Andreas Antonopoulos, author of Mastering Bitcoin and a well-known Bitcoin advocate, spoke about the Binance hack and the re-org that was briefly considered, during a Q&A session on YouTube. During the session, the author explained the scenario of what would have happened if Binance had decided to go ahead with the re-org.
Binance, one of the largest cryptocurrency exchanges in the world, fell victim to a security breach that led to the loss of 7000 BTC. Soon after the hack was announced, Changpeng Zhao, CEO of the exchange, discussed the possibility of a chain re-org. This however, was criticized by a majority of the members in the cryptocurrency community, with several well-known influencers standing against this move.
This was followed by Zhao stating that the exchange had decided not to go ahead with the plan, after discussions with a few prominent players in the community. The reason behind the backtracking was that the cons weighed more than the pros.
Antonopoulos explained an outcome where Binance had decided to go the other way around, and do a chain re-org. The author claimed that the exchange was basically proposing a 51 percent attack. He added that the exchange would’ve had to persuade 51 percent or more miners to roll back to the block before the attacker sent the coins to his/her address, and set that block as the parent of the next block and start mining from thereon.
This was followed by the author speaking about a scenario where the exchange decided to do a re-org, a day after the attack. This would require the exchange to persuade miners to roll back around 145 blocks, following which, they would use their hashing power to surpass the remaining 49 percent of the miners who would’ve have been mining from the current block of the longest chains, thereby causing a re-org of the chain.
He went on to explain the majority of the miners’ work during this process,
[…] they would deliberately mine a double spend transaction from Binance, spending all of the outputs that were stolen by the attacker to Binance addresses and once that’s in there then the transaction from the attacker would not succeed those coins will have already been spent on the chain being mined by the miners trying to do the rollback […]”
Further, Antonopoulos stated that 51 percent was not enough, adding that one of the reasons it was not enough was that “at a rate of 1 percent advantage over the chain being mined by the 49 percent, they [rest 51 percent] would only achieve a 1 block gain every day.”
He stressed that miners with 51 percent hash rate would have only a 1 percent advantage over the chain being mined by the rest of the miners. The author added that under such circumstances, it would take the miners almost 150 days to catch up, overtake and rewrite the chain, remarking that it was a “very very long time.” Antonopoulos also stated that if something went wrong during this timeframe, like 1 percent of miners abandoning this process and shifting to the other side, then all the energy spent on this would’ve been wasted.
The author also spoke about one of the possibilities suggested to Binance, in order to get the miners on-board with the plan, which was to bribe them. He went on to state,
[…] one way to bribe them is to make sure that the transaction that they introduce, which spends Binance’s outputs back to Binance, carries very very high fees and therefore the miners are incentive, they’re gonna get paid off for this and those these would have to be more than the rewards of the blocks that the miners would be rolling back […]”
Antonopoulos added that if miners rolled back five blocks, then they have to pay the miners more than 60 Bitcoins. He explained that the reason for this was that miners would’ve made 12 and a half Bitcoins for continuing to mine the blocks on the normal chain, and if they had to roll back the chain, then that energy would be wasted. He further stated that Binance would’ve had to bribe the miners with the entire reward amount and add more to this as this would’ve been a risky undertaking.
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Priya is a full-time member of the reporting team at AMBCrypto. She is a finance major with one year of writing experience. She has not held any value in Bitcoin or other currencies.