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Ethereum Classic’s 51 Percent Attack a Lesson For Altcoins

The now confirmed 51 percent attack on Ethereum Classic has put altcoins on notice. While reorg attacks are part and parcel of the risk of decentralized systems, a number of altcoin communities have taken steps to avoid such attacks on their digital assets. For others, the ETC attack should be a lesson for altcoins to secure their network before they suffer a similar fate.

Also read: Next Up – Bitwise Bitcoin ETF Would Track BTC, ‘Meaningful Hard Forks’

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ETC Blockchain Rewritten 15 Times

The ETC blockchain was rewritten 15 times between January 5th and 7th, representing a loss of around 220,000 ETC (roughly $1.1 million USD). As is well-documented, a 51 percent attack occurs when a malicious actor gains control of the majority of the hash power of a network. The majority rules in decentralized Proof of Work blockchains.

As Coinbase reminded us, Satoshi Nakamoto’s original bitcoin whitepaper asserts that:

“If a majority of CPU power is controlled by honest nodes, the honest chain will grow the fastest and outpace any competing chains.”

The need for an honest majority is considered a known weakness of Proof of Work blockchains. Litecoin’s Charlie Lee, however, sees things differently, defending 51 percent vulnerability as a feature of decentralized blockchains, not a flaw:

Alts Have Been Hit in the Not-too-Distant Past

Within days of the ink drying on its May 2018 Pornhub deal, Verge XVG was hit with a 51 percent attack, losing $1.9 million USD through excessive mining by a bad actor. That came within about a month of an attack in early April when a malicious actor rapidly mined Verge blocks with spoofed timestamps–exploiting the same vulnerability. A week after that first attack, they were targeted again. All in all, the spring of 2018 saw 35 million XVG coins created ahead of schedule and sold off.

May 2018 also saw controversial bitcoin fork Bitcoin Gold attacked, with exchanges stung for around $18 million after the double-spending was accomplished. And Vertcoin was hit in October last year–16 orphaned blocks suggesting a chain reorg had been accomplished through a 51 percent attack.

Altcoins Strike Back Against 51 Percent Attack

After a tumultuous June 2nd, on which it suffered three double-spend attacks for losses in excess of $120,000, Horizen–the crypto formerly known as ZenCash–upgraded its network to prevent miners from broadcasting long chains, which had caused the vulnerability.

Komodo uses the bitcoin blockchain to store backups of its own blockchain. It also deploys a system it calls Delayed Proof of Work. In DPoW, it has 64 elected notary nodes who record a block hash from a block onto the bitcoin-held backup every ten minutes. Komodo aside, the ETC incident remains a lesson for altcoins.

51 Percent Attack

But the Threat Remains Real

If two blockchains use the same algorithm, then the smaller one will always be susceptible to risk of an attack. And as crypto51 shows, sometimes hashrates are too low and prices sufficiently high for there to be an incentive to perform an attack.

Defending and securing their blockchains is up to altcoin communities. Komodo’s creative approach to resolving security problems preemptively has been mimicked by five other blockchains. Perhaps it is time the entire altcoin ecosystem made a stronger effort to secure their blockchains and avoid more carnage.

Have your say. Does the ETC 51 percent attack provide a lesson for altcoins to get organized before they get reorganized?

Images via Pixabay

(Excerpt) Read more Here | 2019-01-12 21:00:34


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