Everything You Need to Know About Blockchain’s Double-counting and PoW

  • 7 months   ago

Everyone in the 21st century has heard about the rise of the Cryptocurrency market. Bitcoin is one exemplary example of the volatility of the cryptocurrency Blockchain, along with others like Ethereum, commonly traded in the crypto-market these days. But then again, it is a digital currency and it is a network chain that requires an understanding of the various advantages and disadvantages first:

A little about Blockchain

Blockchain technology is used to safely record and securely store all financial transactions. In most cases, each transaction is made into a ‘block’ which contains the required data and then gets added to the chain of transaction blocks already existing. You have a sort of a digital ledger in front of you, which is democratized and highly transparent.

The reason one can call Blockchain technology incorruptible is the important clause that needs to be fulfilled before a block gets added to the entire chain of networks. The clause mentions the compulsory verification and authorization of the new block by the millions of computers that are a part of the system. Seller or buyer details are kept secure by encryption and cryptocurrency wallets are updated from time-to-time which ultimately ensures smooth functioning.

Another advantage of Blockchain is the availability of information to all and zero transaction costs. Any company using Blockchain will have to bear zero transaction costs and can trickle this effect down to customers. Infact, with an option to reduce transaction costs to a minimum, companies can charge a very small amount for transactions and still make a high revenue out of it.

The major flaw in Blockchain tech:

Everything might sound amazing about Blockchain technology and the different types of terms linked with it, like Bitcoin and proof-of-work but there always exists a loophole.

Since the designing of Blockchain is highly complicated and time-taking, it is usually impossible to incorporate any changes into the system. This is one of the major reasons why the problem of double-counting exists in terms of digital transactions on the network.

Considering how blockchain remains unscalable and any added data cannot be identified, it can account for false or wrong transaction data input, that is when double-counting comes into place.

What is Double-counting?

Double-counting is an uncontrollable error that occurs due to a sort of communication gap between the different nodes of the Blockchain system.

Think about it this way, you have Rs. 500 in cash and you spend it for grocery shopping. This means, your entire budget is exhausted and you cannot go around spending more. Similarly, the same should happen when the transaction is digital. You have only Rs 500 in your digital wallet and spend it at a grocery store. However, double-counting as a problem allows you to spend another Rs. 500 on something else, even though that money doesn’t exist with you.

The reason? Well, it exists mostly because of the fact that each Blockchain transaction goes through a series of nodes in a distributed system via a broadcast. Now, for the first digital transaction, a broadcast goes out to all nodes in the network, where one node records and keeps passing on the message to the next node in line.


However, there are different node routes, different timings and system errors that can cause a default. Information failure can happen at one node, discrepancy in transferring details in the other or delay in communication by the next one. Due to all these reasons, there are some nodes that become aware of the first transaction while some nodes are left clueless. Automatically, Rs 500 can be again spent and get accepted by the unaware nodes. The distribution system fails to solve the problem of double-spending in such cases. With inconsistency and time gaps, the Blockchain technology falls into chaos.

The cure to the curse?

Double counting, also known as the curse of Blockchain technology can only be solved by building a consensus and also streamlining the process. The consensus here is done to ensure a group call rather than relying on any specific individual, especially since the entire goal of cryptocurrency is to support democracy and decentralization.

Consensus is a way to have one single winning party or a multiple-party vote to finally decide which transaction is valid amongst the two that were wrongly accounted for.

The first system to use a trusted group of nodes (mostly in cases of a private network) who take a final decision and validate one single transaction only. So a final count of the nodes is considered, their confirmation is received about the transaction they have noted down and the majority vote wins by endorsement. Simple yet effective when the network is made for specific individuals and all nodes can be clearly accessed.

The second system is to have one single winning node to take a call. The winner is elected by a cryptographic puzzle solve like PoW. In this case, whichever node wins can decide the transaction that must be considered and then also follow up with a block addition.

Why do we need Proof of Work (PoW) or a standard consensus system?

Well, the whole point of a consensus system is to avoid random winners grab hold of the chance to add blocks. The founder of Blockchain, mystery man Satoshi Nakamoto, always wanted to make Blockchain limited to small network chains and not dominated by any particular individual or group of individuals.

The entire complicated process of Proof of work ensures that a deserving candidate gets the opportunity to enter a block and genuinely validate a transaction. It is true, it might not always be the case that the original transaction gets validated but in this way, double-counting, in general, would be resolved when one single transaction stays and the other gets removed.

Double spending also occurs if any one person gets a control of 51% or more of the distributed network and if they get randomly allocated as the decision-maker, there would not be any improvement. Proof of work uses hash functions and makes it difficult for anyone to re-configure or redo the entire chain of data. Moreover, thanks to PoW, there won’t be any monopoly power ruling the particular distribution system in consideration.

Wrapping up.

Ensure that you thoroughly understand such cases of errors before entering into Blockchain. Moreover, Blockchain is an extremely complicated network, a network that can give you value and good returns but it can also be conformed to stringency. The necessity of Blockchain makes it a worthy opponent to tackle.