There have been reports on Tether (USDT) being double spent on an exchange, and this news started to spread like a wildfire. It is not even a week now after Tether had a successful audit and cleared the FUD that was accusing it of printing money out of thin air and proved itself that it has USD backed for every token it produced. Now, it is hit with another FUD narrative that a successful double spent has occurred. Below is the detailed explanation on the full episode.
SlowMist Posting Screenshot of Tether Double Spent
The Tether double spending was first exposed by SlowMist - a Chinese website focusing on Blockchain Ecosystem Security. They reported it on their Twitter page, and the tweet was in Chinese. This was later posted on Reddit, and many started to comment on it. Many started to research on this to find out if this is an authentic cased of double spending or not. Below is the screenshot of the transaction shared by SlowMist.
Also, many started to look at it in the block explorer to get a clear picture to know if this a case of double spending or not. Below are the transaction details fetched from the block explorer.
{ "amount": "694.00000000", "block": 529555, "blockhash": "00000000000000000004850989c1e8b3846b2e503d2bf8c3f63857a3aec0133d", "blocktime": 1530162531, "confirmations": 108, "divisible": true, "fee": "0.00011036", "ismine": false, "positioninblock": 448, "propertyid": 31, "propertyname": "TetherUS", "referenceaddress": "16sNxzU5qMmeDkV4QcARCivMNknxr9Yx79", "sendingaddress": "17R4MDRYiC29znLdGUo4wz9dwNboWvt2Uy", "txid": "f2e4b555532c6abd9065ab6158a1eec184e4fa8a570e9fb1ede4022589904dd8", "type": "Simple Send", "type_int": 0, "valid": true, "version": 0 }
In the Reddit post, it is also mentioned that "A double-spent has been successfully performed on USDT, we recommend Tether perform a code review to catch this vulnerability." The reported transaction happened when someone wanted to send Tether from an exchange integrated with Omni layer.
Omni Founder Negates this FUD Narrative
Omni is a layer for trading digital assets on a fully decentralized asset platform and has its own token Omni(OMNI). It is built on top of the Bitcoin blockchain, and so it is very secure and trusted. All the Omni transactions are Bitcoin transactions.
Omni Founder commented on the Reddit post and cleared the air about this double spending narrative. He said that for double spending on Omni one needs to double spend on the Bitcoin blockchain, because the Omni layer is built on top of the most secure and trusted Bitcoin network. He explained that assets on Omni are very secure and in this case, he noted that the exchange wasn't checking the "Valid" flag on the transaction. He further added that the exchange accepted a transaction with Valid=False first and then the second double spent transaction accepted was with flag Valid=True. He also dismissed this narrative completely by saying that this is a classic case of poor exchange integration.
He also shared a GitHub link where one of his developers has explained about the best practices for exchange integration. In that link, the developer has clearly requested the exchange to check the "Valid" flag before accepting any transactions. Below is the screenshot of the same.
The above explanation by the Omni founder clears the air surrounding the Tether double spending FUD and should have removed the fear from the traders and investors. It is unfortunate that Tether is targeted again and again and people think that by targeting Tether they can bring down Bitcoin. They forget to understand that Tether with a marketcap of $2.7 billion cannot make a significant impact on Bitcoin, which still has a marketcap of over $100 billion.
Double Spent - Explained
Double Spent is a term used when the coins are spent on more than one transaction. This is an attack on the network, and the most secure blockchains cannot be double spent because one needs 51% of the computing power of the network to perform an attack to reverse a transaction. That's why we consider Bitcoin to be the most secure network since it has huge hashpower and it is highly unlikely for anyone to perform a 51% attack.