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Bitcoin falls 10% after report suggests a critical flaw in the cryptocurrency called ‘double-spend’ may have occurred

NYSE trader worried
A trader reacts as he works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 18, 2020.

  • Bitcoin fell as much as 10% on Thursday after a report from BitMEX Research suggested a critical flaw called “double-spend” occurred in the bitcoin blockchain.
  • Double-spend is a highly feared scenario where a user is able to spend their same bitcoin more than once. 
  • The double-spend event has not been confirmed and there have been mixed messages from BitMEX on the particular instance.
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Bitcoin fell as much as 10% on Thursday, hitting its lowest level in nearly three weeks as the popular cryptocurrency was hit with a double whammy that jolted faith in its user base.

First, Treasury Secretary nominee Janet Yellen suggested ‘curtailing’ bitcoin during her confirmation hearing on Wednesday due to its suggested use in illicit activities, and second, an unconfirmed report from BitMEX research suggested a critical flaw called “double-spend” occurred in the bitcoin blockchain.

Double-spend is when a bitcoin owner is able to spend the same bitcoin twice. It is a feared and dire scenario for the digital asset, and the blockchain was thought to have solved the issue when Satoshi Nakamoto published the Bitcoin Whitepaper in 2009.

Early attempts at launching a digital cash system were ultimately halted by vulnerabilities that could have enabled double-spending and undermined faith in the system.

Read more: Goldman Sachs reveals the 8 ‘green-energy majors’ that are set to jump in value in a sector worth trillions of dollars as the renewables race heats up

BitMEX Research tweeted on Wednesday, “It appears as if a small double spend of around 0.00062063 BTC ($21) was detected.”

At first, it appeared that the supposed double-spend was actually an RBF transaction, which is when an unconfirmed bitcoin transaction is replaced with a new transfer paying a higher fee. But ForkMonitor has said of the alleged double-spend transaction, “No (RBF) bumps have been detected.”

BitMEX went on to tweet, “A transaction in the losing chain sent 0.00062063 BTC to the address 1D6aebVY5DbS1v7rNTnX2xeYcfWM3os1va, and a transaction in the winning chain which spent the same inputs only sent 0.00014499 BTC to this address.”

If in fact the $21 double spend did occur, it could be a fatal blow to the popular cryptocurrency in that the flaw Nakamoto set out to solve in fact remains a vulnerability that could crush confidence in the asset.

In the meantime, institutional investors continue to gain exposure to bitcoin. According to Wednesday SEC filings, BlackRock has enabled two of its mutual funds to invest in the cryptocurrency.

Read More: We spoke to Winklevoss-backed crypto platform Gemini about bitcoin, how to use stable coins, and why regulation won’t kill the boom in digital currencies 

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