Vericoin rolls back block chain after attack on Minptal, community outraged by this blatantly centralized action

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On July 13 the cryptocurrency exchange MintPal was hacked, and $2 million of Vericoin was stolen, which is nearly 30% of all the Vericoin in existence. This is one of the biggest cryptocurrency crimes this year, and such a loss could cripple Mintpal, which is the most popular alternative cryptocurrency exchange. Also investors who had their Vericoin on Mintpal  stood to lose all their Vericoin, which would damage the community. The expected price crash from the hacker dumping 30% of all the Vericoin in existence would also cause major damage to everyone invested in Vericoin. As if this wasn’t bad enough already, Vericoin is a proof-of-stake (PoS) cryptocurrency, so having 30% of the total coins means controlling 30% of the network’s hashing power. The hacker could repeatedly attempt to double-spend, and they would succeed after only a few tries on average. If they managed to amass 51% of all the Vericoin in existence they would be able to succeed at double spending 100% of the time. In either case, having a hacker control such a large percentage of Vericoin is dangerous.

Vericoin’s developers responded to this by forking the blockchain, so that all transactions from the moment of the hacking onwards were reversed. This returned all the coins that were stolen , saving Mintpal from insolvency and preventing the possibility of a double spend attack by the hacker. This is controversial however, since it defeats the purpose of a decentralized cryptocurrency. The developers proved that they are in full control of Vericoin, capable of taking anyone’s Vericoin away for any reason. Some worry that rollbacks will become more common and the justifications will get weaker. One’s trust in Vericoin is now only as strong as his/her trust in the developers. This rollback is unlikely to set a precedent for cryptocurrency developers, since there has been strong community backlash after the Vericoin rollback.

At the same time, some see the rollback as an advantage that only cryptocurrency has. Never in history has a robbery been reversed by simply rolling back the ledger of transactions to the time before the robbery. If this was possible for fiat currency robberies and scams could be easily reversed, saving innocent victims millions of dollars. It gives a lot of power to whoever is in charge of the currency however, which can be quite dangerous. Imagine a government that has the ability to reverse money that was sent to your bank, or to reverse payments for services/products that they had already received. Clearly it is important that transactions can’t be reversed by a central authority, which is why the Vericoin rollback has drawn so much controversy.

—Thank you to Kefkius for contribuiting to this article

One thought on “Vericoin rolls back block chain after attack on Minptal, community outraged by this blatantly centralized action”

  1. In this one case, rolling back the ledger was a major blessing. And, if you knew you could always trust that it would NEVER be done, except in extreme cases like this, there would be nothing to worry about. I understand the concern, but I also see the advantage. Kinda between a rock and a hard place on this issue, but my gut feeling is.. they can be trusted.

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