Cryptocurrencies . 26 Jan 2021

Chain Reorganization on Bitcoin Network, Not a Double-Spend

by Blockonomist Editorial
Chain Reorganization on Bitcoin Network, Not a Double-Spend
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There is a flood of news on the internet after the fall of Bitcoin on Thursday. BitMEX Research’s report suggested a critical flaw called “double spend” was responsible for the 11% fall of Bitcoin. It dropped below $30,000, which was the lowest level since January 2021, and the drop seems to continue even after some of the essential financial players are investing in it. It was becoming a little challenging to track the reason for this fall despite some rumors. This all started after the hearing of Janet Yellen on Tuesday to curtail the use of Bitcoin, and then, on Wednesday, BitMEX Research suggested the small double spend of nearly 0.00062063 BTC in Bitcoin Blockchain.

Notably, a double spend is when a user uses a single token for two transactions. The double-spend in the blockchain would mean that it had been manipulated, violating the security claim of Bitcoin. Bitcoin was designed to prevent double-spend specifically, and the news has undoubtedly spooked the investors. But, it is not to worry about because it was a clear case of misunderstanding. A chain reorganization of one block occurred due to simultaneous mining in two blocks, which is quite common.

What happened was that similar coins were registered in two different blocks while the network validated a split in Bitcoin’s blockchain, and only one of these transactions was confirmed. The other was not done, being it invalid. New coins were not added to Bitcoin’s supply. It might look like, but not a double spend.

Chain reorganization is something familiar in Bitcoin mining, where the same block is mined simultaneously by mining pools to cause a split in the history of blockchain. Due to this, both the blocks will be having miners until one wins over the other. The other history will be considered invalid and becomes a stale block. A takeaway from this is that there can be different versions of single transactions, but Bitcoin Network will ultimately accept only one.