Double-spending

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Double-spending is a failure mode of digital cash schemes, when it is possible to spend a single digital token twice. Since, unlike physical token money such as coins, electronic files can be duplicated, and hence the act of spending a digital coin does not remove its data from the ownership of the original holder,[1] some other means are needed to prevent double-spending.

Trusted third party

This is usually implemented using an on-line central trusted third party that can verify whether a token has been spent.[1] This normally represents a single point of failure from both the technical and trust viewpoints.

Decentralisation

By 2007, a number of distributed systems for double-spending prevention had been proposed.[2][3]

The cryptocurrency Bitcoin implemented a solution in early 2009. It uses a scheme called proof-of-work, to avoid the need for a trusted third party to timestamp transactions. These timestamps are recorded in its public ledger called the block chain. This avoids anyone double-spending the currency.[4]

See also

References

  1. 1.0 1.1 Mark Ryan. "Digital Cash". School of Computer Science, University of Birmingham. Retrieved 2010-07-12.<templatestyles src="Module:Citation/CS1/styles.css"></templatestyles>
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  4. Joshua Kopstein (12 December 2013). "The Mission to Decentralize the Internet". The New Yorker. Retrieved 30 December 2014. The network’s "nodes"—users running the bitcoin software on their computers—collectively check the integrity of other nodes to ensure that no one spends the same coins twice. All transactions are published on a shared public ledger, called the "block chain"<templatestyles src="Module:Citation/CS1/styles.css"></templatestyles>