Bitcoin dropped by up to 11% this Thursday, reaching its lowest point in almost three weeks, as the top cryptocurrency was slammed by a one-two punch that hurt its user base’s faith.
The first incident, Janet Yellen, the likely incoming treasury secretary, hinted during her hearing that Washington should “curtail” the usage of Bitcoin because of illegal activities.
And second, a report came out from BitMEX Research which argued that a critical flaw named “double spend” had happened within the blockchain.
Double spend is an event that allows someone to spend their bitcoin twice. It is a feared occurrence for Bitcoin fans and investors, and it was believed that the issue was solved when Satoshi Nakamoto wrote his Bitcoin white paper back in 2009.
Early tries to start a digital cash technology were stopped by these types of vulnerabilities that enabled double spending and destroyed faith in the system.
BitMEX Research claimed that “it seems as though a small double spend of about 0.00062063 BTC ($21) was found.”
BitMEX later stated it looked like this was actually a RBF transaction, which is the word to describe an unconfirmed transaction being replaced by a newer one which pays a bigger fee. But BitMEX’s Fork Monitor claimed that “no (RBF) fee increases have been seen.”
In the end, the double-spend event seems to not have taken place, according to CTO of Bitfinex, Paolo Ardoino. In a message to reporters, Ardoino said, “What occurred is that two blocks were mined at the same time. As a result, a chain reorganization happened, which did not end with double spend.”
Meanwhile, large investors continue to increase their exposure to bitcoin. Filings with the SEC show that BlackRock has allowed two of its funds to start buying the cryptocurrency.