Social and mainstream media lost their collective minds last week as reports of a bitcoin double-spend transaction spread everywhere from Bloomberg to CoinTelegraph. It took quite a while before everyone realized there actually wasn’t a double spend...kinda.
Why was everyone spooked?
BitMEX’s research arm first noticed the one-block reorganization and tried to offer a simple explanation of the fairly routine event on Twitter. But the words “double spend” quickly became sensationalized and widespread.
Misinformed reporting on the incident even caused one publicly traded technology company to liquidate its entire $4 million in bitcoin.
Technically, a double-spend transaction was attempted; one block was reorganized. But, given bitcoin’s probabilistic transaction settlement design, this occurrence is not uncommon, and it was resolved by the next block. (Deeper reorganizations, however, are of course much more problematic.)
The total value of the attempted double spend was $22, and the one-block chain split only happened after the sender attempted three different times over a period of a couple days to have the transaction included in a new block by raising their fee spend. Coin Metrics on-chain data analyst Lucas Nuzzi explains the timeline of these events in this Twitter thread.
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Here are three other Twitter threads on the incident that go into more detail.
To further clarify the “possible double spend,” which BitMEX Research notes again was resolved after one block, the below diagram was posted to Twitter by their researchers. The bottom line is: this one-block reorg is not uncommon and certainly not a reason to panic, let alone liquidate one’s entire bitcoin holdings.
