On March 19 the crypto world was set ablaze with the reports of an old known issue of Digital Currencies that Bitcoin itself tried to solve. A vulnerability that has given plenty of sleepless nights to Blockchain developers. We’re talking about the issue of Double Spending.
The incident was reported as an API logic error by Binance and Filecoin as they addressed the ‘double deposit‘ of $4.6 million worth of $FIL on Binance. The incident is written off as the result of an “incorrect use” instead of a bug or an attack.
What looks like a Double Spend but isn’t one?
A Double Spend is a unique problem that is a native problem for digital currencies until Bitcoin came along and solved it with its immutable ledger technology that we call Blockchain. Non-Blockchain-based digital assets (or currencies) existing only digitally, can easily be copied and the same unit of this asset could theoretically be spent by an exploiter twice – hence the term Double Spend.
But the incident with Filecoin was not technically a Double Spend and not even an attack on the asset. The market price of $FIL only moved from around $89 to $75 per $FIL as the even transpired.
The company behind Filecoin, Protocol Labs, revealed recently in a blog that the matter is under investigation. The team said the investigation showed no errors with the RPC API code or the Filecoin blockchain.
“We are confident that there is no double-spend on the blockchain itself,”Quote from a spokesperson of Protocol Labs
This case is based on inappropriate use of the Lotus API logic, according to the spokesperson. The API (Application Programming Interface) is a process that enables software to communicate with each other. The spokesperson confirmed that despite the double deposit, no funds were lost to the incident.
The RPC channel serves as the communication and verification channel which confirms that deposits are legitimate. However, they do not do this directly, but by sending messages via the channel and wait for responses from the Filecoin node. They had some critical setbacks in the process Filecoin developers sent to exchanges for verifying deposits. This resulted in the deposit of the same coins twice on the Binance exchange. Binance and Filecoin have assured users there is nothing to worry about as it was just a mishap and didn’t lead to an actual double-deposit.
Binance stated that deposits of Filecoin ($FIL) were suspended after discovering the double deposits. The issue resulted from incorrect usage of API from the exchange. We haven’t heard of any other exchange with similar mistakes.
Filecoin itself uses a proof-of-work mechanism, just like Bitcoin and it was designed to prevent double-spending just like this one and so far this has proven to work. Commenting on the issue, the Filecoin team has reassured the community that no funds were lost during the mishap;
“The team will work with exchanges to audit their deposit mechanism to avoid future issues”Filecoin team
So for now it seems digital currencies in the form of cryptocurrencies have won against its arch nemesis again. Blockchain tech works and there’s nothing to worry about. If anything, events like these have reinvigorated people’s belief in the Blockchain economy.