Spending the same coins twice by getting one transaction confirmed and then replacing it with a conflicting one.
The problem every blockchain exists to solve. Digital files copy perfectly, so a ledger needs some way to make sure the same balance is not sent to two places. Consensus does this by agreeing on one ordering of transactions.
Attacks in practice target merchants and exchanges that credit funds too early. The attacker pays, receives goods or a trade fill on zero or one confirmation, then publishes a competing branch that erases the payment.
Example: an exchange crediting a $200,000 deposit at one confirmation on a small chain is an inviting target when renting enough hash-rate for a short chain-reorg costs a few thousand dollars an hour. Confirmation requirements are a direct function of that arithmetic.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Risk and reward on one trade. One trade on a price scale: the entry sits 2.00 points above the stop and 6.00 points below the target, so the shaded reward band is three times the risk band. The ratio compares what is lost if the stop is hit with what is gained if the target is reached.
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