Digital Copy: what is it?

The digital copy of a cryptocurrency is a copy of every confirmed transaction that has been carried out over a peer-to-peer network, for example, the Bitcoin network.

Digital copies are a security measure designed to address the problem of double-spending in the bitcoin protocol.

In every Bitcoin transaction, a digital copy of the transaction (called “the record”) is created. The digital copy prevents users from making duplicate purchases with the same Bitcoin, and one of the features that allow Bitcoin to function without a centralized authority (how most currencies function) is because transactions are recorded on ze “blockchain,” a decentralized system spread across multiple networks.

Bitcoins are protected from being duplicated virtually by digital copies, and they keep track of where each unique snowflake bitcoin is sent. Considering that the transaction appears on a public bulletin board that’s been copied in many places, it can’t be edited by anybody

Digital Copy: How does it Work?

Cryptocurrencies gained popularity in 2009 when bitcoin was introduced. The idea of creating a digital currency without any central control and no third party to guarantee transactions was one of the driving factors behind the invention of bitcoin.

In contrast to bank transactions, bitcoin transactions aren’t recorded or stored centrally. The bitcoin network is made up of independent computers which each maintain a record of the transactions independently. The distributed ledger is known as a blockchain.

Problems with double-spending

A decentralized system used to transact in digital currency introduced the problem of double-spending. The term “double-spending” refers to someone sending the same coin to two addresses at the same time.

The financial world checks transaction histories and account balances to prevent double-spending, such as in traditional currency, as well as through modern payment systems that detect overdrafts. In the past, digital currency systems such as eCash could not satisfactorily prevent double-spending.

The bitcoin inventor came up with a process whereby each valid transaction is independently shared among multiple miners located throughout the network to solve this problem.

Multiple digital copies and the distributed ledger

 An algorithm assembles hundreds of bitcoin transactions into blocks by broadcasting them to miners. In addition to broadcasting a new block when it is completed, a miner also compares the new transactions to hundreds of other bitcoin nodes. In the event of a double-spend, the new block is rejected by all nodes. By default, nodes relay the new block to their counterparts and miners.

In this system, honest behavior is rewarded and bad conduct is punished, preventing double-spending. Because miners receive block rewards, they have a financial incentive to only accept legitimate transactions. Nodes will not share a block if a miner doesn’t reject a double-spend.

Additional issues related to double-spending

The bitcoin network is typically protected by digital copies, but in rare circumstances, a double-spend can go undetected. In most cases, the longest chain is considered to be authoritative because of the longest-chain principle: the longest chain, when there are two competing blockchains, is considered to be authoritative.

 51% attacks are one of the most well-known methods of exploiting this property. It is possible for malicious actors who control most of the hashing power on the network to secretly create a second blockchain that has different transactions. Any transactions that have been executed on the shorter chain will be reversed when the second version of the blockchain is published.

Due to the probabilistic nature of the blockchain, it is also possible for transactions to be reversed inadvertently. It is possible for two versions of the same block to exist in the network at the same time if different miners discover them simultaneously. The network will accept one version and reject the other as an orphan block when this occurs.

The next six blocks after a bitcoin transaction should not be considered to be final until the transaction is part of a chain. This is because six blocks cannot be reversed under normal circumstances. A bitcoin user used bitcoins from an orphaned block at least once to earn bitcoins again.