Canada’s BoC Publishes Study on Double Spending with Blockchain Tech
A new study published by the BoC tackles what is known as incentive compatibility in regards to blockchain-tech and noted that double spending, a common fraudulent method of spending crypto-coins more than once, is simply “unrealistic.”
The Bank of Canada’s publication takes a closer look at PoW protocols on blockchain-tech and designing models based on the behavioral patterns of a truthful or deceitful miner. Researchers at the BoC constructed a system designed to the immunity levels of blockchain and whether the network was protected enough to several malicious cons like double spending.
According to the paper, DLT’s like blockchain are designed in ways that are meant to make those operating on a chain in charge of protecting the system themselves. Essentially how blockchain works is that once every user on the platform has consented, an update to the system ensues and new transactions are permitted.
Another issue is what is known as a 51 percent attack. Crypto-miners operating on a system usually have all processing power distributed among them. In the event that a single miner possesses over 50 percent on any blockchain, the 51% attack is a possibility. How it works is that a miner, the deceitful one, set an arrival rate far bigger than any other ones, mainly honest miners and in that method, double spending is achieved.
Notes in the study have stated for double spending to happen, a miner must be incredibly financed and willing to take risks. The notes end by saying that expectations of an event like that are unrealistic and there is very little motivation among users of a blockchain to conduct a 51 percent attack.
One head of research at the BoC, James Chapman, has doubted how protected and efficient blockchain is towards the banking industry while another published paper by Bain & Company discovered the unprecedented potential of DLT on bank transactions.