1\ There is an alarming amount of misinformation (fueled by the media) on what exactly happened to Bitcoin yesterday, and whether funds were "double spent"

Here's everything you need to know 👇

2\ On the 18th, a user broadcast a transaction with very low fees.

When users underpay fees, their transactions gets stuck because miners have more profitable opportunities.

Users are left with 2 options:

a) wait until fee levels drop
b) tell miners they will increase fees
3\ The most popular way to (b) increase fees of an already-broadcast transaction is through a "Replace By Fee (RBF)" transaction.

Put simply, RBF is a copy-and-paste of the original transaction with higher fees and an explicit instruction to favor the new transaction instead.
4\ Nearly a day passed after our infamous user broadcast the original transaction and miners did not include it.

So the user decided to issue an RBF on the 19th with higher fees... but not high enough!

And the transaction was again stuck...
5\ A couple of hours later, the user decided to bump fees up again via a second RBF!

This time around the user paid enough fees.
6\ So, to recap, the user broadcast a total of 3 transactions:

1) Dec 18th 22:11 UTC (1 sat/b)
2) Dec 19th 21:22 UTC (9.4 sat/b)
3) Dec 20th 00:32 UTC (14.3 sat/b)

And here's where things get a bit more complex
7\ At around 1:18AM the blockchain split into 2 versions, which is an entirely normal occurrence; a fundamental part of how Bitcoin works.

When this happens (1+ times per month), miners need to converge on a single version of events, which often takes around 1 block, or 10 min.
8\ However... by the time the user broadcast the third transaction, fee levels had quieted down and the chain was split:

-One miner picked the first (low fee) transaction for their version of the chain
-The other miner picked up the third (highest fee RBF transaction)
9\ The thing about RBFs is that they're entirely optional. Miners decide which transaction to pick.

In this occasion it might have looked like a malicious "double spend" (inflation), but it is a completely normal event.
10\ The chain was split for 1 block (again, normal), but ultimately the miner on the branch with the low fee transaction ended up winning.

The important thing to know is that, yes, there might be different versions of the same transaction, but ONLY 1 will ultimately be accepted.
11\ @0xB10C (follow this man) made a helpful timeline of events using @coinmetrics data:
12\ Again, RBFs in stale blocks is business as usual.

No reason to freak out. No inflation, no "double-spend" was actually confirmed. Just a ton of loud ignorance and misinformation.
13\ This is a wake up call for crypto media. Looking at you @crypto and @Cointelegraph

You benefit by serving crypto adds. I urge you to at the very least understand your responsibility and step up your technical game.

How about sponsoring a bitcoin developer?
14\ Another clarifying point: @BitMEXResearch is doing an amazing job for the community with https://t.co/k9MhseACnP and https://t.co/0gjizyXMy7

Their depiction of what happened was accurate. Unfortunately, their post was grossly misrepresented misrepresented for clickbait...

More from Bitcoin

The is no Devcoin Gold yet. But then again, we've never been one to "peg" to anything. I came across an interesting article about 'recreating' addresses with Bgold that @bitcoincoreorg cut out since 0.13.0 - perhaps one day we can do a similar thing in future Devcoin software :)


https://t.co/cv4UqsaVAK

That being said I hold some Doge @blockio in an "A-" address myself after 0. 1. "9-" versions :). Don't believe Bitcoin Core the Coin (Utility) is the only visible value on Core chain. Color me crazy. I believe in script. And FOSS that is used to export📜


And that's just a guy @MeniRosenfeld who put his identity and ideas out in the public to build a Web of Trust back when the web was much less of a safe place. His identity at stake and the implementation of a branch in source code by another unsung hero @killerstorm reveals value

Some of those who set up our bright future quietly implemented it in a branch on the main source code before it was officially the Bitcoin Core main repository, before a "Bitcoin Core" entity existed

Just because Bitcoin Core nodes dominate and do not read "smart" colored satoshis or display them, doesn't mean they do not exist on chain. The example of recreating P2WSH-over-P2SH address from BTC https://t.co/ZWSP2MO5bY wallets in Bitcoin Core Gold I shared proves -rescan's $
I will be a buyer under 13800 levels, but depending upon the reversal on smaller timeframe.
1/9 Bitcoin has performed remarkably these past few weeks despite:
-Most of DeFi falling 50-80%
-CFTC charging BitMEX
-POTUS contracting Covid
-Delayed stimulus talks
-FCA announcing a derivative ban for retail

Why? Let’s see what we can find on-chain

2/9 Bitcoin’s Realized Cap has been steadily increasing just as it did before the 2017 bull market took off. If it continues as it did in 2017, 2021 should be an interesting year.

https://t.co/nqgX7vTMDV


3/9 Bitcoin MVRV, whilst more volatile this market cycle, is also is holding the same trajectory it did during the 2016/17 bull market

https://t.co/jadbn6nCOB


4/9 Looking at the supply of Bitcoin on exchanges is a good indication as to whether or not users are increasing trading activity, or increasing hodl activity. With supply reducing it looks like the tendency recently has been driven by hodlers


5/9 Despite the recent volatility, the number of Bitcoin whales continues to increase, indicating the growing number of large holders that have positive expectations for the future of Bitcoin

You May Also Like