Unpacking Bitcoin's Recent "Double-Spend" Event
- Bitcoin recorded a double-spend instance for a small amount which sparked rumors of Bitcoin’s death.
- Investigation reveals that the occurrence was rare and even normal for blockchains.
- Experts shunned the FUD calling the end of the Bitcoin blockchain.
Multiple Bitcoin blocks mined at the same time have sparked debate around a possible double-spend attack on Bitcoin.
A double spend refers to when more Bitcoin is spent than the amount held in an address. Avoiding double spending is the crux of any money network. Thus, media publications jumped at the opportunity to call the time of death.
Besides the wider panic, however, there is nothing to worry about, according to Bitcoin experts. Some have even questioned if said transaction was indeed a true double spend.
Double Spend for 10 Minutes
On Jan. 20, at Bitcoin block height 666833, mining pools F2Pool and SlushPool both mined a BTC block simultaneously. The Bitcoin blockchain adds blocks one-by-one. Thus, only of them was eventually added to the major chain.
For ten minutes, nevertheless, transactions in both blocks showed confirmation.
A transaction from one set of addresses showed in both blocks with outputs of 0.00062063 and 0.00014499 BTC (total 0.00076562 BTC). The sending addresses had a total of 0.00071095 BTC only.
Hence, the input address received more Bitcoin than the sender held in the wallets.
Debate on Terminology
The BitMEX research team first reported the instance on Twitter, earning the attention of many. A double spend on Bitcoin meant the end of the leading blockchain as the ledger is no longer secure.
BitMEX research gave an incorrect report at the beginning.
To understand what happened, one has to know about replace by fee (RBF) transactions. As the name suggests, it appears when a sender tries to replace an earlier transaction with another one with a higher fee.
This particular user had an unconfirmed transaction sent on Jan. 18 from four Bitcoin addresses.
Later, the user attempted to send another transaction to a different address on Jan. 19. Bitcoin full nodes rejected this.
On Jan 20., an RBF attempt to make miners accept the transaction finally sent the amount.
However, when the RBF transaction was initiated, the first transaction from Jan. 18 also went through in the second block. Thus, the input addresses spent more than their total input.
Note that the transaction to a different output was not included in either chain.
The intentions of this user are unclear at the moment.
Nonetheless, until the next block confirmation, which is ten minutes for Bitcoin, both transactions were verified simultaneously. This could have created minor issues.
For instance, merchants of Bitcoin payment processor BTCPayServer would have received a successful invoice confirmation of the dropped transaction. Nicolas Dorier, Bitcoin developer and founder of BTCPayServer, told Crypto Briefing:
“It is a double spend because two blocks spend the same input with different output.”
Nevertheless, as the output address was the same in both transactions, many debated against calling it a double spend.
What Happens to Bitcoin Now?
Temporary block reorganizations are a common occurrence. Bitcoin educator Andreas Anotonopolous noted that one or two block reorganizations happen every few weeks. The chances of adding two different transactions from the same address are rarer.
The concern remains as to what happens to the transactions that are ultimately disregarded in the losing chain. Antonopoulos answered:
“If they [transactions] are also in the winning block then all is well. If they are not in the winning block, each node puts them back into its mempool as ‘unconfirmed’ and they wait for another opportunity”
The chances of the above situation happening again are very rare and possible only with small amounts.
Moreover, panic regarding possible double-spend attacks in the future has little basis. According to Dorier, the cost of conducting such an attack is in the millions.
Ideally, more than two, or a maximum of three BTC block confirmations guarantees finality every time.
Disclosure: This author held Bitcoin at the time of press.
The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.
Source: Read Full Article