(Jan 22): Bitcoin plummeted more than 10% on Thursday, triggering a hunt for reasons the highly volatile asset was selling away. One who caught attention questioned the very viability of the ticket itself – though it was not a cause for concern.
A report in a trade blog suggested that there has been what is known as double spending, where the same ticket is used by the same person in two transactions. It’s as if someone buys a car, pays the seller, drives away with its brand new wheels and then later complains about all the money. In the case of the blockchain – or the software underlying Bitcoin and other cryptocurrencies – the transaction in question would be excluded from the final account on the digital ledger.
But, “in this case, it doesn’t look like a trader has been fooled,” said Nic Carter, co-founder of Coin Metrics, a data firm. “This doesn’t look sinister to me. My best guess is this is a software experiment or bug. ”
[1/2] Bitcoin block was outdated today, at a height of 666,833. SlushPool has beaten F2Pool in a race.
It seems as though a small double spend of around 0.00062063 BTC (US $ 21) has been found.
– BitMEX Research (@BitMEXResearch) January 20, 2021
Bitcoin was created with the intention of being a digital currency that does not require any central authority to support or oversee transactions. Instead of bank software handling electronic transfers, Bitcoin is negotiated on blockchain – essentially a spreadsheet that logs when and where coins move. Transactions are recorded on the blockchain after an unaffiliated third party has verified the deal, often in return for partial coins.
The blockchain is supposed to be irreversible, helping to prevent fraud and making transactions irreversible. Double spending would effectively mean that the blockchain has been manipulated, overcoming Bitcoin’s high security claim. Traders often wait for payment to be checked as much as six times. In the case of the double expenditure reported, the transfer is likely to have been checked only once, entered on the ledger, and then revoked.
It’s rare to consider a payment final after only one confirmation, Carter said. What is likely is that two blocks – the crypto term for authentication – had the same transaction from the same address but one entire block was eventually excluded.
Still, online discussions intensified about the potential implications of blockchain, with Google looking for “double spend Bitcoin” spiking.
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