The value of bitcoin took a hit Thursday, down 11%, as investors questioned what had been dubbed in an online trade blog as a “double-spend.”
A bitcoin double-spend is when the same token is used by the same person in two different transactions.
Because the blockchain ledger”technology records each transaction, one of the spends would therefore be rendered worthless and it would be excluded from the ledger.
The event shook the bitcoin community to its core–with some bitcoin watchers even beginning to doubt the entire system of the cryptocurrency itself.
BitMEX Research was one of the first to report on the event – writing that there was what appeared to be “a small double spend of about 0.00062063 BTC ($21).
[1/2] There was a stale Bitcoin block today, at height 666,833. SlushPool has beaten F2Pool in a race.
— BitMEX Research (@BitMEXResearch) January 20, 2021
Bitmex later reported that the issue had been resolved.
As for yesterday’s *possible* Bitcoin double spend, which was resolved after one block, we have summarised the transactions in the below image, so that you can decide for yourselves what may have happened
— BitMEX Research (@BitMEXResearch) January 21, 2021
Bitcoin was created as a way to allow for a true peer-to-peer currency–free from any Central Banking authority that would govern its availability and value.
The blockchain technology empowering the crypto currency is considered revolutionary. It enables bitcoin to change hands instantaneously. Though still traceable, it’s significantly more challenging to track spending via bitcoin than traditional transaction mechanisms like credit card. Many investors appreciate this perceived anonymity — though governments around the world worry about that very issue.
In addition, there are some that worry the foundation of the currency and its technology could be quite vulnerable to interference from either the government or hackers. Indeed, trusting one’s money in a fully electronic payment system that has no government backing requires a certain leap of faith. Thus, when a possible double-spend error occurs, investors grow wary.
Bitcoin ended the session down 11% at $30,986. This is considerably lower than the $40,000 price level recently reached.
Nonetheless, the currency is still gaining in popularity having seen a massive influx of capital from institutional investors including insurance company Mass Mutual and also, the world’s largest asset manager BlackRock.