The hackers have compromised the bitcoin cryptocurrency, a lesser-known derivation of the original Bitcoin, this month, using a higher computing power to falsify the currency ledger and cheating at least $ 18 million from online trading.
The episode of hacking, which was reported in a blog post at the beginning of this month, is significant because it shows as a so-called 51% attack, which represents an existential threat to any currency similar to Bitcoin, it is not just a theoretical concern.
The threat is known as a "51% attack" because it comes from an attacker who gets more than half the power of mining on a cryptocurrency network.
This dominant level of computer power allows you to manipulate the blockchain register on which transactions are recorded and to use the same digital coins more than once. By analogy, it is as if a fraudster had access to the clearing registers of a stock exchange and falsified a series of share transfers.
This is basically what happened to Bitcoin Gold. According to the Bitcoinist website, the registers of a digital wallet show that hackers have created a series of fraudulent deposits in which money never ended up with the exchange of recipients:
The Bitcoin Gold network still appears vulnerable to further attacks of this type. The hacker has yet to hit again, however, probably because further attacks could trigger a massive sell-off as the owners of Bitcoin Gold lose confidence in the integrity of the network.
The price of Bitcoin Gold has dropped slightly on the news of the attack, but so far there has been no sign of panic selling.
On Tuesday morning, a developer of Bitcoin Gold recognized the ongoing risk in a blog post and added that it is planning to introduce a software update known as "hard fork" that will decentralize the mining power on the network. (The blog post does not indicate if the hard fork will restore coins cheated by exchanges).
As Quartz notes, the Bitcoin Gold crisis represents the "nightmare scenario" for any cryptocurrency, and could theoretically happen to many other currency networks.
While the threat has existed for years, the chances of it materializing seemed to diminish as more and more people joined the cryptocurrency networks, which in theory makes it more difficult to get control of more than half of the network. But the rise of huge mining conglomerates that use specialized IT equipment has seen a growing centralization of mining activity in recent years.
For now, there seems to be no imminent threat of a 51% attack on Bitcoin itself, largely due to the size of the network, but other smaller networks could be more exposed.