What a Bitcoin 'Reorg' Is and What Binance Has to Do With It

What started with a single tweet quickly turned into an escalating debate Wednesday when the CEO of one of the world's largest cryptocurrency exchanges appeared to entertain the idea of encouraging revisions to the bitcoin blockchain.

Following Wednesday's revelation that crypto exchange Binance was robbed of 7,000 BTC, a proposal was floated to conduct a transaction "Reorg" on the bitcoin blockchain, sparking a fiery debate and community uproar.

As the tweet caught attention, the conversation quickly boiled over given the topic of discussion - there have been very few changes to the bitcoin blockchain's transaction history in its 10 years of operation, as doing so has been reserved for dire emergencies in which there may be critical consensus failures.

"The losses are still at a minimum [7,250] BTC," wrote developer Jimmy Song about rough costs for Binance to sufficiently incentivize miners to rewrite part of the transaction history of the bitcoin network.

"1. We may damage credibility of BTC. 2. We may cause a split in both the bitcoin network and community3. The hackers did demonstrate certain weak points in our design and user confusion that was not obvious before. 4. While it was a very expensive lesson for us, it is nevertheless a lesson," listed Zhou on Twitter.

Zhou's reasoning highlighted a key concern many have voiced in the past when it comes to blockchain immutability not just on bitcoin but all proof-of-work blockchains.

In Binance's particular case, prominent members of the bitcoin community point out that bitcoin being the world's largest blockchain is a particularly unique case with a reputation to uphold.

"Talk of forking or reorganizing the blockchain is close to heresy," tweeted billionaire bitcoin investor Michael Novogratz.

It would also be unfair according to Adam Back - CEO of bitcoin development startup Blockstream - given that the latest Binance hack is nowhere near as severe as previous hacks suffered on the bitcoin blockchain.

"A Bitcoin reorg is just not happening, and I doubt any Bitcoin industry, miners nor developers considered it either. Recall 2014 $473mil, 2016 bitfinex hack $72mil, 2019 binance $40mil etc. #NotHappening," tweeted Back.