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.

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