How Does Using Bitcoin Keep My Transaction Safe?

The whole idea behind online casino gaming is to enjoy casino games without needing to travel to the casino!  It is the same basic idea why the internet is better than having an entire bookshelf taken over by a 25 volume encyclopedia or why shopping at a big box store is often better for consumers than going to a number of specialty stores for various items.

The Convenience of Online Casinos Cannot be Challenged by Land Based Casinos

Especially in the era of mobile gaming, where a gamer can take a few spins at a progressive jackpot worth hundreds of thousands of dollars if not millions, online casinos provide a wider range of games, a lot more convenience, and none of the expenses in time and money that travelling to a land based casino involves.

Still, in order to play at an online casino, gamers have to send money to the casino.  One of the many banking methods we offer at Jackpot Capital online casino is bitcoin which is erroneously called a cryptocurrency but which we call an alternative currency.

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Alternative Currencies in a Digital Economy

Let’s return to our discussion of the problem pf double spending in a digital economy.  Here at Jackpot Capital casino, we have heard from some gamers who are leery of using bitcoin for deposits and withdrawals.  We hear that the whole idea of an alternative currency is not difficult to grasp but that the idea of how an alternative currency can prevent double spending which we mentioned in our previous article on bitcoin is difficult to understand.

So, as a service to all of our gamers at Jackpot Capital, we will go into the idea of double spending in a digital economy in some depth.

The Computer Age Brought about Digital Economies

It is not the alternative currencies that ushered in the digital economy; they are simply one of many indications that we are well into a digital economy with no sign that it will change in the near future.

Digital Means Computerized

The term digital economy simply means a computerized economy.  This we have had for a few decades already.  In a digital economy a lot more money exists simply as entries on a computer.  There is no actual cash in circulation to take into account all the money that is in circulation digitally.

It is true that governments have a lot of gold in stock but no country actually pins its currency to a gold standard.  Many economists feel that a gold standard is a silly anachronism total unbefitting a sophisticated economy.

Double Spending

The problem of double spending is that for all the computer sophistication our modern economies have, some people have figured out how to game the system and can steal money and use it more than once to buy goods and services.

Everyone who uses the internet is well aware of the danger of hackers getting into their personal accounts and information.  That is why we exit a sensitive online page such as our personal account page at a bank or investment house.  If we can access our personal medical records online, we have to exit the page in order to protect the privacy of that information.

By the way, long before computers handled most transactions, the really big transactions were done without cash.  Banks transferred millions, then billions, and finally trillions of dollars among them without computers and also without cash!  These transactions were recorded in ledgers that the banks kept.  In a real way, the banks acted in a manner similar to the way alternative currency “miners” work today.

This is just a bit ahead of ourselves because we first have to talk about security ads a top concern for online casinos.

The Urgent Need to Protect Gamers’ Money

So, any online casino has to find a way to protect your money when it is transit to and from the casino and while it is in your casino account.  We do so with encryption software which is basically software that confuses the hacker’s search for our information.  In order to hack an encrypted method, a hacker has to unravel a code that is as sophisticated as any military code. Fortunately, very, very few people can unravel these codes.

Double spending is, then, a problem for individuals who are honest in their own practices but whose money has been hacked and for unscrupulous people who may themselves try to use the same digital money more than once.

How a Blockchain Prevents Double Spending

In and of itself, a blockchain cannot prevent double spending.  Remember, a blockchain is simply an interconnected chain of entirely open transactions.  It would be as if a dollar transaction were done in which the serial numbers of all the bills involved were published for the public to see.

Since dollar transactions are almost all digital these days, there aren’t any serial numbers to publish to “define” the transaction. 

Alternative currencies use what is called proof of work.  This is a transparent record of all transactions in this currency except that the names of the buyer and seller are kept out of the public’s eye.  The people who keep the proof of work information are called miners.

The blockchain has every transaction duly recorded since bitcoin began being used for financial transactions in 2009.  The information is open to the public but anyone who wants to see the “ledger” has to qualify for that privilege.

The way that the blockchain and the proof of work method combine to prevent double spending is this.  No matter how quickly one person tries to make two transactions with the same bitcoins, one of those transactions will be approved by the miners before the second transaction can also be approved.   The second transaction will be flagged and will not be approved thus nullifying the transaction.

Anyone who promises to send a product after receiving payment in bitcoin or any other alternative currency needs to wait for the transaction to be confirmed and approved in the blockchain before putting the product in the delivery process.

So, bitcoin and the blockchain can prevent double spending on the transaction side but they can’t prevent premature delivery of a product.  That is the responsibility of all sellers.

Double Spending is Done by Thieves

In the most simple double spending scenario, someone steals another person’s financial information and uses the same account to make purchases using the same money to do so.  In the blockchain scenario described here, there is one way for a thief to game the system and double spend with an alternative currency.

That way is to achieve monopoly control of the blockchain.  If someone could control the approval process, which is simply the work of people who see it as their duty to make sure that the alternative currency maintains its viability as an alternative, then the whole structure of an alternative currency would come tumbling down.

So it is vital to keep the role of miner in as many hands as possible.  In the next article, we will talk at length about miners.

Health and Happiness

In the meantime, even as the corona virus seems to be slowly winding down, there is a long road to go before everything returns to normal.  Stay healthy and safe, wash your hands often, wear a face mask whenever you go out, and maintain the proper social distancing.

And remember to play at Jackpot Capital online casino for a welcome fun respite from the concerns of the day.

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