How Do Centralized Exchanges Prevent Double-Spending before Blockchain Confirmation? ⎊ Path

How Do Centralized Exchanges Prevent Double-Spending before Blockchain Confirmation?

Centralized exchanges (CEXs) prevent double-spending on deposits by implementing their own internal ledger and confirmation policy. Upon receiving a deposit, the CEX will credit the user's account only after a certain number of blockchain confirmations (e.g. three or six) have been reached.

Before this threshold, the funds are considered pending. For internal trading and withdrawals, the CEX uses its own centralized database to track balances, making double-spending impossible internally.

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Glossar

Confirmation

Attestation ⎊ The term "confirmation" within cryptocurrency, options trading, and financial derivatives signifies a process validating a transaction or event, establishing its legitimacy and finality.