Double Spending vs Fast Payment

To make it short, double spending means that somebody spends its coin twice. You cannot spend a coin twice in the real world, but in cryptocurrency, you can do it with some tricks.

When you pay the crypto-coin to Person A, you can use the same coin to Person B in a very short period of time, because neither of them can get an immediate update on whether your coins has been spent or not until it is too late.

Network latency is the main reason of allowing double spending. It takes time for the transaction to be confirmed by the others and written in the Blockchain. Bitcoins only allows the transaction be recorded in every ten minutes and somebody suggests that you have to wait at least one hour to make sure your transaction is not “double spending” of the counterparty. The official wiki of Bitcoins (link) recognizes the problems and suggests the user to protect themselves by waiting for confirmation.

The alert and blacklist system was introduced to warn other users and allow users to see who was the “bad guy”, but it does not stop people from being cheated by someone who seems to be a “good guy”.

When the cryptocurrency is being promoted to be used in our daily life, I would ask a question to the store owner.

How do you know that the person would not spend the same coins in your store and another store, while the person takes away your goods in the next seconds?

Faster protocols and different safeguards are introduced to make confirmation much faster to prevent users from double spending. However, the protocol itself cannot prevent the leader, i.e. who wins to write in the blockchain, from writing a “double spending” transaction for his own benefit.

Moreover, when the right of adding a new block comes to a leader or a group of leaders, they could choose to write anything on the block without the consideration of the others. I would call them the evil leader(s).

The action of the evil leader(s) would create the second hardest problem — hard fork. It splits the blockchain into two or more, creating a threat on the usability and acceptability of the cryptocurrency. In the next section, the details and consequences of hard fork would be discussed.