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AR company buys fake ‘double spend’ news, sells its Bitcoin

Just a couple weeks ago, Nextech AR Solutions announced it was buying $2 million in Bitcoin as part of a “new capital diversification and allocation strategy”. Well, that didn’t last long. Today the company sold all its Bitcoin holdings because of a misleading news story that projected a fundamental misunderstanding of blockchain technology.

They announced the sale on their blog:

Nextech CEO, Evan Gappelberg comments, “Our investment in Bitcoin in the past was part of our capital diversification strategy with the intent to maximize long-term value for our shareholders. This sale reflects our awareness that something potentially has changed with Bitcoin which is seen as the digital version of gold. The news that has emerged is that a critical flaw called a ‘double spend’ may have occurred, which if true allows someone to spend the same Bitcoin twice undermining faith in the system. If the system is built on scarcity and faith in the system, then a ‘double spend’ would eliminate both -essentially destroying the store of value it was meant to be. In light of this potential outcome, I have decided to move to cash as this story is still unfolding”.

What Nextech doesn’t understand is that these kinds of “double spend” events happen relatively often in Bitcoin and all proof-of-work chains, and they’re only consequential if these two different versions of a transaction were to remain in the blockchain due to a failure of the consensus algorithm.

Nothing weird or outside the consensus algorithm happened. Bitcoin continues to work exactly as it should. The only thing that happened is bad "journalism" if it can even be called that. In a bubbly market, a rumour can circle the globe before it is debunked.24/— Andreas (BEWARE of giveaway scams!) (@aantonop) January 21, 2021

That didn’t happen. Bitcoin continues to work just as it has for over a decade.

We briefly touched on this in a post the other day:

The protocol is built to handle this situation and is an example of a fork. The network quickly reorganized itself and only one of the blocks was eventually included in the chain.

If it’s really this easy to understand how reports of a “double spend” were intensely misleading, why did Nextech AR actually sell their Bitcoin holdings? I’d guess it’s because they never truly had any conviction in the long-term viability of holding Bitcoin on their balance sheet in the first place.

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