The Bitfinex hack shows that the immutability of blockchain is also a burden!

Rage Review : Mt. Gox went bankrupt in February 2014 due to a security breach, and on Tuesday, Bitfinex, one of the world's largest digital currency exchanges, had nearly $68 million worth of bitcoin stolen due to a security breach. Therefore, the digital currency community should find a way to make the blockchain more flexible so that victims can recover the stolen digital currency. Cornell University computer science professor and hacker Emin Gun Sirer proposed a compromise method and designed a service called Bitcoin Vault, which gives users 24 hours to recover any fraudulent transactions.

Translation: Nicole

Bitcoin's blockchain is often touted as a revolutionary step toward cybersecurity. But the theft of nearly $68 million worth of bitcoins from consumer accounts on the Hong Kong exchange on Thursday showed that the cryptocurrency still carries significant risks.

Bitfinex, one of the world's largest digital currency exchanges, has not yet released any details about the hack.

But a spate of bitcoin security breaches, like the one at Bitfinex, and one that led to the collapse of Mt. Gox in February 2014, have urged the digital currency community to find a compromise that would make the so-called blockchain more flexible so victims can recover stolen digital coins.

The blockchain is a global record of all bitcoin transactions, and every computer running the bitcoin software keeps a copy of the ledger encoded into the system. Every time a large number of transactions are processed on the bitcoin global network, the transaction data must be checked with every computer storing the blockchain ledger.

Digital ledgers are not only one of the largest assets of currencies like Bitcoin, but also one of the biggest liabilities. Once information is added to the blockchain, it cannot be changed, making it difficult to remedy thefts.

Tuesday’s Bitfinex hack resulted in the theft of 120,000 bitcoins — currently worth $68 million — from consumer accounts.

Bitfinex did not disclose any specific information about the reasons for the hack. The company was also hacked in May 2015, but the platform changed the way it stores customers' bitcoins afterwards.

Charles Hayter, CEO of CryptoCompare, a company that provides digital currency data and analysis, said that the security vulnerabilities that led to the Bitfinex hack did not exist within the system, but rather, the hackers discovered security vulnerabilities in the digital currency exchange.

Hayter said:

“This is not Bitcoin’s fault, this is the fault of the infrastructure surrounding Bitcoin.”

The idea of ​​restoring stolen digital currency by modifying the blockchain is controversial, as recently as July, when Ethereum's native token, ether, the world's second-largest digital currency, split into two separate digital currencies after developers proposed a software update that would have restored $50 million worth of ether stolen in June.

Emin Gun Sirer

Emin Gun Sirer, a professor of computer science at Cornell University and a hacker, has come up with a compromise that doesn't involve changing the blockchain. He and two colleagues designed a service called Bitcoin Vault that gives users 24 hours to recover any fraudulent transactions. But there's a problem with the vault: Users who want to store digital currency safely also want to spend it quickly.

Many members of the bitcoin community remain strongly opposed to rollbacks — tweaks to the bitcoin software that would cancel fraudulent transactions.

After hackers stole more than 50 million ether tokens from a fund set up to help crowdfunding projects built on the Ethereum platform, Ethereum founders and developers designed a "hard fork" - a mandatory update to the Ethereum software - that essentially invalidated those transactions. Digital currency purists refused to update their Ethereum software, so two flavors of Ethereum were created, the original version of which was called Ethereum classic.

It is not yet known whether traditionalists will resist changing blockchain software to adopt the new version of ethereum, a split that is the most troublesome obstacle to widespread adoption of digital currencies.