TL; DR
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When you submit a transaction on the Bitcoin network, a number of independent computers compete for the right to process it. After it is processed, the winning computer will receive a reward of 6.25 BTC plus a transaction fee.
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When you send a transaction, you can offer a higher fee to try to get your transaction processed faster… and instead of offering a $5-$20 fee like a normal person, a Paxos employee Crypto Exchange (accidentally) offered a cool $500,000.
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The miner responded in the most Web3 way possible: put it to a vote (on Twitter/X).
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Do you want to see the results? click here.
Full story
Imagine buying a nice new laptop. It’s $2000.
You swipe your card, the payment goes through and you walk away happy.
But then you check your account and discover that your $2,000 money transfer was charged a $500,000 fee.
A similar scenario just played out on the Bitcoin network.
Here’s the ‘how’ and ‘what’ of it all…
When you submit a transaction on the Bitcoin network, a number of independent computers compete for the right to process it. After it is processed, the winning computer will receive a reward of 6.25 BTC plus a transaction fee.
That last bit (the compensation) is what is important here.
See, when you send a transaction, you can offer a higher fee to try to get your transaction processed faster… and instead of offering a $5-$20 fee like a normal person, an employee of the Paxos Crypto Exchange (accidentally) offered a cool $500,000.
(Oof!).
The miner who received the compensation thought it was a mistake and made a bid in good faith, passing the vibe check by giving three days to claim a total refund.
…but the deadline passed without any claims.
In fact, it wasn’t until yesterday that Paxos noticed the mistake and asked, “Hey, um, can we maybe, um, get an extension on that offer?”
The miner responded in the most Web3 way possible: put it to a vote (on Twitter/X).
They gave 4 options:
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Paxos 20 BTC refund as is
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Divide it among miners
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Go for fifty-fifty
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Just freeze it
As I write this there are still three hours left on the clock, but by the time you read this it will be decided.
Do you want to see the results? click here.