A wave of fear crossed the cryptocurrency community while Ethereum Classic (ETC) – the original version of the Ethereum network – was attacked.
Basically, an unknown perpetrator has withdrawn and has altered the transactions on the network. In response, some exchanges have stopped transactions in the cryptographic resource, while others require longer confirmation times to avoid playing during the negotiation process.
So, what happened?
Today, the official Twitter handle for the $ 550 million ETC network put on guard of "a possible chain reorganization or double expense attack", even if they have noticed that "from what we can say that the ETC network operates normally." Only seven hours later, however, the handle tweeted again, urging cryptographic exchanges to pay attention processing of transactions.
For some, Ethereum Classic is the true Ethereum network. After a catastrophic accident that threatened to wipe out Ethereum in the summer of 2016, the developers of the network "bifurcated" the project. Ethereum was divided into Ethereum Classic, the original version of the network that allowed the hack, and the new Ethereum in which the hack was canceled. (The latter is now much larger and more popular among developers, with a market capitalization of around $ 16 billion.)
Immediately after the announcement of the network, also Etherchain, operator of the mining pool issued a warning, claiming to have identified "a 51% successful attack" on the Ethereum Classic network. Once a party or parties that act in concert control more than 50% of the computing power of a cryptocurrency, known in the jargon as the hasrate, bad things can happen.
An ETC miner temporarily had more than 60% of the network hash rate, said Donald McIntyre, Founder of Etherplan. If a person or group controls more than half of the hash power of the cryptographic network, it essentially gives the person control over which transactions are processed on the blockchain, allowing them to extract a disproportionately large amount of network blocks, spend coins by duplicating the blockchain and generally they are unjustly rewarded.
According to GasTracker, the alleged malicious miner still owns 45% of the ETC ishrate measured in the last 24 hours. That means they could get a score close to $ 30,000 in ETC lock premiums, the payments that a person usually receives to protect the network.
Many of the blocks produced by the alleged miner are empty, which means that they contain no transactions. Kevin Lord, community manager of ETC for blockchain engineering company IOHK, believes it was "more than a selfish miner rather than a 51% attack".
But according to the main cryptographic exchange of Coinbase, the reasons were more sinister. It turns out that Coinbase was aware of the ETC problem a few days ago when he noticed some nefarious activities.
"On 1/5/2019, Coinbase noted a profound reorganization of the Ethereum Classic blockchain chain that included a double expense," according to Mark Nesbitt application security engineer. "In order to protect client funds, we immediately suspended the movements of these funds on the ETC blockchain. Following this event, we detected 8 further reorganizations that included double expenses, totaling 88,500 ETCs (~ $ 460,000). "
Thus, the attacker may have transferred almost $ 500,000 of Ethereum Classic tokens by changing the history of the blockchain, or at least their version of it. The coordination between exchanges to ensure that everyone is using the same ETC history, ie, by eliminating the attacker, it could end up being a huge headache.
In general, the Ethereum Classic fiasco shows how difficult it is to build a reliable public network. (Bitcoin Gold, a fork of the original cryptocurrency, suffered a 51% attack in May of last year.) It also enhances the vulnerability of less popular cryptographic resources: Ethereum Classic is the 18th largest cryptocurrency, according to CoinMarketCap. It turns out that not all blockchains are immutable.