A:

Double-spending – the incidence of one individual successfully spending a Bitcoin balance more than once – is a major concern for all digital transactions. The block chain itself does not prevent double-spending; instead, all transactions posted to the block chain are verified and protected through a confirmation process. Once a transaction has been confirmed, it becomes irreversible and posted publicly.

Understanding the Block Chain

In Bitcoin terms, a "block" is a file of permanently recorded data. All recent transactions are written into blocks, much like a stock transaction ledger on an exchange.

The term "block chain" refers to a virtual ledger that is publicly (yet anonymously) shared to all members of the Bitcoin network. Any economic transaction involving the Blockchain.info allows users to navigate the Bitcoin block chain and review transactions in quantity only; information about the buyer and seller are protected. Bitcoin uses a high-level AES encryption to prevent outside sources from accessing or changing the ledger.

All Bitcoin wallets are instantly updated through the block chain. "The integrity and the chronological order of the block chain are enforced with cryptography," the Bitcoin website indicates.

Handling Double-Spending

Suppose two transactions spend the same input to the same block. Bitcoin automatically rejects both transactions to prevent one Bitcoin from going toward two separate ends. A similar rejection occurs if two separate blocks receive inputs from the same Bitcoin source. Bitcoin treats such circumstances as incidents of accounting fraud.

Nevertheless, double-spending is still possible (though highly unlikely) in Bitcoin. If this does occur, at least one party in one of the transactions will not receive the Bitcoin. All parties are responsible for communicating and sorting out the dispute.

RELATED FAQS
  1. What Does the Bitcoin Blockchain Record?

    Read about the bitcoin blockchain, a public ledger shared among all bitcoin users that records the information of every single ... Read Answer >>
  2. Is Bitcoin legal in the US?

    Learn about the legality of Bitcoin as a form of payment in the United States, as well as how it is produced and concerns ... Read Answer >>
  3. Why do Bitcoins have value?

    Performing with transactional anonymity, Bitcoin has value as a private digital currency, investment tool and social networking ... Read Answer >>
  4. What's the difference between the general ledger and a general journal?

    Keeping records for most organizations require a double-entry bookkeeping system, which revolves around transactions in the ... Read Answer >>
Related Articles
  1. Tech

    How Bitcoin Can Change The World

    Bitcoin has the potential to not only create savings for consumer, but also to transform global transactions.
  2. Tech

    Bitcoin vs. Bitcoin Cash: What's the Difference?

    We break down the difference between bitcoin and bitcoin cash, and what it might mean for the future of cryptocurrencies.
  3. Tech

    What's Bitcoin Cash And Where the Heck Did It Come From?

    Here's a look at Bitcoin Cash and how its arrival has impacted the market dynamics.
  4. Tech

    Is Bitcoin Cash About to Fork Again? Is It in Trouble?

    An update was announced in November and is set to take place in May.
  5. Tech

    The Rise And Fall And Rise Of Bitcoin

    A look at the reasons behind the recent spectacular surge in bitcoin prices.
  6. Tech

    Bitcoin Innovations And Obstacles

    Investopedia explains the development of the Bitcoin digital currency system and the risks associated with using and investing in it.
  7. Tech

    How Should Investors Play Bitcoin Price Volatility From November Fork?

    Here's a brief analysis of what's at stake and key indicators that investors should look for.
  8. Tech

    Ways To Earn Bitcoins

    There are many ways to earn and own Bitcoins other than just buying them on a Bitcoin exchange.
  9. Tech

    SEC Denies Winklevoss Bid to Launch Bitcoin ETFs in Surprise Upset

    The Bitcoin world was stunned by the SEC's decision not to approve the Winklevoss Bitcoin ETF.
  10. Tech

    Bitcoin Price Falls After Yesterday's Highs

    Bitcoin's price fell into correction territory this morning as other cryptocurrencies gained strength.
RELATED TERMS
  1. Bitcoin Classic

    A fork from Bitcoin Core that proposed increasing the size of ...
  2. Bitcoin XT

    A fork from Bitcoin Core that proposed increasing the size of ...
  3. Block Explorer

    A block explorer is a website that allows users a real-time, ...
  4. Block Time (Cryptocurrency)

    Block time is the average time for a new block to be generated ...
  5. Digital Copy

    A digital copy is a duplicate record of every Bitcoin transaction ...
  6. Genesis Block

    Learn about the Genesis Block, the first Bitcoin block ever mined. ...
Trading Center