Our thoughts on Trust - Binance Hack

Binance, one of the world’s leading cryptocurrency exchange was reported to have 7,000 Bitcoin stolen from their system. The news has intrigued the community and has led up to a lot of discussion and debate, especially after the CZ’s comment of potentially rolling back the transaction on the Bitcoin Network to prevent further loss on his live video, however ends the video by concluding the importance of remaining Bitcoin ledger as the most immutable ledger on the planet.

According to the Binance officials, the theft impacted about 2% of Binance’s total bitcoin holdings and will cover the lost via their SAFU funds.

Can Binance really roll back?

Yes, given the technical and funding resources that Binance has. Though rolling back the trasaction on Bitcoin’s Blockchain would be a violation of its immutability property, thus affecting the credibility of the chain and its consistency. For Binance, it was a matter of claiming back the 41 Million USD worth of Bitcoin or swallowing lost and maintain the philosophy and credibility of Bitcoin.

Fortunately Binance chose the later, as Binance is not just the exchange, but the creator and maintainer of Binance Chain, by rolling back the transaction, not only that it’s bad for its original brand but would raise concern for Binance Chain as well.

Who should you trust?

The real question behind this incident is when people are trading through exchanges, who do they really trust? Blockchain or the exchange? Do the users place their faith in Binance because of Blockchain or because of Binance itself? We believe that with the way Binance has handled this issue, users will have more trust in Binance, because when it comes to services, we as humans are used to having someone to be held accountable, and accountable Binance is in this situation.

We think we as the users of Blockchain and believers of Blockchain should realise that Blockchain can’t solve trust issues in human society, though it may carry technical properties such as immutability that can help promote trust, however as Blockchain can’t identify the truthfulness of the content uploaded on chain, hence at the end of the day it is what we do with the tool that counts.