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A 51% attack was launched against EthereumClassic (ETC), causing a single malicious player to take control of the network. Several blocks have been rewritten, resulting in double spending on what could be several hundred thousand dollars of platform tokens. In response, a number of exchanges, including CoinBase, have suspended withdrawals. In addition, the price of EthereumClassic fell more than five percent.
The developers of EthereumClassic have recognized that a single player has acquired most of the hash power, but denies that double losses have occurred. Rather, the developers claim that the situation is the result of a new generation of ASIC miners that have been tested, and is nothing but "selfish mining". However, CoinBase has published evidence of what it claims to be double spend since January 5th. Officials in return argue that so far 88,500 ETCs have been the subject of double spending, worth about $ 460,000.
In the last 12 months attacks like these have become more frequent. Verge and Bitcoin Gold are two of the most popular platforms for undergoing chain reorganizations. Others have included Vertcoin and Einsteinio. The last of these, which took place in October, was announced in advance and broadcast live.
Such attacks were once considered almost impossible for already established cryptocurrency platforms, but a number of factors made them relatively easy to implement. Firstly, the decline in market capitalization has substantially reduced mining on minor altcoins, thus weakening their networks. For most proof-of-work coins, much hash power is needed to gain control.
Another factor is the emergence of hashing power intermediaries, the most important of which is Nicehash. These services allow people to buy or sell mining energy in an open market. Using such a service, an attacker can hire enough energy to control a network for a short period, allowing for a fifty-one percent attack. In some cases a network can be controlled for a few hundred dollars at the moment. Web sites have even emerged that track the cost of taking control of networks in real time.
Collusion of data mining pools is another way that a network can be controlled. Since the extraction by cryptography becomes more commercialized, a number of large pools have come to dominate the networks. These pools could, in theory, work together to get the majority of the power of the network. This vulnerability is a particularly acute concern for Bitcoin, since over eighty percent of all Bitcoin mining is controlled by a handful of Chinese-based pools.
It is too early to determine the source of the EthereumClassic attack, or how damaging it will be for the platform in the long run. More details will emerge without doubt. Although the platform can recover, this attack indicates that no cryptocurrency is immune to manipulation and greater measures will be required to move forward if the safety of the blockchain is to be guaranteed.
Featured image via BigStock.
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