The Day Bitcoin Was Hacked [Freeman’s Perspective]

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This is a investment news/thought email I get once in a while and this was at the top. Just sharing. Source.

The Day Bitcoin Was Hacked

In the ninth year of Satoshi, at 9:30am UTC on a cold February morning, Bitcoin was hacked.

The hacker (or hackers) found a way to take advantage of a command in Satoshi’s original code. Then, using some very impressive number-crunching power, they played man-in-the-middle and intercepted transactions as they approached the big Bitcoin miners.

But this required more than impressive number crunching – it required world-class intelligence, as well as access to dozens of major routers. This, however, didn’t become clear for a few hours. During that time, tens of thousands of bitcoins were stolen.

Whoever hacked Bitcoin had access to secret backdoors in the big commercial routers – backdoors that weren’t supposed to exist. A few ex-employees of the big router company had once tried to speak out on this subject, but they had been quickly silenced. (This wasn’t known till later either.)

By the time dawn broke in New York, bitcoiners in Japan, Korea, and all across Europe were in a panic. A couple of dozen key Americans were being roused as well. The old cypherpunk channels were busy for the first time in many years.

A hasty meeting was called in the oldest darknet chat room, and a moratorium was called on all Bitcoin mining (transaction processing), beginning immediately. Only two significant miners refused to acknowledge the move, but they were just being asses on principle. In any event, they joined the moratorium half an hour later. No transactions would be recognized.

Bitcoin had stopped.

It took just over an hour for the big financial sites to figure out what was happening, followed by a roar of victory that crossed continents. Central banks, Wall Streeters, and gold bugs joined together, rejoicing that their joint enemy… the curse that they all wanted to bury… the upstart that had thrown confusion into their lives… was dead. Many of them literally jumped, screamed, danced, and stomped their feet.

Comment boards erupted with glee. “Butt coin is dead!” “Buh-bye TwitCoin losers!” and much worse were posted, over and over and over.

Several thousand neophyte bitcoiners panicked and tried to dump every coin they could on the exchanges, but the exchanges closed as well. The result of this was that the price for Bitcoin, was, for all practical purposes, zero.

At this, the enemies of Bitcoin let out an even bigger cheer than before. Their world view had been restored. Whereas they had been looking like fools – repetitively pronouncing Bitcoin dead as it inexplicably refused to die – it was now the bitcoiners who were the fools. The haters spewed a river of venom, with vigor and with glee.

A couple of dozen cryptocurrency scam artists emptied their bank accounts during that day, cleared out of their apartments, and headed to unknown addresses. They knew an opportunity when they saw one. And so they took advantage of the confusion, getting away before anyone could call the law down on them.

But it wasn’t just the scammers; at least as many Zuckerberg wannabes started looking for new ways to get amorally rich as quickly as possible.

The old chat room, however, remained choked with traffic. Literally dozens of Bitcoin developers, enemy miners, and altcoin developers had been sharing their findings. New information was deposited in the main chat room, while an old cryptographer summarized it all in a second room (where solutions were being discussed) and cross-posted conclusions between the two. In a third room the best programmers divided the code between themselves and hunkered down to find the vulnerability.

It took them all four hours.

An hour after that, a patch was being tested.

Three hours and four versions of the patch later, all agreed that it was ready.

At midnight in London (0:00 UTC), every major Bitcoin miner turned back on , and by agreement (an agreement they all kept), they restarted from block number 684273, which was the last complete block before the hack.

Bitcoin – to the shock and horror of the crypto-hate community – was back. In the end, only a handful of people lost money (mostly by providing products during the hack), and only one of those businesses failed. Bitcoin’s price (as measured in dollars, etc.) lagged for a few days and then returned to its previous trajectory.

Many of the altcoins remained shut for a day or two more, simply because they had less skilled manpower to throw at the problem. But soon enough they came back too, with the exceptions of the scammers who had run away and the get-rich-quickers who had wandered away.

The haters went right back to hating.

submitted by /u/gonzobon
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247 Bitcoin

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