Bitcoin is the world’s first decentralised digital currency. Its main technical innovation is the use of a blockchain and hash-based proof of work to synchronise transactions and prevent double spending the currency. While the qualitative nature of this system is well understood, there is widespread confusion about its quantitative aspects and how they relate to double spending attacks and their countermeasures.

This paper looks at the processes that underlie typical attacks and their probabilities of success. The authors take a look at how different blocks are selected, what a successful double spending attack consists of and how an attack impacts the Bitcoin blockchain structure.

A successful double spending attack consists of:

1. Broadcasting to the network a transaction in which the attacked merchant is paid.
2. Secretly mining a branch which builds on the latest block at the time (before the transaction made it into a block), which includes a conflicting transaction which pays the attacker.
3. Waiting until the transaction to the merchant receives enough confirmations and the merchant, confident in their payment, sends the product.
4. Sometimes continuing to extend the secret branch until it is longer than the public branch before broadcasting it. Because the new branch is longer than the one currently known by the network, it will be considered valid, and the payment to the merchant will be replaced by the payment to the attacker.

Download this paper to discover more about double spending attacks and their impact on the Bitcoin blockchain and the overall crypto economy.