A Detail Analysis Of Double Spending Attack

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A double spending attack is known to be a very serious threat to cryptocurrencies or other digital currencies, it is an attack whereby the same unit if currency can be spent twice or more.
In the operation of the traditional financial systems, we have the presence of the intermediaries which record and verify transactions, ensuring that a duplication of money is not done, and the in the decentralized system like the Blockchain network, we have no intermediary that oversee such transactions.

And the Absence of an intermediary like the bank in the decentralized system creates the possibility of a double-spending , a condition where attackers try to spend same currency more than once.

And inorder for the integrity and security of digital currencies to be maintained, we need to gain understanding on the operating techniques of double spending attack

A double spending is said to occur when two conflicting transactions is being initiated by a malicious user with the intent of making use of the same funds for both transactions. For example, they may simultaneously send funds to two different parties with the aim of having one of the transactions reversed while still receiving good and services for the reversed transaction.

This form of attack is only made possible because of the delay in the verification time of the blockchain network.
The attacker can only see the need or window to broadcast a second transaction with the same funds when the blockchain network is slow to confirm transactions. This attack is usually done in blockchain network with a low computational power or one with an insufficient security measures.

Double spending attack comes in different forms and we have the 51% attack, Finney attacks, race attacks etc.
In the race attack, two transactions is sent out simultaneously by the attacker, with the aim that one gets verified quickly before the other, and in a Finney attack, the attacker will need to have control of the mining nodes and here he premines a block with one transaction and spend the same money on another transaction before the premined node is being broadcasted.

And lastly, the 51% attack is an attack that can only occur when the malicious user have control of more than half of the network mining hash power, and this gives him the ability to reverse confirmed transactions and also to rewrite blockchain history.

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The blockchain technology is highly dependent on a consensus mechanism to fight against double spending attacks.
In some blockchain network, this is usually done with the use of a Proof-Of-Stake or Proof-Of-Work system and this mechanism requires that the confirmation and verification of transaction is carried out through a process free from the intervention of the central authority.

The Proof Of Work is the most commonly used consensus mechanism and this mechanism requires that for a transaction to be added on the blockchain, the miners would have to solve complex cryptographic puzzles, and this helps to ensure that transactions remains virtually immutable once they have been added to the blockchain. Double spending is now difficult with the decentralized nature of the blockchain and the impossibility of transaction to be altered without the consent of majority miners on the network.

This mechanism works in a way that in the event of two conflicting transactions, only one will be verified. So if a race attack is being done by an attacker, where two transactions are being sent simultaneously, the network will only validate the first transaction to reach the blockchain network and the second transaction becomes rejected.

In the Proof Of Stake system, node validators are often selected based on the amount of currency they are holding or based on their staking power, thus creating a similar security measures against double spending attack.

Very important component that are needed in mitigating the risks of double spending attack is block confirmation.
When there is a broadcast of transaction to the blockchain, it is always included in a block which must be verified by validators or miners, and the higher confirmation received by a block the higher the transaction on that block becomes.
And this is so because the difficulty of altering the blockchain increases with every new block added to the chain, thus making it impossible for the transaction to be reversed by an attacker.

And for this reason, a multiple confirmation is being recommended by most cryptocurrency network, using bitcoin as an example, a total of confirmation is needed on its blockchain before a transaction can be termed to be irreversible.
And the idea behind this is that when a transaction has more confirmation, the attacker would need to rewrite more blocks based on the number of confirmation before he would be able to reverse such transactions, thus making double spending attack time consuming and very expensive

There are several preventive measures that can be applied to eliminate the risks of double spending attack and also strengthen blockchain security.
First, this can be done by increasing the network hash power, as this will play a very important role in detering 51% attacks.
A significantly higher resources will be needed by a network with higher computational power to take control of the majority of the hash rate, thus making it more secured.
And this Is very important for smaller cryptocurrencies which are more vulnerable to double spending attack.

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Also, the security of the blockchain can further be enhanced through the implementation of an hybrid models consisting of the combination of a POW and POS.

Hybrid systems would require that an attacker possess a huge staking power and also the computational power which will make it more challenging for a double spending attack to be successfully executed.

Also, an additional layer of security can be added to the blockchain through the use of multi-signature wallets, as this would require the approval of multiple parties before it can be finalized.