"but the attacker was able to reverse transactions since they had majority control of the network."
I thought these crypto currencies didn't allow for reversing a transaction? Or is this "reversing" such as just deposit and then withdraw?
When you first connect to the Bitcoin network, how do you find out what the true blockchain is? You connect to other nodes and ask them. They may tell you anything. However, it's easy to verify whether a blockchain given in a response is valid. That is, it's easy to tell if a given blockchain is following all of the rules.
But what if you receive a few valid blockchains that are different from one another? Which one is the true blockchain for the world?
You simply choose the longest blockchain that you hear about.
Why the longest? It's the one that has had the most computing power focused on it. Anyone can compute a very small, self-serving, malicious blockchain of a few blocks. But to compute the longest blockchain in the world requires vast computing resources. The longest blockchain is supposed to be uncontrollable by any single party or network of colluders because it is supposed to be too hard to acquire the majority of the computing resources in the world.
Unfortunately, it looks like someone did just this and controlled >51% of all computing resources in the world dedicated to Bitcoin Gold. If you have enough resources, you can generate the longest blockchain in the world, add a self-serving transaction, get some goods or service in return, then recompute a new longest chain in the world where that transaction is no longer there. Everyone by default accepts the longest blockchain because it's supposed to be the most safe, but they are wrong.
I'm not well versed in the block chain tech but it is surprising that there is an inherent big ass monopoly type manipulation you can run ... inherent to the system.
That seems very much not what Bitcoin would "intend" and yet there it is, very available.
They send the money from their address to the exchange, the exchange credits that money.
Then they release their chain (that they have been building privately). This chain is taken as the consensus and accepted.
Why? Because it is the longest chain.
Why? Because it has had more than 50% of hashpower behind it, allowing it to add blocks faster than the current network.
Now the trick here is that because a single entity controls this new chain, they can just not include the transaction which happened between them and the exchange. So it a sense, it never happened. Yet, the exchange credited the account -- Thus the exchange account now has currency, and the original account has currency as well.
The purpose of mining is to solve a puzzle. In Bitcoin one solution is expected every 10 min on average. This can then be used store transactions on the blockchain in one block. To add to that block you need to solve a new puzzle and so on.
You can reverse transactions if you recalculate the puzzle solutions. This can take time but if you have more mining power than the rest of the network you can win this race. This is called a 51% attack.
So for example you deposit to an exchange and wait for that to confirm, in maybe 6 blocks. Meanwhile you create 7 blocks in secret yourself where you did not send to the exchange and release them to the world. The blockchain works by always considering the longest chain as the correct one, therefore overwriting or reversing the old transactions.