What's "Bookkeeping"?... A Q&A on the "Bithumb Bitcoin" Incident
Q. Bithumb holds approximately 42,800 Bitcoins, so how were 620,000 issued?
This is due to the so-called "bookkeeping" method, commonly used across centralized virtual asset exchanges (CEXs) and the financial sector.
For example, bank deposits are processed not by physically transferring cash, but by changing the balance recorded in the bank's computerized ledger. After the close of business, the balance on the ledger is compared to the actual balance held.
Therefore, the 620,000 Bitcoins issued by Bithumb were coins that were first reflected in Bithumb's internal database and were not actually issued on the blockchain.
Q. So, are bookkeeping transactions the problem?
Bookkeeping transactions themselves aren't the problem. As mentioned earlier, banks and securities firms also use bookkeeping transactions. Instead, the key to bookkeeping transactions is the constant comparison of actual holdings with the amount on the ledger.
Upbit, a rival exchange, has a dedicated team that compares and verifies the quantity every five minutes. However, Bithumb wasn't aware of the incident for 20 minutes after it occurred. This means that 620,000 "non-existent coins" were recorded, but no quantity comparison was conducted for 20 minutes.
Q. If ledger transactions aren't the problem, what's the real issue?
The real problem lies in Bithumb's internal control system. First, the very structure that allowed event rewards to be paid out was problematic.
Upbit and Korbit have separate "event rewards-only accounts." These accounts are literally dedicated to event rewards, and the amount of rewards required for payment is secured in advance.
The lack of a clearing process was also a problem. Bithumb only issued event rewards through a single-step process, meaning a single approval.
Q. How were non-existent coins sold? As mentioned earlier, the 620,000 Bitcoins minted by Bithumb were not actually issued on the blockchain; they were simply "fake coins." Because they were only recorded on the Bithumb database, they could only be sold "within Bithumb."
This is because each virtual asset exchange is an independent market.
Bithumb immediately suspended the accounts that received the Bitcoin upon learning of the incident. However, even if the accounts had not been suspended, users would not have been able to withdraw the Bitcoin they received.
Therefore, there are only cases where users who mistakenly received the coins successfully sold them "within Bithumb" and then withdrew them into Korean Won.
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