The blockchain is a distributed database of records of all transactions or digital event that have been executed and shared among participating …
In a decentralized manner, blockchain technology guarantees the safety and reliability of data distribution. Similarly, it is a way to record information in a manner that makes changing, hacking, or cheating impossible.
Although blockchain technology has limitless potential, it could be flawless. It is regularly hit by various obstacles, such as hard forks. To be clear, a fork is a radical change made to a blockchain network’s protocol that leads to its block splitting.
Forks can occur for various reasons, but they can adversely impact the network’s security and make it more susceptible to malicious attacks. Chain reorganization (aka chain reorganization) is one method of mitigating this impact. This article aims to explain what chain reorganization is in the blockchain sector, how it works, and what role it plays across different blockchain networks. Firstly, let’s look at the basic concept behind chain reorganization.
Understanding Chain Reorganization
Understanding chain reorganization requires a basic understanding of blockchain technology. A node operator network is one of these fundamental concepts – a network of specialists responsible for securing data distribution over a blockchain.
In addition, distributed ledgers or blockchains are stored by nodes equally responsible for ensuring their accuracy. To effectively authenticate transactions made on a blockchain network, nodes must maintain their own copies of the blockchain.
A blockchain node is a network stakeholder whose hardware device (e.g., validating/mining hardware) keeps track of a distributed ledger and acts as a communication hub. Blockchain nodes are tasked with confirming the legality of every subsequent batch of network transactions, known as blocks. Numerous parties are involved in a network of nodes. Each node in the network is assigned a unique identification number to make distinguishing them from one another easier. Nodes validate blockchain transactions by generating new blocks, which act as data storage units throughout the network. It may seem simple initially, but validating nodes are often overwhelmed with bulk orders. They must group transactions rather than confirm them individually.
Due to multiple nodes (validators in this case) competing for the same task, especially on blockchain networks with Proof of Work consensus algorithms, multiple blocks (usually two) may be generated at the same time, resulting in forks – various blocks with a similar or almost identical transaction history.
At this point, a chain reorganization occurs, where the confirmed blocks are propagated across the network to ensure they are valid. The replica blocks are eliminated or rearranged, so all transactions within them are marked invalid, resulting in a chain reorganization. What is the technical mechanism behind chain reorganization?
How/When Does Chain Reorganization Take Place?
A chain reorg typically occurs when two nodes mine a new block independently simultaneously, typically due to network congestion or targeted attacks. There is no problem with that here, however. When the duplicate blocks are generated, each miner must decide which block came first and should therefore be kept in the chain.
If this is the case, the most extended chain rule (LCR) might be applied, implying that the longer the chain, the more effort it takes to build it.
Could you please explain what this means? You are welcome to ask. Blockchains require significant processing power to add new blocks. Therefore, each block consumes energy to reach its destination. In general, longer chains will be preferred over shorter chains due to their higher energy requirements. Essentially, a node’s previous longest chain is deactivated in favor of its new longest chain. A block would be removed from the blockchain to allow for more blocks to be added to the blockchain.
Suppose the miners fail to resolve the conflict. In that case, another resolution might be to let the node that adds the subsequent block decide. To put it another way, the node adding the next block must select which chain to add.
It is assumed that these methods will only lead to a resolution. There is also the option of a reorganization attack, in which nodes receive blocks from a new chain while continuing to operate on the old chain. As a result, the chain would be split into two, resulting in a duplicated version.
Advantages of Chain Reorg
Blockchains can benefit from chain reorganization in several ways, such as:
- Maintaining a unified ledger on each node would only be possible by reorganizing the chain.
- All nodes must run on the same copy of the ledger to minimize the possibility of errors.
- You can easily reorganize your chain with the chain reorganization process.
Drawbacks of Chain Reorg in Blockchain Technology
Additionally, chain reorganizations can lead to higher node costs, transaction delays, poorer user experiences, uncertainty, and vulnerability to attacks. Here’s a breakdown of each:
- Increased Node Fees
It is common for reorganizations to result in the growth of nodes in a blockchain over time. Moving to a new fork requires substantial memory and disk space, thereby increasing costs.
2. 51% Attacks
If illicit actors control 51% or more nodes in a network, a 51% attack has occurred. Hackers can launch a “double-spend attack” by outstating miners that have not “reorged,” thereby spending cryptocurrency and reversing pending transactions.
In some cases, malicious miners or groups of miners control new blocks so that minority nodes cannot participate in its development. Through this method, exploiters can take control of most of the blockchain’s mining power, forcing the rest of the network to accept their branch as authentic. Before the “fork” has been completed, any transactions executed will be undone.
3. Transaction Delays
Reorgs also increase the possibility of delayed transactions. As exchanges rely heavily on timely transactions and the ability to process deposits, this can lead to serious issues since it affects their liquidity.
What happens to Reorg After the Merge?
It ‘The Merge,’ Ethereum’s latest upgrade, unifies PoW and PoS infrastructures, completing the transition from PoW to PoS. Due to the chain reorganization, many have been curious about the network’s next steps since the legacy infrastructure is likely to be heavily impacted by the change in the operational model.
Over time, the challenges faced by reorgs will only increase. A new fork rule, dubbed ‘Gasper,’ will be introduced with the Ethereum Beacon Chain implementing the Proof of Stake consensus mechanism.
The new rule, Gasper, further introduces what is described as “attester votes” and “attesterations” that make attacking the Ethereum blockchain difficult.
Ethereum’s official website says that attestation is a new voting method requiring validators to approve a specific validator’s view of the chain, especially when it comes to the most recently justified block of the current epoch.
By giving more weight to blocks, the Gasper fork choice rule makes them more tamper-resistant and less vulnerable.
The attesters are the first step in taking control of the validation process. A single-block reorg would be more difficult if hundreds of thousands of attesters compete for a select few controlling validators.
Why You Should Care
Mining two blocks simultaneously usually result in chain reorganization. In general, chain reorganizations do not cover a set number of blocks; depending on the specific situation, they can span several blocks.
A crucial aspect of blockchain technology is its technical methodology. While blockchain operations can have some drawbacks, they cannot yet replace the complex process since it often ensures a smooth blockchain operation.