Bitcoin SV block re-organisation attacks and network response explained

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By Jamie McKane Published: August 20, 2021
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Following a series of block re-organisation attacks made against the Bitcoin SV (BSV) blockchain over the past few months – all of which were successfully overcome – nChain CTO and Bitcoin SV Infrastructure Team technical director Steve Shadders has outlined the network’s response to the attacks and attempts at double-spending in a blog post today.

Shadders says that following the attacks, he is more confident than ever in the Bitcoin protocol and its resilience to attack, even in the face of overwhelming hash power directed against honest nodes. Bitcoin SV is the blockchain most closely aligned with the original Bitcoin protocol described in Satoshi Nakamoto’s 2008 white paper, offering unbounded scaling and low transaction fees empowered by increasingly large block sizes and a fully-fledged scripting language that enables full smart contract functionality.

The first of the block re-organisation attacks against the BSV blockchain was made on June 24, 2021 by a miner the Bitcoin SV Infrastructure Team believes was impersonating the Zulupool mining pool. After it was discovered that Zulupool was not mining these blocks, the team built tools to detect and counteract against potential block re-organisation attacks.

A block re-organisation attack is an attempt to create an alternate history of transactions by privately mining a long chain of blocks using superior hash power to the honest network before publishing the alternate, longer chain and attempting to switch honest nodes to this longer, fraudulent chain. This chain may be used to include instances of double-spending, which is prohibited by the Bitcoin protocol and can be identified through the deployment of tools that detect these invalid transactions.

Countering the attacks

Following this first wave of attacks and the deployment of tools by the the Bitcoin SV Infrastructure Team, the attacker went dormant for some time before attempting once again to conduct block re-organisation attacks in early August – this time impersonating honest miner TAAL.

‘Preparations put in place after the earlier attacks enabled the Bitcoin SV Infrastructure Team to detect these fraudulent blocks within seconds of their release, and rapidly communicate to well-known and honest miners who chose to reject the fraudulent blocks with their own hash power, eventually overtaking the attacker’s fork and preventing the double spends from happening,’ Shadders says.

He also explains that Bitcoin Association communicated the state of the chain to enable block explorers and listeners to follow the correct, honest chain which all honest miners were working on.

‘During this time, Bitcoin Association published the command that had been used by the honest miners to invalidate the attacker’s previously-hidden blocks containing double spends,’ he says.

‘This was because it was known that it might take some time for the attacker’s chain to be overtaken by honest miners and it gave other (non-miner) operators of the Bitcoin SV node software (such as applications operating as block listeners) the mechanism to follow the chain that the honest majority miners were building upon in anticipation of it become the longest chain.’

The result of this response was that no double-spends were recorded during the second wave of attacks and the attacker had spent an estimated $200,000 in an attempt to commit fraud on the BSV network. Despite the resources they invested in this attempt, they were unsuccessful and BSV continues to operate at its expected efficiency, growing its transaction throughput and mining several record-breaking 1 GB blocks in the past month.

Reconciling defence with the Bitcoin protocol

As Bitcoin SV is based on the original Bitcoin protocol as described in the white paper, it is important that miner actions abide by the rules laid out at the inception of the protocol. Shadders offers a detailed look at which parts of the white paper are applicable to the response from honest miners against the recent attacks.

The key point of Shadders’s explanation of miner actions in defending against these attacks was their adherence to the ‘first-seen rule’ described in the Bitcoin white paper.

‘Miners, charged with the responsibility of enforcing the rules laid out in the Bitcoin protocol, essentially took action to reject invalid transactions, and therefore blocks that contained them, on the basis of the “first seen rule” as defined in the Bitcoin white paper,’ Shadders says.

He goes on to describe the importance of ascribing a current or historical point of view to observers of the blockchain’s status, noting that small discrepancies between points of view are common in the natural case of extended chain tips. Referring to different pieces of the white paper, Shadders demonstrates how this discrepancy between points of view can be reconciled – specifically in the context of a block re-organisation attack.

He explores the definition of fraud, double-spends, honest chains and validity as described in the white paper and he stresses how the necessity to broadcast blocks is a core requirement for honest nodes to meet the following requirement as described in the white paper: ‘The payee needs proof that at the time of each transaction, the majority of nodes agreed it was the first received’.

This recent spate of attacks against the BSV network has demonstrated the difficulty in encoding network rules, as well as the need for human intervention to secure the state of the system in the case that the network rules are compromised.

‘It is not always practical to express a rule algorithmically without opening up potential attack vectors when the algorithm is used maliciously, which is why human judgement and intervention is occasionally required,’ Shadders explains.

‘Bitcoin is not code, it is a system of multiple independent parties enforcing a ruleset and rejecting violations of that ruleset by other parties.’

For a full breakdown of the attacks and the alignment of the network’s response to the Bitcoin white paper, read the original blog post by Steve Shadders.