 

More often than not, investing in stocks or company shares would require a license for the former and a visit to a broker for the latter. However, with Bitcoin, trading is made easy. Buying and selling Bitcoin is made easy and you can store them in your wallet with little to no hassle. Trading in Bitcoin is also instantaneous. 

Digitalized Storage And Repository

Due to the upgrade of technology, cryptocurrencies are not subject to the traditional form of investment and storage like banks. Instead, the data is stored in a peer-to-peer network of nodes and duplicated across the world. 

Digital Gold 

Owing to its limited accessibility, Bitcoin is referred to, by many, as the “digital gold”. Like with gold, which has to be extracted from the earth, Bitcoin has to be “mined” through the use of computer software and thus, cannot be produced at the snap of fingers. Bitcoin has been said to have features akin to gold, silver and the likes. 

Brand New Opportunities 

The fact that Bitcoin is still current in the world of cryptocurrencies brings room for fresh opportunities. Its newness poses a high price alteration and volatility, which may lead to vast profits if invested properly. 

Bitcoin has always been a smart expenditure. The rate at which individuals adopt the coin is proof that it is still a good investment. Bitcoins will help in diversifying your portfolio, it will help in simple and stress-free trading, it will help in electronic and digital storage, amongst many others. Bitcoin as a long-term investment is feasible because the supply is fixed. It goes without saying that Bitcoin has the potential to become a global currency.

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