At the beginning of January (ETC) there was a result that led to multiple reorganizations of the blocks on the Ethereum Classic chain. The attacker stole about $ 100,000 in ETC tokens, but later returned tokens, according to the gate.io exchange, from where the theft occurred.
5-hour ECT chart
The price of ETC was a slight success after the news of the attack. However, it appears that the cryptocurrency has recovered. It currently has a market capitalization of $ 463.94 million, making it the 18th most popular digital currency, and is currently on the market in the $ 4.20 range.
For those unfamiliar with a 51% attack, it refers to an assault on a blockchain by a group of miners who control more than 50% of the network's mining hashrate, or computing power. According to a statement released by gate.io, there was no explanation from the attacker since the funds were returned for any reason for the attack.
The exchange published the following note after the ETC was returned:
"On January 10, we found that the recent 51% ETC striker returned USD 100K worth of ETCs to gate.io. We were trying to contact the attacker but we have not had any answers so far. We do not know why yet. If the attacker did not do it for profit, he could be a white hacker who wanted to remind people of the risks involved in blockchain consent and the security of hashing.
Based on our analysis, the hashing power of the ETC network is not yet strong enough and it is still possible to hire enough hashing power to launch another 51% attack. Gate.io increased the ETC confirmation number to 4000 and launched a 51% detection for advanced protection. We also suggest other ETC exchanges to take actions to protect the trader from the rollback / reorg blockchain. "
Because of the attack, traditional cryptographic exchanges like Coinbase have suspended all ETC transactions, causing losses to the platforms. Coinbase security engineer Mark Nesbit reassured customers that no attacks were attacked.
The exchange also reported that it had identified for the first time the profound reorganization of the chain on 5 January. At this point, he stopped chain-based ETC payments to protect customers from becoming victims of a double-expense attack.
Crypto Equivalent of a Bank Heist
In recent years, a number of cryptocurrencies, including, and have had 51% attacks. In both cases the attackers were able to accumulate enough computing power to compromise networks, reorganize their transactions and run away with millions of dollars. Some would say that a 51% attack is the digital equivalent of a bank robbery.
Site 51 Crypto outlined the estimated hourly cost of launching a 51% attack on various cryptocurrencies. With their calculations, the recent ETC attack cost the authors $ 4,104 per hour of effort.
There are a number of measures that may have been taken by the cryptocurrency exchanges and developers to avoid such situations. Well, there are ways in which blockchain security can be improved to prevent this from happening again. Unfortunately, this problem is likely to continue as many demonstration coins (PoWs) share similar hashing functions.
Is PoW still reliable?
For many years, PoW was a safe way to generate consensus in a decentralized network, says Simon Harman, Loki's Project Lead, a privacy network for decentralized transactions. However, he adds:
With the passage of time, more and more of this hashrate through cryptocurrencies and hashing algorithms can be found in fewer places. In most cases, each coin has only a handful of large pools and most of the hashrate available for any algorithm can be found on Nicehash or other rental sites. These trends are unlikely to reverse and therefore we can consider the decentralization of most PoW coins reasonably poor compared to the past. However, proof-of-stake (PoS) and delegated delegation-of-stake (dPoS) do not necessarily improve this situation. "
In fact, explains Sky Guo, CEO of Cypherium, PoW has long been the most reliable blockchain consent mechanism, maximizing both incentives and security. This is why many of the major projects in cryptographic space continue to rely on PoW mechanisms.
"Even so, it does not maximize the efficiency of resources such as energy and money injected into the mining efforts of a community of cryptocurrencies." Since the PoW algorithm is not resistant to ASIC chips, it is relatively easy. exploit it, some cryptocurrencies, for example, update their algorithms every six months to prevent this from happening.
Another way to prevent such attacks is to introduce checkpoints and safeguards into the system to reduce their profitability. Abandoning PoW completely will only lead to greater centralization and greater vulnerability. The wisest step forward will be to modify and hybridize the effect of PoW. The new generations of decentralized consensus do not need to replace the projects of the initial phase, just as they need to improve them and to evolve them. "
On the other side of the argument there are those who believe that the cryptosphere should develop different and more secure permitted protocols. Daniel Schwartzkopff, CEO and co-founder of Invictus Capital, states:
"Smaller cryptocurrencies will have to adopt more secure consensus protocols such as mining mining, which allows them to be extracted simultaneously with much larger PoW blockchains such as bitcoins, or to switch entirely to proof-of-stake, from much larger hash rates major cryptocurrencies, making them more secure. "
Editor's Note: In a recent Investing.com analyst, Clement Thibault discussed the attack and what it means for ETC and the future of cryptocurrencies. He also explained how to protect himself from being involved in an attack (starts at 2:38)