15 May 2019
As you’re probably aware, crypto exchange Binance was hacked at the beginning of May 2019. In the aftermath, the Binance CEO Changpeng Zhao (CZ) toyed with the idea of “undoing” the hack by orchestrating a huge re-org of the Bitcoin blockchain.
This basically means that miners would ditch the transaction block where the hacker’s transaction appeared and create new blocks (without the hacker’s transaction) from that block on.
This “re-org conspiracy” was nothing more than just a few tweets (and maybe a couple of phone calls) and it realistically could not happen. But let’s play with the idea of “what if it really did happen”. What would it take to be achieved?
First of all, CZ would have to get a (vast) majority of miners onboard. They would all have to agree to follow the plan. And here’s the first catch - what if some miners betray the conspiracy? If would definitely make an economic sense to do so and thus the betrayal could very likely happen.
But even if they would all agree to play fair and not to betray the co-conspirators, there’s an outside threat to their plan:
“Crypto diversity? Oh, you mean that if Bitcoin loses it’s trust people would have other cryptos to turn to and abandon Bitcoin?”
While this sounds like a logical outcome, we didn’t have this in mind.
Instead, if the main BTC miners conspire to change the ledger via a re-org, miners from the other cryptocurrencies could jump in and protect Bitcoin’s immutability.
“But wouldn’t they rather see Bitcoin fail so their altcoin(s) would rise?”
Not necessarily. When bitcoin goes down, altcoins go down along (usually even harder).
Another reason why they would want to jump in and fight the conspiracy is a purely economic one: They would very likely have the Bitcoin’s community support and in case of winning the “re-org war” they would profit significantly.
This shows how altcoins (and altcoin mining) benefit Bitcoin. Altcoin miners are sort of reserve Bitcoin mining army that would definitely jump ship in case the opportunity shows up.
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