Coin Metric researcher Lucas Nuzzi claimed that one way for exchanges to fight back against the hackers is by renting mining power from online marketplaces. Nuzzi made the remarkable statement at the Unitize virtual event.
According to Nuzzi, an exchange which has been hacked could rent enough hashpower through an online marketplace to force a favorable network reorganization
“So it is essentially a technique to try and reorg yourself by renting mining power and doing that work where if you’re an exchange and you’ve been hacked, within those six work confirmations that the network is expecting to be considered final <…> But through mining, you could potentially, within those six blocks alter a transaction where your hot wallet has been drained. So that’s one of the approaches through mining.”
Nuzzi appreciated the fact that Bitcoin (BTC) transactions are not necessarily final prior to confirmation. It is generally assumed that they become final after six block confirmations, which typically take an hour.
Thus, an exchange, either by renting the majority of hashpower or in coalition with mining pools could choose to accept a version of the chain where the hack did not happen.
Nuzzi told Cointelegraph that this solution is impractical for bigger coins like Bitcoin, but could be used for smaller ones:
“It’d actually be impossible for exchanges, or any entity really to reorg BTC via NiceHash. This could, however, be an effective counterattack on smaller chains with more niche hashing algos, like lyra, or equihash.”
He also highlighted that the attack on Bitcoin Gold (BTG), where the community was able to repel the attacker to support his theory.
Disclaimer: The information provided is not trading advice, Bitcoinworld.co.in holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.