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Bitcoin Cash: Coinbase Release Research On BCH 51% Attack

Bitcoin Cash: Coinbase Release Research On BCH 51% Attack
Breaking News / Cryptocoins / Bitcoin Cash / YouTube

Researchers at one of the biggest cryptocurrency exchanges in the world, Coinbase have released their own investigate findings into the recent controversy behind the Bitcoin Cash 51 percent attack, but it seems their finding may upset a few Bitcoin enthusiasts.

Following the attack on Bitcoin Cash in mid-May, a group of miners colluded to reverse the attacked blocks and return misappropriated funds to their rightful owners.

The Bitcoin Cash community came under fire from supporters of Bitcoin. Although according to a blog post published at the end of last week by Coinbase, the worldwide cryptocurrency platform ultimately saw good sense in the decision.

Why is this attack so significant?

The upgrade on Bitcoin Cash was temporarily put on pause last month when an attacker exploited a bug in the blockchain. Even though the attack only lasted a short while, it took some time before Bitcoin Cash miners figured something was wrong and made some moves to address it.

At the time of the attack, one BCH user said on Reddit:

“The attackers used p2sh addresses that had easily guessable scriptSigs (they lacked a signature altogether to redeem). […] I ended up liquidating about ~1.2BCH of their funds just now […] So you will see the mempool now has lots of tx’s and is 18MB full as of the time of this writing. These tx’s are all the special tx’s that have a lot of sigops that I made to liquidate (take) the attacker’s funds.”

This is seemingly where the controversy surfaced. It seemed that critics refused to see the difference between an attacker switching up the blockchain and miners doing the same. When Binance was hacked earlier last month, the CEO of the exchange, Changpeng Zhao suggested ‘rolling back’ the blockchain to retrieve the funds that were lost.

At the time, miners of Bitcoin basically told him that this was a poor idea and so the plan was dropped.

Although, this idea has floated around before. When Bitfinex was hacked in 2016, the concept posits that the financial rewards of reorganising the chain to trick the attackers were much higher than the incentive to keep the blockchain as it was. Research at the time pointed out:

“In this case, Bitfinex could promise to pay the miners, say, 25 BTC per block for however many blocks it takes to reorg out the theft transactions and replace them with a spend aggregating the funds off of BitGo and into cold storage. As long as this is less than a few thousand blocks, it makes economic sense for everyone involved, simply because of the enormous size of the theft. […] To be absolutely clear I hope that this doesn’t happen. If it does, I’m not sure what value proposition bitcoin would have left. Uncensorable, nonpolitical money is what bitcoin is about, and without that it is nothing. If this manages to go through, I hope the outrage pushes people to fight for more decentralization and fungibility at the protocol level. Otherwise I don’t know what future bitcoin would have.”

As CCN put it, this is one of those instances where the rubber meets the road in the crypto space. Blockchains are meant to be immutable, however, if enough miners band together and can agree to make a change, then anything is possible.

Others have made similar moves in the past. In fact, the whole reason we have Ethereum Classic is because the Ethereum community split into two following a contentious hardfork after the DAO attack.

The Honourable Thing

Coinbase had their own interest in finding out what happened during the hardfork/attack as Bitcoin Cash is a huge asset that is hosted on the platform. In its blog, it says:

“On May 15th, Coinbase detected a depth-2 chain reorganization on the Bitcoin Cash blockchain. The reorg targeted BCH funds that were erroneously sent to BTC segwit addresses…”

These funds summed up to around 3,655 BCH. At the time this would have been worth around $1.5 million. Most of these coins were safely recovered and then sent to their proper addresses by the BCH miners. This seems to be very appreciated by Coinbase.

The blog states:

“We find it remarkable that derived the technical solution to recover BCH funds mistakenly lost by users, choosing to send the coins to their intended recipients rather than claiming the funds for themselves.”

It was specifically because one miner had tried to move the stolen funds to their own address that stepped in. For those that don’t know is one of the biggest Bitcoin Cash mining pools which represents ten percent of the BCH hashrate.

Some still believe that BCH miners neglected the principles of the blockchains in their recovery of the stolen funds.

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