Reorg Scenarios: Binance Hack Edition

A Disagreement

In this tweet, you can see Ari Paul and Adam Back come to a bit of a disagreement:

A Simplistic Model

Let’s assume a very simple model where 100% of the hash power helps Binance.

A More Contentious Alternative

This would be a contentious fork and a race to be the longer chain. Overtaking with 55% of the hash power for a 100 block reorg means that it would take on average 1000 blocks (~2 weeks in this scenario). The variance on that is also fairly high, with 500 blocks and 1500 blocks being fairly common in that scenario. Even at 99%, it would take 101 blocks (~20 hours) to overtake.

Conclusion

There are more complicated scenarios, especially with all the offline mining equipment out there, but all of them are pretty easy to analyze. The thief can incentivize miners, so it’s a losing battle for Binance, where they’ll have to pay for each block reorganized plus whatever they lost in the theft.

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Jimmy Song

Jimmy Song

Bitcoin Educator, Developer and Entrepreneur. Book: https://amzn.to/2RSlnTb PGP Fingerprint: C1D7 97BE 7D10 5291 228C D70C FAA6 17E3 2679 E455