Binance Ceo CZ Wants to Reverse Bitcoin Transaction Is It Possible?
After the hack of the Binance exchange (7000 BTC worth of $40 million stolen), Binance CEO CZ wants to Re-Org (Roll Out) the Bitcoin network Blockchain.
In the AMA section, CZ said that they are working on tracking the hackers and recovering the system will take a week time.
CZ further stated in the AMA section:
“We can do a rollback on Bitcoin network in the next few days. We can do this, but it may have negative consequences/impact on the BTC network and might destroy the credibility of the network… We will maintain high transparency and will take the idea of reorg seriously”
What is Re-Org (Roll Back) of Bitcoin Network?
Re-Org (Roll Back) of Bitcoin Network means to start the Bitcoin Blockchain from a previous block before the hack happens. This is not a simple as a Bank transaction (They just need to update the numbers in the database), Bitcoin is based on Proof-of-Work (PoW) that needs real calculations to put blocks on the network.
A Roll Back is only possible with chain spilt and all miners should support the new chain. The minimum support needed to turn the new chain into main chain is 55 percent of the hashing power of Bitcoin Network.
Cost to do Re-Org of Bitcoin Network
After the hack 58 blocks are mined and placed into the Bitcoin Blockchain. Here is the estimation cost of the Re-Org of Bitcoin Network.
- Minimal cost: 58 * 12.5 btc = 725 BTC (assumes every miner would get roughly the same tx fees in the new chain and that 100% of miners go with this scheme)
- If 75% of the network going with this scheme, you would need on average 116 blocks to overtake the current chain or about 1450 BTC worth of mining rewards.
- At 60%, this becomes 290 blocks or 3625 BTC. At 55%, 580 blocks/7250 BTC.
- 7250 BTC > 7000 BTC, so at minimum, you need more than 55% of all hashing power to agree to reorg the chain. In 58 more blocks, this rises to 60%, in 116 blocks, 65%. In 174 blocks, 70%, 232 blocks/75%. The cost goes up pretty quickly assuming everyone agrees.
Rist Involves in Re-Org
There are significant risks also for the miners agreeing to do this as any miner that betrays will significantly raise the risk of wasting hash power that could be productively put to mining the longer chain.
Depending on the premium that a miner would charge for that risk, this would mean a much shorter time than 232 blocks to make that decision. And really, if you do this, you end up taking the money from the thieves and giving it to miners. Binance doesn’t benefit that much.
CZ Reply After All That
After speaking with various parties, including @JeremyRubin, @_prestwich, @bcmakes, @hasufl, @JihanWu and others, we decided NOT to pursue the re-org approach.
Considerations being:
- we could “revenge” the hackers by “moving” the fees to miners
- explore the possibility of how bitcoin network would deal with situations like these
“While it is a very expensive lesson for us, it is nevertheless a lesson. it was our responsibility to safeguard user funds. We should own up it. We will learn and improve.
As always, thank you for your support!”
CZ mentioned that the trading on the exchange will not affected and users can continue to trade.
“There will be a few system upgrades during this week and there may be a time when we have to halt trading for a little while to make changes in our core systems.”
CZ advised users to change their passwords and API keys and re-enable the 2FA. Binance is still working to figure out the number of affected users by the hack.
