In this article, we learn about the basic concept of Bitcoin that are necessary to Understanding Double spending notes. ​

I will try to explain some of the most important topics such as Payments and double spending notes, Bit coin Scripts.

Payments and double spending

What is Double spending with Example?

Double spending means spending the same money twice. As we know, any transaction can be processed only in two ways. One is offline, and another is online.

• Offline: A transaction which involves physical currency or cash is known as an offline transaction.
• Online: A transaction which involves digital cash is known as an online transaction.

Lets take examples

• When you go to Restaurants and order a coffe worth $5. You pay in cash. The service provider at Restaurants instantly confirmed that you have paid, and you received your coffee in exchange for the money.
• Spend same $5 somewhere to purchase another item is it possible?
• The answer is NO. But what if the answer is YES? It means the same person can use the same cash more than one times. This type of problem is known as Double Spending Problem.

What is a Double spending problems?

• In a physical currency, the double-spending problem can never arise.
• It is a problem that arises when transacting digital currency that involves the same tender is being spent multiple times.
• Bitcoin transactions have a possibility of being copied and rebroadcasted.
• •A centralized trusted party has always been required to prevent double spending

How Bitcoin handles the Double Spending Problem?

• The only way is to be aware of all transactions.
• Each node (miner) verifies that this is the first spending of the Bitcoin by the payer.
• Only when it is verified it generates the proof-of-work and attach it to the current chain.

What is Bitcoin Mining?

• Everyone who uses Bitcoin becomes part of the bank of Bitcoin
• Miners use special software to solve math problems that verify all transactions and they are rewarded with newly issued Bitcoin in exchange for using their computing power
• As more miners come online, the network gets more secure and the math gets harder
• Bitcoin would not work without miners

What Are Mining Pools?

• It’s nearly impossible for individuals to mine because the math is getting so hard to solve that it takes massive computing power to work
• The Solution… Mining Pools! People can share in the profits by pooling together their resources and splitting up the Bitcoin that is mined
• There are no limits or restrictions on how big a pool can get or how one is set up.

Read More

• Introduction of Blockchain (Notes)
• Applications of Blockchain Technology (Notes)
• How Blockchain Transaction Works? (Notes)
• Digital Signature (Notes)
• Types of Blockchain & Smart Contracts (Notes)

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