After it was revealed that Binance had suffered a 7000BTC hack on its exchange, its CEO, Changpeng Zhao (CZ), threw out the idea of rolling back the main Bitcoin blockchain to reverse the hackers transactions.
This idea was not taken lightly by the cryptocurrency community.
In an AMA following the news of the hack, CZ said that it would be possible to roll back the bitcoin blockchain in such a way that miners would receive the stolen bitcoin.
"There is the other topic of do we want to issue a rollback on the bitcoin network," CZ said. "Because right now the 7000BTC is far higher than, if we distribute that to miners, it would be far higher than what they got paid for the last few blocks."
— CoinSpice (@CoinSpice) May 8, 2019
The CEO would continue on to say this could be achieved within the "next few days" but not without some concerns.
"If we do a rollback on the bitcoin network at that scale it may have negative consequences for destroying bitcoins credibility," he explained.
CZ would add that the suggestion of a rollback came from some members of the community, as it was something he apparently did not know was possible.
Crypto Twitter Sounds Off
While it now appears that Binance has backed off the idea of trying to roll back the bitcoin blockchain to undo the theft, the crypto community has expressed a bad taste in their mouth over the idea being thrown out in the first place.
It's scary that you considered rollback option on #BTC chain.
— Spartanec (@ooostrateg) May 8, 2019
Think about this:
1)Binance is robbed with $40M worth of BTC.
2)BTC core dev. suggests Bitcoin chain reorg.
3)CZ (top exchange) gathers Bitcoin top core devs. and Bitmain's CEO (top miner) to have a closed-door discussion on the possibility to reorg.
Anyone scared yet?
— XRP Research Center (@XrpCenter) May 8, 2019
Why would you even consider it? If Binance can re-org Bitcoin we might as well all get out of crypto as JP Morgan and the Fed could too.
— Simon Dixon (@SimonDixonTwitt) May 8, 2019
You were seriously considering a 51% attack on #bitcoin because you lost some? I have seen many exchanges come and go...
— Yanislav Æternity Blockchain (@noyyy) May 8, 2019
This entire conversation has caused me to reevaluate you and the Binance project. Not in a more positive light, unfortunately...
— Fiachra Mullen (@fiachramullen) May 8, 2019
— Vitalik Non-giver of Ether (@VitalikButerin) May 8, 2019
I never suspected any wrong doing here, but the fact that this is even being considered makes me feel that something sinister could be going on. I believe crypto will be dead if this proceeds.
— Ash (@Mr3uk) May 8, 2019
it's not your decision, you got hacked, deal with it
— Szabi ⚡ (@JSzblcs) May 8, 2019
Rolling Back the Chain
The community push back against the idea of rolling back the theft of Binance's bitcoin is well understood from the standpoint that, a roll back of the blockchain is a drastic measure which has only been taken in situations that are drastically detrimental to the health of the entire network.
Such a roll back happen in 2010 when an inflation bug hit bitcoin, minting 184 billion BTC outside the bounds of the consensus held by the nodes on the honest chain. A software update was created by Gavin Andresen and Satoshi Nakamoto to purge the toxic transaction which created the newly minted bits.
Similar action would need to be taken to purge the transactions that sent Binance's bitcoin out of their hot wallet. This would require a majority of support from the network. If the roll back did hypothetically occur, it would mean that it was believed to be in the best interest of the network.
The fact that the community is outraged and shocked by CZ's idea of rolling back the chain shows that this doesn't have a large enough effect on the network to set the precedent of rolling back for an exchange that was exploited.
This is well understood even by CZ himself:
cons: 1 we may damage credibility of BTC, 2 we may cause a split in both the bitcoin network and community. Both of these damages seems to out-weight $40m revenge. 3 the hackers did demonstrate certain weak points in our design and user confusion, that was not obvious before.
— CZ Binance (@cz_binance) May 8, 2019
In The End
Even the "revenge" rollback idea thrown out by CZ wasn't appealing enough to the community. This means the effects of the hack don't out weigh the potential consequences of a rollback to reward miners with hacked coins.
Exchange security going forward will have to strengthen, because it looks like they probably won't ever be getting a bailout from the community.