According to reports from the Coinbase team on May 15th, the team detected a structural depth 2 chain re-organization which took place within the Bitcoin Cash Blockchain. This particular re-organization specifically targetted Bitcoin Cash funds which were sent to a specific Segwit Bitcoin address.
While these funds were previously unspendable by the community, were since made available through recent update by the core developers behind BCH. So what was it that caused this? According to the Coinbase team, this was made possible due to an internal, hash-based power struggle between two miners on the blockchain.
So, What Allowed This to Happen?
To give some context to how this was made possible, Bitcoin Cash and its network instigates two yearly hard forks in order to implement scheduled upgrades to the underlying protocol. The most recent one of these took place on May 15th, at 12pm GMT, with the update being introduced in two stages:
- Enabling of Schorr Signatures – This refers to a cryptographic solution for digital signatures.
- Enable Segwit Recovery – This is one of the critical elements, as this upgrade would allow for previously unspendable assets sent to a BTC address to become spendable again, in some cases.
The Event – Hour to Hour
Between the times of 5:20 to 9:05am (PST), there was a vulnerability discovered within the main implementation of Bitcoin Cash – Bitcoin ABC. This was then exploited in order to created ’empty’ blocks within the network, resulting in the BCH network being backlogged by large numbers of hollow transactions.
From there, a vast range of thousands of transactions, with approximately 29 of them, according to the team, being double spends within BCH.