Is Rolling Back the Bitcoin Blockchain Possible and What Would it Do to Bitcoin?

Earlier this month, digital asset exchange Binance was hacked for little over 7,000 bitcoins, worth over $40 million. To stop the hackers from getting away with the stolen BTC, an attempt to rollback the Bitcoin blockchain was considered. Lets take a look at why the consideration caused such controversey.

The CEO of Binance Changpeng Zhao (CZ) revealed that after speaking to various parties, he decided not to pursue the re-org approach to get “revenge” on the hacker(s) that managed to steal funds from the exchange.

The hack involved a single transaction that moved approximately 7,074 BTC out of Binance’s hot wallet. While CZ believed rolling back the Bitcoin blockchain was possible, he admitted it wouldn’t be worth it to do so, even for the $40 million that were stolen.

The re-org would see miners essentially collude to create an alternate continuation of the blockchain rooting from before the block that contained the hackers’ transaction. This alternate continuation would need to grow faster than the current one to have more proof-of-work and see all Bitcoin clients re-org to it, accepting it as valid. The $40 million worth of Bitcoin would be paid out to miners if recovered, like a bounty.

In its list of pros for doing this, CZ noted it could deter future hacking attempts, and look into how the Bitcoin network would deal with such a situation. The result would likely be the end of it, as it would destroy the cryptocurrency’s immutability, and affect users’ confidence in it.

Currently, bitcoin is seen as a store-of-value and a form of digital gold. Using the cryptocurrency, whales can move millions of dollars for extremely small amounts in fees, making BTC a superior form of gold that’s also useful for remittances and everyday transitions.

But what if miners were to form a cartel to pull a 51% attack on the Bitcoin blockchain to reverse transactions, for whatever reason? This is essentially what was at stake if CZ decided to rollback the blockchain, and would almost certainly damage Bitcoin’s reputation. Who would want to move millions using BTC if the blockchain wasn’t immutable?

As Nic Carter, a partner at investment firm Castle Island Ventures in Boston, put it through a Telegram message, Bitcoin’s value proposition relies on miners not colluding, as if they do so they could “selectively censor, invalidate, or otherwise interfere with transactions.” He added:

More to the point if this kind of behavior becomes mainstream -- deep reorgs to reverse valid transactions -- then Bitcoins settlement assurances are impaired. People will lose confidence in Bitcoin’s ability to settle large transactions.

The Ethereum Precedent

Those who have been in the crypto space for a while know that blockchain transactions have been reversed in the past. When the DAO software on Ethereum saw a hacker take about 3.6 million ether– at the time worth about $70 million – from it, the Ethereum blockchain underwent a hard fork to recover the hacked funds.

At the time, the Ethereum blockchain was quite young, and even then the move was controversial. Some saw the hack as an unethical, but valid move, and opposed recovering the funds. This saw the network split, with some remaining on the original blockchain, now known as Ethereum Classic (ETC) and supporters of ETC pride the chains intact immutability.

Since then, various Bitcoin supporters have stayed away from Ethereum altogether. Commenting on the recent proposal to rollback the Bitcoin blockchain Vitalik Buterin, an Ethereum co-founder, noted rolling back the chain wasn’t even considered.

As the billionaire founder of Galaxy Digital Michael Novogratz stated, bitcoin is now seen as a legitimate store of wealth, and has a market cap of over $100 billion. Affecting its immutability and reputation could see its value plunge.

Some believe CZ decided against the rollback because he wouldn’t be able to pull it off. Miners on the Bitcoin blockchain are aware that if they were to form a cartel to interfere with transactions, the value of BTC would likely plummet.

This would mean the 7,000 BTC they would get paid would be worth a lot less than $40 million by the time they received it, and would affect their business in the long-term. This could see BTC’s hashrate drop significantly, making it easier for bad actors to pull a 51% on it and double-spend coins or otherwise mess with the blockchain.

Even if it was possible, messing with the foundation of trust Bitcoin sits on could, effectively, put an end to the flagship cryptocurrency. The fact that the largest cryptocurrency exchange considered a rollback but realised it was not possible is a positive sign for the future immutability of Bitcoin.

New Public Blockchain Hedera Hashgraph Launches with 26 Dapps

Michael LaVere
  • Hedera Hashgraph launches open access to its mainnet blockchain with 26 dApps. 
  • Network will support 10,000 transactions per second, in addition to smart contracts and file services. 

The Hedera Hashgraph team has announced the successful launch of its public blockchain mainnet on Sept. 16, which includes 26 decentralized applications. 

Hedera Launches Public Mainnet

According to the release, Hedera Hashgraph is now open to the general public after months of being in a closed beta network for select developers.

Hedera claims to be have a faster consensus algorithm than the blockchain used by Ethereum and Bitcoin, capable of supporting 10,000 transactions per second. The open-access mainnet also allows users to operate smart contract and files services, with the team planning to increase the network’s speed “methodically throughout the remainder of 2019.”

Heredera’s Hashgraph achieves this transaction throughput thanks to a unique feature called gossip, which sees nodes within its network share information – gossip - on transactions, and subsequently gossip on gossip to record each event on the network and create a hashgraph of information.

The network reportedly achieves consensus and is secure by a virtual voting process, where the hashgraph technology uses nodes to ensure Byzantine fault tolerance. Hedera further has a Consensus Service under development that will be made available to the public later in the year. 

Mance Harmon, co-founder and CEO of Hedera Hashgraph, said, 

We are thrilled that, through open access, dozens of decentralized applications are now live and running on the mainnet, along with mirror nodes and other parts of the ecosystem designed to expand Hedera’s reach and adoption.

Hedera uses “council members” to run nodes and maintain the decentralization of the blockchain. The 39 council members, which include IBM and Boeing, also govern changes to the software. 

The enterprise-focused network has earlier this week seen its cryptocurrency, HBAR, get listed on leading cryptocurrency trading platform OKEx as three new trading pairs – HBAR/BTC, HBAR/USDT, and HBAR/USDK were added.

In a press release Andy Cheung, OKEx’s Head of Operations, stated:

Hedera and OKEx share the same goal of building a trusted, safe, and fair digital future for everyone through developing a neutral, open-access infrastructure. With such a powerful, enterprise-grade ledger technology, we believe it is a big step forward in mainstream adoption of decentralization. We are excited to support the Hedera platform and continue to lead this industry forward.

To celebrate listing HBAR, the cryptocurrency exchange launched a 500,000 token giveaway that will see holders and market makers who create maker orders on OKEx have a chance to win a share of the HBAR tokens being given away.

The first 5,000 traders to trade a HBAR trading pair, OKEx’s announcement reads, are also entitled to a share of 150,000 of the half a million HBAR being given away, in proportion to the volumes they trade.

Featured Image Credit: Photo via Pixabay.com