Monday, December 5, 2022

Litecoin $1 Million Bounty Invites Hackers to Test SegWit Security

Litecoin $1 Million Bounty Invites Hackers to Test SegWit Security

Someone is challenging the notion that tokens on a SegWit-based network are easier to steal. To prove the point, the anonymous party put $1 million USD worth of Litecoin in an address and challenged talented hackers to steal it.

Also read: LTC Now Has SegWit. What Next for Bitcoin?

Litecoin activated segregated witness (SegWit) transactions on its network on 10th May, having reached a mining support threshold two weeks earlier. In doing so, it became the largest market cap cryptocurrency to enable the feature.

Proponents and opponents of SegWit for Bitcoin are now watching Litecoin closely. SegWit also allows other level-two features for Bitcoin including off-chain lightning network transactions.

Litecoin’s first lightning network transaction took place just two days after SegWit activated, on 12th May. 1 LTC is currently worth around $30, up from just $4 at the start of April. Some are attributing this value surge to LTC’s technological boldness.

What Point is the Litecoin Millionaire Trying to Prove?

The LTC million dollar bounty is sitting in this address. Whoever put it there announced the challenge on Reddit using a throwaway account. They said:

“A lot of people have been saying that segwit is unsafe because segwit coins are ‘anyone-can-spend’ and can be stolen. So lets put this to the test. I put up $1MM of LTC into a segwit address. You can see it’s a segwit address because I sent and spent 1 LTC first to reveal the redeemscript. Let’s see if segwit really is ‘anyone-can-spend’ or not. Good luck.”

SegWit-for-Bitcoin supporter and BitPremier founder Alan Silbert quickly tweeted out the challenge.

Litecoin inventor Charlie Lee also responded, adding a subtle dig at the Bitcoin Unlimited development team.

Bitcoin Unlimited favors a flexible block size scaling solution, and many of its supporters see SegWit as a stop-gap measure only.

At press time, the identity of the owner of the $1 million in LTC remains unknown. However the field of players holding that much litecoin and with a point to prove about SegWit is narrow.

What Does ‘Anyone Can Spend’ Mean?

The $1 million challenge stems from an accusation that “anyone can spend” coins on a SegWit-based network.

What does this mean? Well for starters, SegWit works by taking the signatures associated with a transaction (or “witness” data) and counting it separately to the transaction data itself. A transaction block typically consists of sender and receiver data, plus the witness.

segwit separation Under segregated witness, the signature/witness data counts for only one-quarter of its current size — effectively increasing the number of transactions in a block while maintaining a 1MB limit. SegWit is implemented by miners via a “soft fork” which means previous versions of the software can still participate on the network.

The issue is that older nodes may see SegWit-based transactions as “anyone can spend” due to the separated signature data. Some say this makes coins easier to steal. Others say it’s impossible.

The best way to prove the point is to put coins is with a test like the $1 million LTC bounty.

As some more conspiracy-minded redditors pointed out, a SegWit opponent could also put the coins in an address and then “steal” them himself, “proving” SegWit is untrustworthy.

[Update 14 May  20:20EST 2017] Charlie Lee, responding to this article, later tweeted that it is actually impossible for this to happen:

Do you think anyone can steal the coins? What’s your opinion on SegWit? Let us know.

Images via Pixabay

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