HOW BLOCKCHAIN PREVENTING DOUBLE-SPENDING - created from Mind Map

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What is the meaning of blockchain in Bitcoin? A blockchain is a decentralized ledger of all transactions across a peer-to-peer network. Using this technology, participants can confirm transactions without a need for a central clearing authority. Potential applications can include fund transfers, settling trades, voting, and many other issues.

Ways of prevention of double-spending :

confirmations on blockchain

benefits of blockchain technology

centralized (no longer present)

decentralized

With a centralized solution, a central and trusted third party will normally be responsible for verifying that a digital currency has not been double-spent.

However, this method is faced with one significant disadvantage, that being the fact that it leaves behind a single point of failure.

Because A centralized third party can be involve by a malicious actor, which may then lead to the same digital currency being spent more than once.

Bitcoin uses a consensus mechanism known as proof-of-work to avoid the need for a centralized party

Instead of requiring a trusted third party to verify that transactions are not double-spends, a decentralized group of individuals known as miners perform this task.

All Bitcoin transactions are also included in a shared public ledger known as a blockchain

A transaction is regarded as valid once it has been grouped into a block and included in the blockchain. As more blocks are added to the blockchain , it becomes increasingly difficult to go back and double-spend a transaction.

This is because, for a block to be added to the blockchain, a tremendous amount of computational power is required.

The greater the number of block confirmations, the increased likelihood that the transaction cannot be double-spent.

0 confirmations: At this stage, the transaction has been broadcast across the network but has not yet been included in any block. Transactions with 0 confirmations (or unconfirmed transactions) should generally not be trusted, as the risk of a double-spend can be high at this point.

1 confirmation: The transaction has now been included in a block and added to the blockchain, thus, the double-spend risk decreases significantly. However, a double-spend of the transaction is still a possibility, and as such, one should wait for more block confirmations.

6 confirmations: With Bitcoin, the network has spent approximately one hour protecting the transaction against double-spends. With the transaction being buried under 6 blocks, an attacker would require a significant amount of network hashing power to revert those 6 blocks and double-spend the transaction.