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Comment by DennisP | Hacker News Reader

> partially voided, with the reversal being worth slightly more than $70 million due to Bitcoin volatility. This didn’t happen an hour later; it happened in 2022. How?

> The answer is nowhere in the Bitcoin whitepaper or any codebase. A full recounting of it is outside the scope of this anecdote, but it rhymes with “If you and the United States federal government disagree whether a transaction is final, you are wrong.”

Following the link in that quote, that didn't happen because Bitcoin wasn't final after all, just because the government "disagreed." It happened because the government found the criminals' private keys, and made a new transaction.

Back to the first article, it continues with this:

> That is true for notorious Bitcoin thefts, but also true for wire transfers

I'm wondering how it is then that theft by wire fraud is a serious problem these days.

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Agreed, the Bitcoin transaction(s) which stole and moved the funds out of the exchange did have finality. The entire premise of crypto is that whoever knows the private key controls the account... So this is essentially a seizure of an account. The seizure of funds has nothing to do with finality and everything to do with laziness, complacency and neglect.

If the hacker had hidden their private keys in a secret location (or just memorized them), they could almost certainly have gotten away with it. The hackers were extremely neglectful. It's a testament to Bitcoin's security that it took so many years to be caught given this level of carelessness and the massive amount of money involved.

Some people in the Bitcoin community think the news is fake and intended to harm Bitcoin's reputation... We don't know what really happened behind the scenes. It's hard to believe that people can be so careless.

I don't see why it would harm Bitcoin's reputation. It's always been clear that you have to be careful with your keys, and extraordinarily careful if you want to protect them from the government.

> I'm wondering how it is then that theft by wire fraud is a serious problem these days.

The article touches briefly on that. Some wire transfers can be reversed. It becomes more difficult when money starts moving around jurisdictions, but at least it's possible. Essentially no crypto transactions can be reversed.

> Essentially no crypto transactions can be reversed.

Bitcoin transactions are hard to reverse (not strictly impossible, as shown by the recent example, and a few others of the same vein, but it requires to arrest the key owner and seize the key, which is obviously kind of hard) but practically all other cryptocurrencies are centralized enough to allow for transaction reversal (The ethereum hard fork after the DAO hack is the practical example of this). And I'm not even talking about weak chains for which an attacker can even reverse transaction against everybody else's will[1]…

[1]: https://www.coindesk.com/markets/2020/08/29/ethereum-classic...

I'll bite.

> centralized enough to allow for transaction reversal

You can argue that the developers held outsized influence over the consensus mechanism early in Ethereum's lifecycle. You can also debate their recommendation & push to hard fork to a new ledger that undid the hack. But to argue that it is anywhere close to 'centralized' today is disingenuous at best.

It should be impossible for any one agent to change the record, but it is the nature of blockchains that consensus holds as "accepted fact". In the event a blockchain is ever relied upon for anything of social importance, the ability for consensus mechanisms to fork away from "systemic ruin" is a desirable trait.

I'm one of the few that argue the DAO Hack was a proof of concept for an ultimately 'required' capability for any critically important blockchain systems.

> But to argue that it is anywhere close to 'centralized' today is disingenuous at best.

Ethereum devs have absolute power on ethereum. Things like EIP 1559, or Ethereum 2 illustrate this point really clearly: miners have zero power, neither do full nodes.

No matter what the algorithms (which can be patched anytime anyways) say, power is a social thing and in the case of Ethereum, the devs have literally complete power over it.

The storage is decentralized, the computation is decentralized, but power clearly isn't (and with PoS, it will become more centralized even on an algorithm point of view).

EIP 1559 was immensely popular among everyone in the community besides miners. The same is true of proof-of-stake.

With “the community” being the name for a bunch of online forums whose admins are… Ethereum devs. How surprising…

The foundational decentralization feature of a cryptocurrency is the fact that the blockchain is edited by a distributed network of competing people: yes I'm talking about the miners. If the miners have no power in your system, then their is no practical decentralization because mining is the only thing actually decentralized in a blockchain!

I’m not arguing that both systems (PoW and PoS) don’t have their issues with some measure of aggregated power, but it’s just a false narrative to say that staking and mining aren’t equally decentralized.

The migration to PoS isn’t some rug-pull on miners, they’ve known about it for years. If there was legitimate protest, they’d refuse to adopt new versions that incorporated the ETH kill switch. The reason they haven’t? They have no skin in the game - most are mercenaries for hire, operating through centralized pools, cashing out whatever they mine.

PoS is a superior system - more flexibility for decentralized participation (only benefit to pooling is convenience), and dramatically better for the environment at scale. Everyone who holds the asset (I.e. the people who should have the most say in platform operations) have invested in PoS, and want it. It’s widely supported.

Unwillingness to accept anything other than “bitcoin is the way” is just baseless faith in modern garb.

> Unwillingness to accept anything other than “bitcoin is the way” is just baseless faith in modern garb.

I've never said “bitcoin is the way”. Let me be clear, bitcoin is a giant CO2-emmiting turd invented by a libertarian who wanted to bring the gold standard back.

But, if you're doing PoS you're not in a permissionless blockchain anymore (since you need to buy staking power), that's it.

(And, BTW, if you don't need the sybil-resistance that permissionlessness implies, then you are in the realm of traditional distributed systems and using a blockchain is just path dependency at this point …)

You need to buy mining equipment too. To get the best returns on Bitcoin, you need the connections and scale to buy the latest ASIC hardware from the few manufacturers that make it.

Just because bitcoin is bad doesn't mean Ethereum isn't too.

You said: "if you're doing PoS you're not in a permissionless blockchain anymore (since you need to buy staking power)."

So my point was that having to buy stake doesn't make Ethereum's proof-of-stake any more permissioned than proof-of-work, where you have to buy mining equipment.

The forums do not ban people like r/bitcoin does. In fact, plenty of ETH-hating Bitcoiners show up on r/ethereum, and even get a few upvotes.

For the DAO fork at least there was controversy. There was a little bit of controversy on 1559, but it was mostly from miners or people who had clear misunderstandings about how it worked. It ended up improving the user experience and, according to Coinbase, saving users a little money. Proof of stake has no noticeable pushback except in the mining subreddits, and has been part of the plan since 2014. If it had no support then the beacon chain wouldn't have 9 million ETH deposited.

For the DAO fork, people made the same claim, that the visible community actually misrepresented people's real feelings. But in the end, both sides got a chain of their own, and oddly enough, the side that had appeared more popular before the fork ended up having vastly more market value.

If this is the case, how was North Korea able to wire fraud $81 million USD from the Bank of Bangladesh [1] ?

Why was this wire transaction not reversed? Apparently, they were about to get away with $1 billion USD but the hacker entered the global SWIFT code incorrectly by 1 character and so it was caught.

The fact that North Korea made off with $81 million USD, however, is rather unsettling, and even more so the fact that this was not reversed / caught.

[1] https://www.bbc.com/news/stories-57520169

They recovered $18m of that by grabbing one of the accounts it got sent to in the Philippines, so it was actually partially reversed.

They did of course not wire the money directly to North Korea. It was a multi-step process of money laundering, involving currency exchanges, cash and casinos, in several jurisdictions.

Every authority along the way must be on board with the reversal. When the chain is broken, as when cash is laundered at a casino, somebody will be left holding the bag. You can't reverse the cash back out of thin air.

Had all the money been found still sitting pretty in an account, I assume things would have eventually been all settled.

What do you mean by "theft by wire fraud"? As far as I understand, "wire fraud" has almost nothing to do with wire transfers.

I mean by sending someone fraudulent wire instructions. It's been a problem in real estate transactions, mainly with consumers receiving instructions by email. Also, businesses have been hit in social engineering attacks that end up with instructions to send a wire.

These situations can be reversed if discovered fast enough, but after a few hours the funds are moved internationally and you're very unlikely to get your money back.

It depends on how well the fraud is executed, how long time has been passed since the fraud happened and also on the amounts and people/organisations involved.

Technically kalzumeus might be right, however practically it almost always makes sense to think that wire transfer is final, and treat it that way. If a con man tricks you into wiring funds to a wrong address, it is quite likely gone. However with credit card payments you can be more relaxed, and so on.

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