After falling below $30,000: No, bitcoin was not „hacked“

After a sharp price correction in the crypto market, almost all top 100 coins print red candles. Meanwhile, news of a supposed double spend on Bitcoin has caused uncertainty. The market update

„What goes up, must come down“ – this trading truism suggests itself when looking at the price trends of Bitcoin and Co. The entire crypto market has been in correction mode since January 20. Carried along by partly heavy price losses of the industry leader Bitcoin, which pushed BTC to 29,000 US dollars (USD) in the meantime, a large part of the top 100 coins by market capitalization is under a negative sign on January 21.

The large-scale sell-off resulted in the crypto market surrendering the trillion-dollar mark it gained on January 7. Currently, the total market capitalization is just below $900 billion, with bitcoin accounting for 63 percent of that.

Meanwhile, the traditionally strong link between altcoin prices and the bitcoin price seems to have loosened somewhat since September 2020. The correlations between BTC and top-10 altcoins (with the exception of the stablecoin Tether as well as Polkadot’s DOT, for which there is not enough data yet) tend to decrease.

The fairy tale of double spend in bitcoin

The recent market upheavals correlated in time with rumors of a supposed double-spending attack on Bitcoin. This was triggered by a tweet from BitMEX Research reporting an orphan block that contained a (very small) double spend. A double spend is when the same digital currency unit has been used in two different transactions at the same time, i.e. „spent twice“.

Today, there was an invalid Bitcoin block of 666,833, with SlushPool beating F2Pool in a race. It seems that a small double spend of about 0.00062063 BTC ($21) was detected.

This news – spread by relevant crypto media – has apparently caused panic among one or two hodlers. According to Google Trends, the relative search volume for the term Double Spend rose sharply in the U.S. on Jan. 20.

Doube Spend on Google Trends.

Bitcoin guru Andreas Antonopulos promptly launched a livestream on YouTube in response to the emerging FUD (Fear, Uncertainty and Despair). He made clear what he thought of the scaremongering in the title of the stream: „The Illuminati have broken Bitcoin! OMG DOUBLE SPEND & other fantastic scary stories for kids“. Meanwhile, „aantonop“ has shifted gears and changed the title to a more sober (and search engine compliant) „Cryptocurrency explained: understanding „double-spend“, block re-organization, & consensus [Bitcoin]“.

Moreover, Antonopoulos, who teaches cryptocurrencies at the University of Nicosia, rehashed the incident on Twitter.

There was a reorganization in the Bitcoin blockchain. This is a common event that is part of the normal operation of Bitcoin. It is a result of decentralized consensus under Proof-of-Work. All PoW chains do this. […] Again, all of this is normal. A 1-block reorganization happens on average every few weeks as a result of decentralized PoW. A 2-block reorganization happens less frequently, maybe a few times a year. A 3-block reorganization is extremely rare. I don’t think we’ve ever seen one,

the Bitcoin evangelist appeases concerned hodlers.
Antonopoulos takes BitMex Research to task.

BitMex Research has taken some flak for its tweet about double spending. Unjustly, as Antonopoulos finds. He sees the blame for the FUD not with the data suppliers, but with the media, which processed the data into lurid headlines.

For those yelling at @BitMEXResearch:

Wrong target. BitMEX provides a useful service that monitors re-orgs. You are the messenger who said the right thing. Direct your ire at @Cointelegraph who „reported“ sensationalist nonsense and those who amplified it.

So @aantonop takes blockchain analysts to task. However, there is no denying that Bitmex Research has talked about a possible double spend. BitMex itself has admitted to pay better attention to the choice of words next time:

There were two conflicting transactions, each in two competing chains. The apparent „double spend“ situation was quickly resolved within one block. Sorry if our language was confusing, we will improve it next time.