On Thursday, BitMEX Research tweeted that it had discovered two conflicting transactions and that there may have been a double spend.
What is double spending, and was it?
Double spending is a critical flaw in the Bitcoin block chain, never seen before in this block chain. The amount was small – about 0.00062063 BTC ($21) – and the tweet was answered shortly after.
As the Bitcoin price fell by 11% yesterday, some experts argued that this was the result of the news.
As the name suggests, double spending is an attempt to spend the same amount of money in two different places at the same time. With a fiat currency, it would be like issuing the same banknote to two people at the same time, which is impossible unless one of them was forged.
In the case of Bitcoin, if there was a double spending, in which two transactions were added to the block chain at the same time, the first added transaction will be correct.
If transactions were added almost simultaneously, there would be two chains. However, as miners add more transactions to either chain, one of them will start attracting more transactions and eventually win, leaving the other chain obsolete.
In the case we have, the price of MTC plummeted after BitMEX Research misidentified double spending. The price of BTC fell to a low of $ 28,953. 37, and Grayscale Investment bought a $ 1.2 billion drop.
Popular crypto analyst Lark Davis, known as TheCryptoLark, along with a host of other experts, said that there was actually no double spending.
“Don’t believe this media food! Today, this has been denied many times on Twitter. Will there be a rebuttal in the media? No.”
Davis also disagreed with Bitmex’s tactics, calling it a suspicious and desperate attempt to expand the business, adding:
“I wonder how many millions Bitmex earned by publishing a report on double spending on Bitcoin? With their declining popularity, it seems they need to resort to more extreme methods to make money.”
Along with the Bitcoin price drop, the rest of the cryptocurrency market was trending lower this morning. Bitfinex CTO Paolo Ardoino confirmed that there was no double spending.
“Today, cryptocurrencies seem to have retreated amid unfounded speculation that there has been a ‘double spend’ on the Bitcoin blockchain. What actually happened was that two blocks were mined at the same time. As a result, there was a reorganization of the chain, which did not lead to double spending.”
Institutional-level investment giant Grayscale did not ignore the price of BTC and bought up another $ 1.2 billion worth of coins when Bitcoin fell below $ 30,000.
Davis mocked both the double-spending rumors and the alleged collapse of the Cue Ball on Twitter, saying:
“Grayscale bought 1.2 billion worth of Btcoin on this drop. The bullish mood!»
Since then, the Bitcoin price has once again climbed above the $ 30,000 support, and at the time of writing, BTC is trading at $ 31,782.