The year is 2010. The Bitcoin blockchain has been running for over 1.5 years. The current block subsidy is 50 BTC and the cryptocurrency equivalent is pennies. Just a few months ago, a certain Laszlo Hanyecz sold two pizzas for 10,000 BTC.
If you’ve heard of Bitcoin at all, it’s more as a gimmick from a bunch of nerds who want to create digital money. Satoshi Nakamoto is still active on the Bitcoin Talk forums, so we’re in the really early Bitcoin days.
And yet: the blockchain is running, what is being created is what is to become a global phenomenon years later.
But suddenly dive disturbing news in the Bitcoin Talk forum.
It looks like a block at height 74638 has exploited a bug in the network. It uses arithmetic overflow to get a negative […] produce transaction.
“lfm” on 08/15/2010 in the Bitcoin Talk forum
For those who don’t speak programming language: someone has exploited a bug in the blockchain to manipulate transactions.
As a result, the hacker was able to spend 184 billion Bitcoin. But actually there should only be about 4 million BTC at this point in time. How could that happen?
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A serious flaw in the Bitcoin system
An anonymous hacker managed to crack the source code of the cryptocurrency. He broke into block 74,638 and twice sent over 92 billion bitcoin to two different addresses.
It had produced an arithmetic overflow. In short: the result of the output of the transaction has broken the limit of the upper number range. The hacker had discovered a programming error in the verification process and exploited it. Actually, this transaction should have been discovered within the proof-of-work procedure.
This is how the error was corrected
The developer community reacted quickly. After 1.5 hours someone had discovered the error. The first patch was available after just four hours. The community around Satoshi Nakamoto, Hal Finney, Gavin Andresen and Co. then carried out a soft fork. In doing so, they went back in the transaction history of the blockchain until they were in time before the exploit. After that, they kind of restarted the blockchain – albeit with the bug fixed.
In retrospect, it can be seen as positive that the error appeared and was fixed so early in Bitcoin’s history. If such an exploit were to occur today, it would most likely throw the crypto market into chaos. A short-term inflow of 184 billion Bitcoin could massively damage confidence in the cryptocurrency.
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