What is double-spending? To understand what double-spending means, we must first understand how a blockchain network works. All cryptocurrencies use what is known as a blockchain. It is essentially a chain of blocks where each block is made up of digital information about transactions. Bitcoin and other cryptocurrencies cannot be forged because the blockchain is public and immutable. Because of a consensus algorithm each chain has, it is almost impossible for someone to form a transaction or block.
Picture this, James sends Kate 4 Bitcoin. This transaction is made public, and everyone receives information about it. Also, the transaction has to be verified. If James doesn’t have 4 Bitcoin, the verification will fail, and Kate will not receive any Bitcoin. The verification process happens through the consensus algorithm.
Can Double-Spending Really Happen?
Double-spending happens when an attacker spends the same funds twice. For example, if James sends 4 Bitcoin to Kate and also to Alex at the same time, only one of the transactions will be confirmed through a consensus algorithm. Therefore, basically double-spending hardly happens.
Actually, this problem is easier to solve on centralized systems; if there is a central institute like a bank, it can take charge of the problem. However, since blockchain is decentralized, there is no specific one responsible for the double-spending attack.
Even though the consensus algorithm almost prevents double-spending, unfortunately, this cannot be the final solution as the problem can still occur. Theoretically, if someone were able to hold more than 50% of the mining power available, he or she would have the ability to overturn network transactions and may make a double-spending attack valid.
Although this might seem unlikely, it can happen for real. In 2014, the mining pool Ghash.io obtained 51% of Bitcoin’s hashing power but capped their power at 39.99% to increase the trust in the network. However, this event raised significant concerns about the safety of the network, as most mining power seems to be in control of a few parties only.
Other cryptocurrencies have suffered 51% attacks, Bitcoin Gold, for example, was hit by a 51% attack in 2018 and just recently in 2020.
The Final Solution for Double-Spending, FLETA
FLETA is a blockchain-based platform for the creation of decentralized applications. FLETA employes an innovative sharding model where each shard operates individually and independently. For this reason, double spending is not feasible and provides a high transaction speed.
Also, FLETA’s consensus algorithm, PoF(Proof-of-Formulation), prevents the double-spending problem. Its Observer Node, confirms a generated block real-time, and confirmation of 3 out of 5 observer nodes is necessary. This system eliminates the possibility of double-spending.
Conclusion
Although the initial consensus mechanism works, it is not entirely secure against double-spending attacks. A 51% attack has been shown to be achievable even in cryptocurrencies.
FLETA has been able to create an innovative sharding model that allows each chain to operate independently. Moreover, its PoF consensus algorithm confirms a block systematically in real-time. Thanks to them, FLETA is free from the double-spending issue.
