【Selected ChainNews】Don't spread rumors, the Bitcoin network has not experienced double-spending, it was just a "fee replacement" transaction.

Regarding the recent rumors of "double spending" on the Bitcoin network, there is too much shocking misinformation circulating in the market. Let's set the record straight: that was not double spending, just a common "fee replacement" transaction.

(This article is authorized to be reprinted from ChainNews, original article here)

Source: Lucas Nuzzi, Coin Metrics Network Data Product Manager

Translation: Perry Wang

1. There has been a lot of shocking misinformation circulating in the market about what happened on the Bitcoin network yesterday and whether there was any "double spending" of funds, fueled by sensationalized media reports. Here, I'll explain everything you need to know.

2. On January 18th, a user broadcasted a transaction with a very low fee. When users pay too low fees, their transactions get stuck as miners can choose more profitable opportunities.

This user now has two options:

a) Wait for the fee level to drop

b) Inform miners that they will increase their payment

3. The most popular way to increase fees on a broadcasted transaction is through "Replace-By-Fee" (RBF) transactions.

In simple terms, RBF is a copy and paste of the original transaction, just with higher fees and explicitly signaling miners to support the new transaction.

4. Nearly a day after this user broadcasted the original transaction, miners did not include the original transaction in a block. Therefore, the user decided to release an RBF on the 19th, increasing its fees... but still not high enough!

The transaction got stuck again...

5. Hours later, the user decided to increase the fee again through a second RBF!

This time, the user paid enough fees.

6. So, in retrospect, the user broadcasted a total of 3 transactions:

1) December 18th, 22:11 UTC (fee of 1 sat/b)

2) December 19th, 21:22 UTC (fee of 9.4 sat/b)

3) December 20th, 00:32 UTC (fee of 14.3 sat/b)

That's why things got complicated.

7. Around 1:18 UTC, the Bitcoin blockchain split into two versions, which is a completely normal situation and a fundamental part of how Bitcoin operates.

When this happens (more than once a month), miners need to converge on a single version event, which usually takes about the time to mine 1 block, roughly 10 minutes.

8. However... when the user broadcasted the third transaction, the fee level had stabilized, and the Bitcoin blockchain split at that moment:

• One miner chose the first (low fee) transaction for their chain version
• Another miner chose the third transaction (the highest fee RBF transaction)

9. The issue with RBFs is that they are entirely optional. Miners decide which transaction to choose.

In this case, it may look a bit like a malicious "double spend," but it's a completely normal event.

10. The Bitcoin blockchain experienced a split within one block period (emphasizing once again, this is a normal situation), but a miner on one branch ultimately won out by processing the lower fee transaction.

An important point to note is that yes, there may be different versions of the same transaction, but ultimately only 1 transaction is accepted.

11. Twitter user @0xB10C created a timeline of the event using @coinmetrics data to help everyone understand the specifics:

12. Stressing once more, RBFs in old blocks are just a normal occurrence.

No reason to panic. There is no inflation, and there was no actual confirmed "double spend." The external frenzy was just a mass dissemination of ignorance and misinformation.

13. And these rumors are a warning bell to the crypto media.

14. Adding a clarification: @BitMEXResearch has made remarkable contributions to the Bitcoin community through forkmonitor.info and txstats.info.

Their description of the events was accurate. Unfortunately, their post was severely distorted as market manipulation bait...

15. Be sure to check out the excellent article by @hasufl_s on this matter (not sure why I didn't see it at the time), which details what happened: https://insights.deribit.com/market-research/was-there-a-bitcoin-double-spend-on-jan-20-2021/