Lucas Jackson / Reuters
- Bitcoin fell 11% on Thursday, after a BitMEX Research report suggested that a critical flaw called “double spending” occurred on the Bitcoin blockchain.
- Double spending is a highly feared scenario in which a user can spend their bitcoins more than once.
- A double spend event was not confirmed and BitMEX gave mixed messages.
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Bitcoin fell 11% on Thursday, reaching its lowest level in almost three weeks, while the popular cryptocurrency was hit with a double whammy that shook faith in its user base.
First, Janet Yellen, nominated by President Joe Biden as Treasury Secretary, suggested during her confirmation hearing on Tuesday that lawmakers “restrict” the use of Bitcoin because of its use in illicit activities.
And, second, an unconfirmed report from BitMEX Research on Wednesday suggested that a critical flaw called “double spending” occurred on the Bitcoin blockchain.
Double spending is when someone can spend the same bitcoin twice. It is a dreaded and terrible scenario for the digital asset, and blockchain was thought to have solved the problem when Satoshi Nakamoto published the Bitcoin white paper in 2009.
Early attempts to launch a digital cash system were ultimately interrupted by vulnerabilities that could have allowed for duplicate spending and undermined faith in the system.
BitMEX Research tweeted that “it appears that a small double expense of around 0.00062063 BTC ($ 21) has been detected.”
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BitMEX later said that it looked like double the spend it was actually an RBF transaction, which is when an unconfirmed bitcoin transaction is replaced with a new transfer paying a higher fee. But BitMEX’s Fork Monitor said “no rate increases (RBF) have been detected.”
BitMEX said in another tweet: “A transaction on the losing chain sent 0.00062063 BTC to the address 1D6aebVY5DbS1v7rNTnX2xeYcfWM3os1va, and a transaction on the winning chain that spent the same entries sent only 0.00014499 BTC to this address.”
If double spending did occur, it could be a fatal blow to popular cryptocurrency, indicating that the flaw that Nakamoto set out to resolve remains a vulnerability that could destroy confidence in the asset.
Meanwhile, institutional investors continue to gain exposure to bitcoin. Documents filed with the Securities and Exchange Commission on Wednesday said BlackRock allowed two of its mutual funds to invest in the cryptocurrency.
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