- Bitcoin fell 11 percent on Thursday after a BitMEX Research report suggested that Bitcoin’s blockchain had a critical flaw called “double spending.”
- Double spending is a very dangerous scenario in which the user can spend their bitcoins more than once.
- A double spend event has not been confirmed and BitMEX has provided mixed messages.
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Bitcoin fell 11% on Thursday, reaching its lowest level in nearly three weeks as the popular cryptocurrency was hit with a double hit, which shook faith in its consumer base.
First, Janet Yellen, Presidential nominee for Joe Biden as finance minister, suggested during her hearing on Tuesday that lawmakers were “restricting” the use of bitcoin because of its use in illegal activities.
And second, an unconfirmed report from BitMEX Research on Wednesday suggests that a critical flaw called “double spending” has arisen in the Bitcoin blockchain.
Double spending is when someone is able to spend the same bitcoin twice. This is a scary and horrible scenario for the digital asset, and the blockchain was thought to have solved the problem when Satoshi Nakamoto published the 2009 White Paper on Bitcoins.
Early attempts to launch a digital money system were eventually thwarted by vulnerabilities that could allow double costs and undermine faith in the system.
BitMEX Research tweeted that “a small double consumption of about 0.00062063 BTC ($ 21) seems to have been found.”
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BitMEX later said that it appears that the double spend is actually an RBF transaction, which is when an unconfirmed bitcoin transaction is replaced by a new transfer paying a higher fee. But BitMEX’s Fork Monitor said “no inequalities (RBF) fees were found.”
BitMEX said in another tweet: “A transaction in the losing chain sent 0.00062063 BTC to 1D6aebVY5DbS1v7rNTnX2xeYcfWM3os1va, and a transaction in the winning chain that passed the same inputs sent only 0.00014499 BTC to this address.”
If double spending actually happens, it could be a fatal blow to the popular cryptocurrency, indicating that the shortcoming Nakamoto has decided to address remains a vulnerability that could undermine asset confidence.
Meanwhile, institutional investors continue to receive exposure to bitcoin. Statements at the Securities and Exchange Commission on Wednesday said BlackRock had allowed two of its mutual funds to invest in the cryptocurrency.
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