How Does Proof of Work Prevent the Double-Spending of Cryptocurrencies?
Proof of Work prevents double-spending by creating a chronological and immutable ledger of all transactions. When a new transaction is broadcast to the network, it is included in a block by a miner.
To be considered valid, this block must be accepted by the network and added to the blockchain. To reverse a transaction, an attacker would need to create a longer chain of blocks than the legitimate one, which would require immense computational power.
This makes it practically impossible to alter past transactions and spend the same cryptocurrency twice.
Glossar
Race Attack
Momentum ⎊ Within cryptocurrency derivatives and options trading, a "Race Attack" describes a coordinated, high-frequency trading strategy designed to rapidly exploit short-term price dislocations arising from order flow imbalances, particularly in less liquid perpetual futures contracts.
Finney Attack
Exploit ⎊ The Finney Attack, named after Hal Finney, a pioneering cryptographer, represents a sophisticated front-running strategy primarily targeting proof-of-work (PoW) blockchains, particularly Bitcoin.
Immutable Ledger
Record ⎊ This structure provides an append-only, cryptographically secured history of all financial transactions, including the creation and settlement of derivatives.
Transaction Confirmation
Finality ⎊ The transaction confirmation process, across cryptocurrency, options, and derivatives markets, fundamentally establishes the irreversible state of an exchange.
Proof of Work
Challenge ⎊ The core of Proof of Work (PoW) lies in computationally intensive puzzles designed to validate transactions and secure a blockchain network.