It is a double-spending attack with the following features:
• It only works if the merchant accepts unconfirmed transactions;
• It still works, however, if the merchant waits a few seconds to verify that everyone in the network agrees that the merchant was paid;
• It requires the attacker to be mining and controlling the content of their blocks; in theory, however, they can do this with any network hash rate, in particular significantly less than 50%.
It proceeds as follows:
- The attacker mines blocks normally; in the block that they are trying to find, they include a transaction which sends some of their coins back to themselves, without broadcasting this transaction;
- When they find a block, they do not broadcast it; instead, they send the same coins to a merchant for some goods or services;
- After the merchant accepts the payment and irreversibly provides the service, the attacker broadcasts their block; the transaction that sends the coins to themselves, included in this block, will override the unconfirmed payment to the merchant.