Double Spending is the act of paying (sending) the same currency to different parties at the same time.
For example, when you have only 1 BTC of bitcoin, you pay 1 BTC to A and 1 BTC to B.
When double payments are made in a certain currency, the currency doubles in face value, but the value per currency is halved.
If double payments are made on a regular basis, the value of the currency itself will be close to zero.
Therefore, cryptocurrencies that are able to make double payments will lose the trust that supports their value. In other words, preventing double payments is a prerequisite for a cryptocurrency.
Bitcoin prevents double payments by implementing two technologies.
- A Blockchain where everyone monitors the transaction data
- Proof of Work, a mechanism for approving data through mining
In this way, instead of having a central issuer, monitor, or server, the Bitcoin transaction system uses blockchain, a database that allows users to monitor data together, and proof-of-work, a mechanism for approving data through mining. The blockchain is a database that allows users to monitor data together.
By introducing the approval process to the blockchain, Bitcoin has created a mechanism to prevent double payments by determining whether a transaction is legitimate while keeping a record of all past transactions.