Ethereum Classic 51% Attack Performed by Unknown Actor

Ethereum Classic 51% Attack Performed by Unknown Actor

Panic set in for Ethereum Classic holders late last night as a massive 51 percent attack that caused a reorganization of over 100 blocks took place, allowing for a half-hour period of complete uncertainty for users of the cryptocurrency.

Also see: Japan’s FSA Reportedly Honing In On Crypto ETF Decision

Subscribe to the  YouTube channel for great videos featuring industry insiders & experts

Wallet Withdrawals Halted

As exchanges and other services jointly announce holds on their wallet withdrawals pending the fallout of the attack, the Ethereum Classic team released an announcement that the event was apparently a test from an Ethereum ASIC manufacturer based in China:

Regarding the recent mining events. We may have an idea of where the hashrate came from.
ASIC manufacturer Linzhi confirmed testing of new 1,400/Mh ethash machines #projectLavaSnow
– Most likely selfish mining (Not 51% attack)
– Double spends not detected (Miner dumped bocks)

— Ethereum Classic (@eth_classic) January 7, 2019

Others are blaming everyone from Ethereum devs to Coinbase for not warning the ETC team, but there’s been no confirmation as to whether the double spends were sourced from the mining company or not. Coinbase, which began offering support for Ethereum Classic in August, did confirm it was halting withdrawals, and suggested double spends were involved:

On 1/5/2019, Coinbase detected a deep chain reorganization of the Ethereum Classic blockchain that included a double spend. In order to protect customer funds, we immediately paused movements of these funds on the ETC blockchain. Read more here: https://t.co/vCx89dz44m

— Coinbase (@coinbase) January 7, 2019

Shocking as this attack must have been to the ETC community, it’s a run of the mill outcome for any altcoin that uses the same Proof of Work protocol as a larger cryptocurrency network. If the smaller altcoin becomes profitable to mine or attack based on the total network value, even small pools on the larger one can temporarily direct their hash power to perform a 51 percent attack.

The Downside of ASIC Resistance

This is even more significant on “ASIC resistant” coins because GPUs and other general purpose hardware being used for ANY cryptocurrency can be used for the same purpose. Others argue, however, that this potential does not speak to a flaw in Proof of Work itself.

Attacking an Ethereum-style network is even more profitable in some circumstances, because double spend detection is very hard to do without a high end archival node, limiting the number of people that can alert others to an attack to a select few, like Coinbase and ETC block explorers.

Many are speculating as to why Coinbase did not alert the ETC community to the issue, but on a more conservatively designed network, anyone running a full node could have seen the attack taking place.

This, along with a rash of 51 percent and time warp attacks on smaller cryptocurrencies late last year has a lot of people talking about alternative Proof of Work solutions like Monero’s RandomJS and Kristy Leigh Minehan (ohgodawolf/wolf0)’s new ProgPow.

Proof of Work changes can be messy and controversial, but for smaller networks it may be the only viable protection from big players in the space with ill intentions.

Have your say. Should smaller coins look to other protocols to protect their networks? Should Coinbase have been more active in alerting the community as to what was going on?

Images via Pixabay