Bitcoin fell as much as 11 percent on Thursday, hitting its lowest level in nearly three weeks, as the popular cryptocurrency was hit with a double whammy that jolted faith in its user base.
First, Janet Yellen, President Joe Biden’s nominee for treasury secretary, suggested during her confirmation hearing on Tuesday that lawmakers “curtail” the use of Bitcoin because of its use in illicit activities.
And second, an unconfirmed report from BitMEX Research on Wednesday suggested that a critical flaw called “double spend” had occurred in the Bitcoin blockchain.
Double spend is when someone is able to spend the same bitcoin twice. It is a feared and dire scenario for the digital asset, and the blockchain was thought to have solved the issue when Satoshi Nakamoto published the Bitcoin white paper in 2009.
Early attempts to launch a digital cash system were ultimately halted by vulnerabilities that could have enabled double spending and undermined faith in the system.
BitMEX Research tweeted that “it appears as if a small double spend of around 0.00062063 BTC ($21) was detected.”
BitMEX later said it appeared that the double spend was actually an RBF transaction , which is when an unconfirmed bitcoin transaction is replaced with a new transfer paying a higher fee. But BitMEX’s Fork Monitor said that “no (RBF) fee bumps have been detected.”
BitMEX said in another tweet : “A transaction in the losing chain sent 0.00062063 BTC to the address 1D6aebVY5DbS1v7rNTnX2xeYcfWM3os1va, and a transaction in the winning chain which spent the same inputs only sent 0.00014499 BTC to this address.”
If the double spend did in fact occur, it could be a fatal blow to the popular cryptocurrency, indicating that the flaw Nakamoto set out to solve remains a vulnerability that could crush confidence in the asset.