Updated on March 17, 2023 11:58 AM
A blockchain reorganization is a chain split in which nodes get blocks from the new chain while the old chain remains active.
Chain Reorganization is the process of swapping blocks from the previous longest chain for the new longest chain blocks. This can happen due to various reasons, such as a network attack, software bug, or a fork in the blockchain.
Chain reorganization can have significant implications for the security and stability of a blockchain network, as it can result in double-spending and other types of fraudulent activities. In this article, we will explore the concept of chain reorganization, its potential causes and effects, and strategies to prevent and mitigate its impact on the blockchain network.
You must be familiar with the fundamentals of blockchain technology in order to understand chain reorganization. This involves looking into the many parts that make up the blockchain. We must also know that not every blockchain is the same.
When your node receives new blocks that are part of a new longest chain, the chain undergoes reorganization (also known as "reorg"). In favor of the blocks that create the new longest chain, your node will deactivate the blocks in its previous longest chain.
Due to the fact that the accepted version of the blockchain will always be the one with the longest chain of blocks, this approach enables different nodes on the network to concur on the same version of the blockchain.
A great example would be a Mechanical Pencil. We all used Mechanical pencils in our childhood. When one of the blocks was overused or it gets old, we just removes it to add a new incoming graphite cartridge while we put the used cartridge on the tail of the pencil. That’s exactly what a Chain Reorganisation does.
When nodes in a blockchain network disagree on which blocks to add to the blockchain, the process of chain reorganisation begins. This can happen when many nodes identify valid blocks at the same time, and different regions of the network see different blocks first. When this occurs, some nodes may begin adding blocks to a different chain, resulting in a blockchain fork.
The deployment of the Proposer Boost fork decision resulted in a seven-block rearrangement on the Ethereum Beacon chain. As a result, some validators became out of sync after a client upgrade elevated specific clients, while others did not. As a result, validators were perplexed about which block should be processed first.
Reorganization occurred as a result of upgraded clients submitting the next block before the rest of the validators, producing confusion among validators about who should submit the first block. At block 3,887,074, speedier nodes were around 12 seconds ahead of validators who had not updated their clients, resulting in a non-trivial segmentation of updated versus obsolete client software.
Nodes continue to add blocks to their chain in a blockchain reorganization scenario, leaving the shorter chain when the next block is created. This method might be perplexing for validators and may lead to a security issue known as chain organization. To avoid this risk, all nodes must be kept up-to-date and in sync with the most recent blockchain protocol and software.
Most commonly, a Blockchain reorganization happens after two blocks have been mined simultaneously.
Some nodes will receive the first block first and some nodes will receive the second block first depending on how quickly blocks propagate over the network. The question of which of these blocks is genuine "first" and therefore should be at the top of the blockchain will therefore be disputed.
Source: Learn me a Bitcoin
It can be resolved instantly when the next block is mined. The following block that is mined will add to one of these blocks, producing a new longest chain. When nodes acquire this most recent block, they will each undertake a chain reorganization in order to adopt the new longest chain that it produces. Wherever the next mined block goes, it will confirm the presence of the ‘First’ block.
As a result of chain reorganizations, each node can independently agree on the same version of the blockchain as everyone else.
When a reorg occurs, state updates may incur memory and disc costs due to the need to move to the new fork. As a result of the possibility of reorgs, users may have to wait longer before they can reliably treat a transaction involving them as confirmed. As a result, businesses such as exchanges may have to wait longer before collecting a deposit.
The probability of DeFi transactions failing owing to human mistake increases with chain restructuring, resulting in lower-than-expected trading returns. Reorganization also makes 51% attacks more vulnerable, which means attackers no longer have to defeat all honest miners; instead, they must overcome the fraction of honest miners who haven't been reorged. If rearrangement occurs regularly, the attacker's job becomes considerably easier.
Let’s get back to the Mechanical pencil example. What will happen to the nib cartridge which is already used? It will be replaced by the new cartridge and the used one will go back to the tail to maintain the length of the pencil but if one tries to write with that graphite cartridge he/she won’t be able to do so because the nib has been used already. That is exactly what happens to the deactivated block.
When nodes choose a block, the other side is discarded. So, what happens to the blocks containing transactions on the opposite side of the chain? Because only transactions on the longest chain are included in the valid blockchain history, the remaining block(s) are deactivated. These are referred to as "orphan blocks."
Source: Learn me a Bitcoin
What happens to the transactions in orphan blocks is the next question. Transactions within orphan blocks are no longer part of the blockchain's transaction history after a chain reorganization. As a result, they must be reassigned to new blocks.
However, there are no certainties. Because the transaction isn't in the active chain, it's as if it never existed. As a result, if a user attempts to transfer crypto within an orphan block, the nodes will reject the transaction. This is due to the fact that the user is attempting to spend an asset that does not exist on the valid chain.
Chain reorganizations are an entirely typical element of the operation of a Bitcoin node. Adopting the longest known chain allows nodes throughout a network to agree on the same blockchain, and chain reorganizations are just one component of this process.
Transactions within blocks that are deactivated due to chain reorganization become invalid, although they are recycled into the memory pool for the chance to be mined into a block on the new longest chain.
A chain reorganisation may consist of any number of blocks. If your node receives a new chain of blocks that is longer than your current active chain, it will perform a chain reorganisation to adopt the new chain, regardless of its length.
Chain reorganization is a process that occurs when nodes in a blockchain network disagree on which blocks to add to the blockchain. This situation can arise when multiple nodes find valid blocks simultaneously, and different parts of the network see different blocks first. When this happens, some nodes may start adding blocks to a different chain, leading to a fork in the blockchain.
Chain reorganization occurs when some nodes in a blockchain network add blocks to a different chain than the rest of the network. This can happen when multiple nodes find valid blocks simultaneously and different parts of the network see different blocks first. It can also happen if some nodes are faster than others in adding blocks to the chain, leading to confusion among nodes about which block should be added first.
Chain reorganization can have a significant impact on a blockchain network. It can cause a fork in the blockchain, leading to two or more different chains. This can result in a loss of consensus, which is the backbone of any blockchain network. Additionally, chain reorganization can expose the network to security risks, such as double-spending attacks.
Chain reorganization can be prevented by keeping all nodes in a blockchain network updated and in sync with the latest blockchain protocol and software. It is also essential to have a robust consensus mechanism that ensures all nodes agree on which blocks should be added to the blockchain. Additionally, it is crucial to have a system in place for quickly resolving any forks that may occur.
Chain reorganization can be reversed, but it is a complex and time-consuming process. It requires nodes in the blockchain network to agree on which chain is the correct one and to discard any blocks that were added to the incorrect chain. This process can be difficult if there are significant differences between the two chains or if there is a lack of consensus among nodes.