There have been more than 3500 double spending attempts on Bitcoin Cash in the past month.
Some 185 such double spending transactions were attempted in just the past 24 hours.
However, the first broadcasted transaction wins in the vast majority of cases with 90% of the legit transactions being confirmed over theft attempts through double spending.
Yet for the past month 337 double spending transactions were confirmed, with the sum usually being for 0.15 BCH, worth about $30.
A double spending transaction is where you pay say for dinner, sending this 0.15 BCH to the restaurant’s address, and then quickly after you try and send this same 0.15 BCH to your own address or your friend.
In 90% of the cases the restaurant will be right to think you have paid as soon as the transaction is broadcasted to the network. In 10% of cases, however, that transaction will not confirm as the second transaction is included by miners.
In bitcoin the above has been included at the protocol level through Replace by Fee (RBF). This “legitimizes” double spending as miners sort of automatically include the second transaction if it has a higher fee.
We say sort of because miners have free choice regarding what transaction to include, and some time don’t include any, mining empty blocks.
So just as in bitcoin they could, if they wanted to, choose the lower fee transaction, so too in BCH they can choose the higher fee one even if the higher fee transaction was not seen first.
The miner does not have to be malicious either. Many of these successful double spending transactions are sent just a second after the first one. Usually the first one would still propagate faster, but good software would see the double spending attempt, and thus would revert this transaction to requiring confirmation.
Some merchants however would rather put this 10% as the cost of business, either because they’re not aware of the need to look out for double spending attempts through listening nodes, or because they think the cost is so small compared to the inconvenience that waiting 10 minutes would cause.
Yet after a Bitcoin Cash supporter thought it fit to illustrate RBF working as intended on bitcoin by double spending from merchants, a point of sale provider said he might drop both bitcoin and bitcoin cash.
“If we see more of this taking place we would have to drop Bitcoin and Bitcoin Cash on-chain transactions on all our merchants across Australia,” TravelbyBit founder Caleb Yeoh said.
He also said they might have to just stick to bitcoin lightning as the Lightning Network (LN) is designed to be used for buying dinner.
LN as you might know is locked bitcoin where accounts are cryptographically kept through a fairly complex network of a different set of nodes with it generally working, but it has considerable problems.
That’s partly because it is very new, and partly because it attempts to solve the double spending problem through game theory.
For buying dinner, however, it can be a solution especially as in bitcoin otherwise you’d have to wait ten minutes for a block confirmation.
In BCH you don’t necessarily have to wait if it’s a dinner, with the successful double spends being far less than 1% based on some 50,000 BCH transactions in just the past 24 hours.
Obviously those 50,000 transactions are most probably not all merchant payments, but 300 double spends out of 1.5 million transactions a month is a small amount.
Yet it should be born in mind that double spending transactions are possible before a transaction is confirmed, and in extreme circumstances even after it is confirmed.
That applies to both bitcoin and BCH, and in extreme circumstances it can apply to Lightning too, but this is with small amounts. With sums you actually care about, at least one confirmation is a must, six usually preferred.