This exploit was first detailed by Blockonomics here.
In a major blow to BTC security, it is revealed that customers using standard off-the-shelf wallets can purchase goods and trivially reverse the transaction upon leaving the store. Worse, the flaws are sensitive to congestion allowing customers to reliably reverse BTC transactions several hours or even days after a purchase in some cases.
In an alarming demonstration, Hayden Otto showed just how easy it is to reliably reverse BTC transactions using unmodified wallets in common use.
Bitcoin Cash - the new Bitcoin
Bitcoin Cash is well positioned to benefit from Bitcoin’s design missteps, as the flaws stem from using the Bitcoin settlement system in a role that really requires an electronic cash system.
In August 2017, Bitcoin Cash split from Bitcoin precisely because the direction of Bitcoin was moving away from its original purpose as electronic cash. Even before the Bitcoin flaws were revealed, Bitcoin Cash was proving popular among merchants wishing to accept a cryptocurrency. In Australia for example, Bitcoin Cash consistently records more sales at physical locations each month than all other cryptocurrencies combined achieve in an entire year.
“Merchants should immediately cease accepting Bitcoin and switch to Bitcoin Cash.” advises Hayden Otto. “Australian merchants are able to field a payment experience built around Bitcoin Cash that is superior to that of even the best fiat systems because Bitcoin Cash was designed precisely for this role,” he added.
The outlook for Bitcoin is also rather bleak as the flaws are virtually impossible to fix. Bitcoin’s flaws are largely a result of merchants applying a settlement system to a role that requires an electronic cash system. The problem is compounded by Bitcoin continuing to trade on the Bitcoin brand despite its change of direction. The situation today is that the Bitcoin whitepaper describes Bitcoin as a peer-to-peer electronic cash system, Bitcoin BTC now implements a settlement system, and Bitcoin Cash is the whitepaper electronic cash system.
“Blockstream/core should have chosen a new name for their project when they changed the vision of Bitcoin. If it’s not an electronic cash system, it shouldn’t be called Bitcoin” says Hayden.
The best solution is to recognise and accept that Bitcoin is now a settlement system, wish it well in that mission, and don’t apply it in a role for which it is not intended.
Bitcoin’s flaws may end up being a good thing for the $200B industry by highlighting Bitcoin’s changes and ultimately forcing markets to confront the reality of its new role. It may also be a good time to adopt a new name for the system and clear an obvious source of confusion at the same time.
Perhaps then, Bitcoin Cash can continue the whitepaper mission to become the first global electronic cash for the world, and rightly receive the recognition it deserves as ‘Bitcoin’ in the proper sense of the word.