The double-spend attack came to the fore once again yesterday with a post published by BitMEX's research unit.
The post in question, and the few news published after it, actually drove Bitcoin investors into an unnecessary panic. The sales of Bitcoin yesterday and today can be attributed to this panic, among other factors.
The double-spend attack is worrisome when it comes to essentially a 51% attack. In yesterday's case, we don't see it.
We have clarified the double spending method several times before, but we plan to discuss it in more detail here.
What is double spend?
First of all, double spending means spending the same crypto money more than once. To give an example from real life, you entered a coffee shop and paid with 10 TL in cash in your pocket. 10 TL entered the cash register of the shop. Now imagine you buy a cookie for the same 10 TL. This is the blockchain equivalent of double spending. Although this scenario is not possible in real life unless you steal the money in the safe, it is possible in cryptocurrencies.
There are defense mechanisms in Bitcoin to prevent a double spending attack. Especially in small blockchains, this attack is a big problem, and there have been numerous successful attacks on many chains in the past. For example, last year, 51 percent of the Ethereum Classic network was taken over, and then some exchanges lost millions of dollars in double-spending attacks.
Small PoW chains vulnerable
As with Bitcoin, small chains based on the proof-of-work (PoW) system are more vulnerable to 51% attack as it is easy to gather the processing power required for such an attack. In Bitcoin, it is very costly to acquire such power, and at the same time it requires near-perfect coordination to carry out such an attack. So there is no economic incentive to attempt such an attack. This is what makes Bitcoin the most secure blockchain.
Above, we mentioned that the Ethereum Classic blockchain has been exposed to 51% attacks several times until recently. To make a comparison with Bitcoin, the hash rate is 7 TH / s in the Ethereum Classic network, while it is 150,000,000 TH / s in the Bitcoin network. Hash rate refers to the processor power of the network. To date, a successful 51% attack against Bitcoin has not been carried out. Ethereum Classic is not the only example of successful 51% attacks, but chains such as Bitcoin Gold, Vertcoin, and ZenCash have also experienced this before.
Avoid double spending
It is a good protection method to personally not accept transactions that have not yet been approved on the network against double-spend attacks. So if you are selling cars or something with Bitcoin, wait for at least 3 block confirmation for Bitcoin transfer. Some see another 6 block confirmation guaranteed. The reason exchanges wait for 1 block or more block confirmation to account for Bitcoin transfers is to be protected from the double-spending attack.
The "double-spend" story that emerged yesterday
As stated in the first paragraphs, yesterday's event was quickly taken in the wrong direction after it was discovered and published by the BITMEX research team. BitMEX reported that it identified a 'stale' Bitcoin block at block 666,833, the mining pool SlashPool defeated F2Pool 'in the race', and a small double spend of about 0.00062063 BTC appeared.
Bitcoin developer and information security expert Andreas Antonopoulos gave a detailed account of the issue taken in the wrong direction and said:
“There was a chain reorganization (reorganization) in the Bitcoin blockchain. This is a common occurrence that is part of the normal functioning of Bitcoin. It is the result of a decentralized consensus based on proof-of-work. All PoW chains do this. Two blocks belonging to the same master block competing for the same block height were removed almost simultaneously. In the long run, only one can be permanent. It is possible for different nodes and miners to see one or the other first, assuming it is the 'winner'. This is also normal in a decentralized consensus algorithm. Finally, another block is removed within an average of 10 minutes. The main block of this new block is one of the two competing blocks, but which one? The miner first assumed what he saw was the winner, but the new block solves the problem by extending the chain. "
According to Antonopoulos, this whole process is part of completely normal operation and a 1-block chain reorganization is seen every two weeks on average. Rearrangement of 2 blocks is less frequent, several times a year. Antonopoulos emphasized that he had not seen the 3-block reorganization before.
The Bitcoin developer highlighted that in terms of the blockchain as a whole there is no double-spending attack, and "Bitcoin continues to work as it should." said.
