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The hacking of Ethereum Classic recently made headlines after hackers successfully launched a 51 percent attack on the blockchain and knocked out with over $ 200,000 in the value of the digital currency.
Gate.io was particularly impressed, but hackers returned a portion of the booty. According to a report published by Gate.io, a value of about $ 100,000 of the Ethereum Classic digital currency has been returned.
The company speculates that the perpetrator may have been a white hacker who wanted to demonstrate the vulnerabilities of the Ethereum Classic network.
How the hacking attack occurred at 51 percent
A 51% attack depends on an entity that controls more than half of the prevalent hash percentage on a network. The malicious user can stop the transactions, reverse them or rewrite the blockchain history.
In the case of Ethereum Classic hackers, hackers lent enough hashing power to weaken the prevailing one and then took a shot after launching a double expense attack. The incident occurred on January 7 and was extended for four hours. All transactions were confirmed during the attack and passed the validity test, but they became invalid after the hacking was over.
Coinbase was able to counteract the attempt to hack its network over time by pausing transactions involving the Ethereum Classic cryptocurrency. The site discovered 12 double-cost instances on the network for a total of approximately 219,500 ETCs rated at just over $ 1 million.
A vulnerability of the cardinal
That said, the vulnerability of the 51% attacks is sine qua non for work trial networks. Usually, a blockchain is maintained by honest miners who further the honest chain. However, nodes with overwhelming computational power will have the ability to overwrite a blockchain.
According to the latest report, Gate.io implemented a 51% detection as an additional protection measure. The platform also generated transaction confirmation figures of 4,000.
Seven rollback transactions were detected on the Gate.io platform and four were used by the attacker to transfer 54,200 ETCs. The company notified other grants of addresses used by hackers and announced that it would reimburse interested customers. At the time of the accident, Ethereum Classic was worth around five dollars.
The Statcounter Hacking Attempt
In November of last year, Gate.io also suffered a hacking attempt via Statcounter. The malicious code was injected into the Statcounter script that had been incorporated into the site. The code was designed to capture the transactions carried out on the platform, in particular withdrawals and replace the receiving addresses with those belonging to the hackers.
Statcounter is an analysis script similar to Google Analytics that monitors visitor activity. In this case, hackers modified it to be used as an intrusion tool. Gate.io was apparently able to disable the script on its platform in time, effectively reducing the attempt.
A bearish encrypted market to blame
The sharp drop in cryptocurrency prices accentuated the risks of 51% attacks on cryptocurrency networks. Many nascent cryptocurrencies are now vulnerable due to reduced mining profitability that has driven away a significant number of miners. This has led to a drop in hash percentages that makes it easy to get enough hash power to tame a network.
Less miners mean a decrease in the hash rate, which in turn makes it cheaper for cyber criminals looking to hire the computing power that targets a cryptocurrency network. At this time, theoretically it costs about $ 249.824 an hour to launch a 51% attack on Bitcoin at the hash rate of 38.063 petahashes per second. The real figures are destined to be much higher. This is according to the statistics listed by Crypto51.
That said, it is almost impossible to launch such an attack on the Bitcoin network. Firstly, it has a remarkably high hash rate, which requires a huge number of miners. In total, it has over one million miners and is much more decentralized due to the growth and diversification of the network over the years. There is also the insurmountable obstacle of convincing over 500,000 miners to direct their hashing power to start a 51% attack.
Such a plan would not be feasible. Some of the most vulnerable blockchain to a 51% attack include Ethereum Classic, Bytecoin, MonaCoin, Litecoin Cash and Dash. This is second App Crypto51.
In 2018 coins such as Litecoin Cash, Monacoin, Zencash, Bitcoin Gold and Verge had their blockchains stumbled in this mode. Over $ 1.8 million in Bitcoin Gold were stolen during his attack. The attack on Verge also yielded around 2.7 million dollars in digital currency to the attackers.
Gate.io speculates that the perpetrator may have been a white hat hacker. (Image Credit: Pixabay)
Hash Power for Rent is a great collaborator
The increase in the markets that offer hash power to rent has also increased the probability of attacks by 51%. These platforms provide a series of large-scale mining capabilities that can help attackers to instigate an attack without having to purchase hardware.
Cryptographic exchanges can avoid such an attack, for example by increasing the number of confirmations required to validate the funds. Older mined digital coins are generally buried in layers of confirmed blocks. This makes them safer to manage.
As for the Ethereum Classic attack, the creator of Litecoin (LTC), Charlie Lee, pointed out that 51% attacks are part of the fundamental attributes of a decentralized cryptocurrency, stating that if a currency is not susceptible, it does not it is decentralized.
This is a stimulating observation. 🤔
By definition, a decentralized cryptocurrency must be susceptible to 51% attacks if it has hashrates, stakes and / or other resources that can not be acquired without authorization.
If an encryption can not be 51% attached, it is authorized and centralized. https://t.co/LRCVj5F0O1
– Charlie Lee [LTC⚡] (@SatoshiLite) January 8, 2019
A debate on the fact that a 51% attack should have been among the cornerstones of a democratically sentient crypt ecosystem. Some have claimed that such vector attacks have sometimes led to crypto investments and are generally a nuisance to the larger community.
Another school of thought is that a consensus-based platform should be able to allow the majority rule, in this case, those who control the greatest power of hashing. Some have also pointed out that decentralization of a blockchain is useless if not certain.
A proof-of-stake solution has been touted as a response to the 51% attack vulnerability that affects proof-of-work coins. Allows the entity that owns over 51% of the coins in a network to control the blockchain.
Acquiring such a large amount of coins would require buying them, subsequently causing prices to rise. This would be incredibly difficult to achieve, especially if a cryptocurrency has huge market capitalization.
It is expected that 51% of cryptocurrency attacks will increase in 2019, as current market conditions encourage hackers to gain access to significant hashing power.
(Featured Image: Pixabay)
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