LMX-Double Spending problem explained

lmx3881 (29)in #cryptourrency • 7 years ago (edited)

Block chain technology help to stop double spending. But what exactly is double spending. Let Me eXplain
Let’s say you have $100 physical cash. It’s a bona fide record that you have a paper valued $100. Let’s assume you owe two of your friends $100 each. You go to first friend and give him $100 dollars. Now you don’t have $100 in your hand and won’t be able to pay other friend. So in physical cash transaction you won’t get a double spending problem.
Now consider this situation. You have $100 worth of Bitcoin or Steem or any such cryptocurrency. Consider same situation above. You owe two of your friends $100 each. Since Bitcoin is a digital token you can send this digital token to first friend. Since it’s a digital token you can make a copy of it and send to other friend. You only have $100 worth of Bitcoin but you paid $200 . This is called a double spending.
A block chain helps to avoid it. To avoid that what block chain do is to update the first transaction in an online ledger. So it will update that digital token worth $100 is transferred from you to other friend. When you try to transfer same token again it will check the ledger and see that you don’t own that token anymore. Its with your friend so your second transaction is not legitimate

#cryptocurrency #double #spending #blockchain #ledger