Double spend & greed can defeat your life.

[The Cryptovator]

Long story in short, I will try to explain you how double spend and greed can defeat your life.

Yesterday double spend scam happened with one of my known person. He was an reseller of bitcoin and some other fiat currency like Perfect Money. Some unknown person knock him for PM exchange with bitcoin. Means that unknown person will send $110 equal bitcoin and reseller have to send only $100 perfect money (1:1.1 ratio). So both of them were agreed with that deal and unknown person send bitcoin first for first deal and its was approx $300 deal. Deal was successful. Then they proceed for another $500 deal and this deal also become successful.

 Reseller become happy since it was quite high profit by exchanging. However they make another deal about $800 and this deal become successful as well. Then seller become more curious and he trust that unknown person. So they become agree for big deal, one was like $1200 and another was $1900. So as usal unknown person sent bitcoin and its reflect on blockchain waiting for confirmation. And reseller had used blockchain web wallet and balance was reflecting there. Then reseller sent appropriate perfect money and go for another $1900 deal. Same like previous transaction unknown person sent bitcoin and reseller sent PM. When deal was done then both of transaction ($1200 & $1900) canceled from blockchain. That means sender double spend both transactions. Reseller lost $3100 equal btc. Seller wasn't aware about that bitcoin would double spend.

I am not sure if I were able to write correctly, but I believe at least some of you may have realized the main theme of story. Reseller were much greedy and he wasn't not aware about double spent. Unknown person gain trust at the beginning by make successful deal with reseller. So greed and lack of technical knowledge about bitcoin lead lost of funds. Hope you will be careful about such as scam techniques. Just imagine why a person should offer you such as deal since he could use a exchange on 1:1 ratio. That means something is wrong there.

[bob123]

Reseller were much greedy and he wasn't not aware about double spent.

What you meant to say was:

Reseller didn't know such thing as confirmations exist and that transactions are only final after receiving at least one confirmation. He does not know how Bitcoin works, nor how to use it. All he wants is to make money from it.

A transaction is not completed until it got at least 1 confirmation. I really believed everyone knows that already.. but apparently not..

[gentlemand]

A transaction is not completed until it got at least 1 confirmation. I really believed everyone knows that already.. but apparently not..

If it's a decent amount I'd wait for six just for it to be totally ironclad.

It seems to be a very rare piss take. I haven't heard of it happening very often. I'll bet if more people were aware of it it would happen a great deal more often.

There was a case of a crypto trader who got raided by scumbags in the UK. They made him send his BTC out and cleared off. As soon as they were gone he double spent the transaction and they got nothing.

[sheenshane]

First, thank you for sharing this possible scam trick mate.

If this trick was intentional since the unknown person was already gained trust by both resellers. I think there's nothing they can do is to accept the loss of the unknown person who didn't pay them back. There's always risk dealing unknown people on the internet we don't trust them easily. You can use escrow always or much better use third party exchange every time when you are buying/selling Bitcoin.

I think one of them should be confirmed transaction and the other one is rejected.

I have found this simple photo explanation about double-spending.

source:

Or much better read this online article that explained very well about, " What is Double Spending & How Does Bitcoin Handle It? "

[bob123]

You can use escrow always or much better use third party exchange every time when you are buying/selling Bitcoin.

Did you even read the OP?
All he had to do is to wait for a single confirmation.

[The Cryptovator]

Reseller were much greedy and he wasn't not aware about double spent.

What you meant to say was:

Reseller didn't know such thing as confirmations exist and that transactions are only final after receiving at least one confirmation. He does not know how Bitcoin works, nor how to use it. All he wants is to make money from it.

A transaction is not completed until it got at least 1 confirmation. I really believed everyone knows that already.. but apparently not..

Exactly, he know about confirmation, but didn't know it's possible double spend because he isn't familiar with it. I have doubts even he had checked it on block explorer. He checked on his blockchain wallet and balance was reflected there. He don't know he should check on block explorer to be assure 1 confirmation.

Most of people do not have double spend experience, because they use exchange or whatever to transfer fund and transactions become confirmed after sometimes. So mostly are believe all pending will confirmed, and that's how sometimes they become fool.

[Maus0728]

This may not be very accurate since my answer is purely based on books and internet that I have previously read.

Based from the answers above, your friend needs to wait for at least six confirmation before sending the fiat equivalent of bitcoin. Why? because if the transaction is under 3 confirmation, the sender can technically cancel the transaction by duplicating the first transaction which means the duplicate block has to be the same input similar to the first transaction. Furthermore, in order for the miners to include the the second transaction in the blockchain, it should have a larger transaction fee compared to the first transaction making the first transaction to be ignored or invalidated (canceled).

That is why the bitcoin sender uses the trick of having 2 separated transaction. Tell your friend that if he is transacting a large sum of money, make sure that the transaction gets enough confirmation which is 6 before sending whatever amount of money or exchanging the goods.

This is how I understand the double spending, if there is any error in my explanation feel free to correct me.

Here is an additional read about double spending.
https://bitcoin.stackexchange.com/a/4515/3576
https://stackoverflow.com/questions/20929564/canceling-a-bitcoin-transaction

[bob123]

Based from the answers above, your friend needs to wait for at least six confirmation before sending the fiat equivalent of bitcoin.

Not necessarily, no.
Six confirmations are recommended to be close to absolutely sure the transaction went through.
For Amounts as low as 1k$, you definitely don't need to wait for 6 confirmations.

Why? because if the transaction is under 3 confirmation, the sender can technically cancel the transaction by duplicating the first transaction which means the duplicate block has to be the same input similar to the first transaction.

The sender can never cancel the transaction.
What he can do is to create a new transaction spending the same inputs (if the replace-by-fee tag is set on the first transaction).
The miner decide which transaction they will include into the block. Usually its the one with the higher fee.

But after it got included into a block, this is no longer possible.

There are multiple ways of double spending attacks. But the easiest one is the replace-by-fee method, which probably has been used here.
More sophisticated exist, where it even shows a confirmation. But this costs you a whole block reward to achieve. Therefore (with high value transaction) you should wait for multiple confirmations (6 to be on the very safe side).

[Lucius]

There was a case of a crypto trader who got raided by scumbags in the UK. They made him send his BTC out and cleared off. As soon as they were gone he double spent the transaction and they got nothing.

I would love to see the expression on the faces of these thieves when they realized they had received nothing, and were convinced that they had succeeded. This is definitely a good way to try save our coins if we find ourselves in a similar situation and thieves do not understand the importance of the fees.


As for the OP, this is just one of the ways scammers work in the online world - instead of scamming you for a small amount, they first gain your trust and scam you for a large amount.  Of course, we also have a certain level of ignorance here, and the golden rule is that you do not deal with anything that you do not fully understand. As far as memory serves me, I think I have read at least a few times over the years that some beginners have been deceived in a similar way. Transaction without confirmation can not be credible proof of payment.

[Maus0728]

Not necessarily, no.
Six confirmations are recommended to be close to absolutely sure the transaction went through.
For Amounts as low as 1k$, you definitely don't need to wait for 6 confirmations.

I understand and it varies depending on the transaction we are doing. For example, it is obvious the we should wait for about 50 - 60 confirmation if we are dealing with a huge amount of money maybe around millions of dollars or 70 confirmations if I am selling an empty lot.

The sender can never cancel the transaction.
What he can do is to create a new transaction spending the same inputs (if the replace-by-fee tag is set on the first transaction).
The miner decide which transaction they will include into the block. Usually its the one with the higher fee.

I see but I am wondering where did the second transaction go if it was the first transaction to get included in the blockchain. Why is the reseller does not receive the equivalent amount of bitcoin? Does it mean the duplicated block was sent to himself?

I understand that one of the double spending attack is by increasing the tx fee of the second block. So it means there is no such thing like "cancelling the transaction" whenever it is broadcasted in the network.

[pooya87]

i wouldn't call this greed but instead lack of understanding of how bitcoin works. but i am wondering whether perfectmoney has any charge back rules like all the e-moneys out there such as paypal?

I understand and it varies depending on the transaction we are doing. For example, it is obvious the we should wait for about 50 - 60 confirmation if we are dealing with a huge amount of money maybe around millions of dollars or 70 confirmations if I am selling an empty lot.

if some day someone could reverse 50-70 blocks then in that day bitcoin would be dead and it won't matter if you waited that long or not. one of the reasons why bitcoin is considered super secure is that even 1 confirmation is extremely hard to reverse and 6+ confirmation becomes nearly impossible.

[bob123]

I understand and it varies depending on the transaction we are doing. For example, it is obvious the we should wait for about 50 - 60 confirmation if we are dealing with a huge amount of money maybe around millions of dollars or 70 confirmations if I am selling an empty lot.

6 confirmations are definitely enough for high value transactions.

I see but I am wondering where did the second transaction go if it was the first transaction to get included in the blockchain. Why is the reseller does not receive the equivalent amount of bitcoin? Does it mean the duplicated block was sent to himself?

A transaction does not get included into the blockchain.
First, it gets broadcasted and stays in the mempool of every single node. Then a miner can include it into a block. From this moment on, this transaction is confirmed.

The transaction never was confirmed. It was just broadcasted (comparable to saying "i want to transfer X BTC to Y").
Then the attacker broadcasted another transaction with a higher fee, which ended up being included into a block.

I understand that one of the double spending attack is by increasing the tx fee of the second block. So it means there is no such thing like "cancelling the transaction" whenever it is broadcasted in the network.

The TX fee will be increased with the second transaction.
And yes, you can't actively cancel a transaction. You can try to broadcast another transaction which hopefully will get confirmed instead of the first one.

[jademaxsuy]

Greed can always destroy any person who are looking to earn money fast without searching that something like that can happen. I never thought that there are other case like this that happen until now. It may be not greed but I think that the seller might not understand how this happen. In my opinion the seller may be greedy that time and looking to earn more (who knows).

[Welsh]

There's a small amount of risk when transacting in Bitcoin if you don't wait for confirmations, but its relatively small compared to other payment methods like Paypal which can be charged back several days after the transaction took place. Bitcoin, despite some of its flaws is one of the most secure ways of transacting money. There's no charging back after confirmations, and while that might be a bad thing from a buyers perspective its good on a sellers as usually sellers aren't offered enough protection on online platforms. Paypal tends to side with the seller on almost all cases which can actually be pretty annoying when its the seller themselves getting scammed many days after the transaction took place.

I always tend to wait for a few confirmations, and most businesses which I have dealt with at least wait for one. Its pretty much standard practice on most transactions, and shouldn't really be ignored.

[The Cryptovator]

but i am wondering whether perfectmoney has any charge back rules like all the e-moneys out there such as paypal?

No, there is no such as opportunity. If really something happen only you have to make police case and then likely reverse possible. We can't call it reverse. Here you will find more details on their terms and conditions.

1.18 Customer has no right to demand to reverse the transaction done by him/her in the System.

1.19 Any transaction can be reversed only at court decision.

Once a time perfect money was most popular for revenshare scammer due to irreversible behavior. Who will take action against scammer file case take order from court. It's not very easy process.

[UserU]

Once a time perfect money was most popular for revenshare scammer due to irreversible behavior. Who will take action against scammer file case take order from court. It's not very easy process.

On the other hand, Paypal is pretty much a scammer-haven due to the chargebacks. However the last time I got in touch with a personnel, as long as there are evidences that the transaction was valid two-ways, the chargeback from a scammer could be denied. That involves digital items, which were previously not covered.

[UserU]

I doubt it applies to cryptocurrency and other goods/digital goods in gray/shady area. It was common to see BTC seller got scammed from buyer who use Paypal.

This reply was sent nearly 3 years back, and back then I asked if my sales would be covered (I was selling accounts but now stopped).

My guess is that Bitcoin is covered since it's classified as an intangible item.

[JHORN]

It's the sellers fault, he doesn't understand how Bitcoin works very well, he should have wait for a single transaction confirmation, well shit happens, now he knows better, only through the hard way, that's how we learn sometimes

[sujonali1819]

It also happened to me when I was a newbie here. Though it was very little deal. I tried to exchange my Raiblock (nano) to btc with unknown person through telegram. He sent first the BTC and but I did wait for the first confirmation. And other side the Buyer frequently asked me to sent the Raiblock. But I afraid and did not sent it without one confirmation. Thus 12 hours gone even more maybe. But there was no confirmation on btc blockchain. Once I see the transaction was gone from my wallet.  I can not see that.   

[CryptopreneurBrainboss]

Just imagine why a person should offer you such as deal since he could use a exchange on 1:1 ratio. That means something is wrong there.

In my short time of involving myself in the exchanging business, don't think such deals (legit ones) are quite uncommon. I have recieved them numerous times and successfully completed the transacting with my patronizers. You just have to be cautious and get familiar with what ever you're interested in. Any user that has interested in exchanging bitcoin for other digital currencies (mostly centralized ones like PayPal, perfect money etce) should be aware of the disadvantage of those services like the charge back policy features etc.

In regards to the doubling spending incident, that's just ignorance as others have mentioned (so I won't have to repeat all they have said) but do understand 10% deals aren't an indication of scam attempts but treat all transactions like an scam attempt until they're successful.