Ethereum Classic 51% Attack — The Reality of Proof-of-Work

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Gareth Jenkinson Ethereum Classic 51% Attack — The Reality of Proof-of-Work A successful 51 percent attack on the Ethereum Classic blockchain has raised some big questions around smaller cryptocurrencies using proof-of-work algorithms. ETC’s 51 percent attack — the vulnerability of proof-of-work laid bare 1296 Total views 98 Total shares Follow up Just two weeks into the new year and the cryptocurrency community is grappling with the reality of an alleged “51 percent attack” on the Ethereum Classic ( ETC ) blockchain .
While there is still no clear idea of who is responsible for the manipulation of ETC’s blockchain by controlling the majority of CPU power in the mining pool, the circumstances raise some big questions concerning the security and power of proof-of-work ( PoW ) algorithms.
It is worth taking a look at the chain of events leading up to the confirmation that ETC had indeed been the target of a blockchain reorganization.
On Jan. 7 , ETC developers were alerted of a possible attack on the network by Chinese blockchain security firm SlowMist, which was relayed to the wider community on Twitter.
A tweet from the ETC Twitter handle, which has since been deleted, speculated that testing of new 1,400/Mh ethash machines by application-specific integrated circuit ( ASIC ) manufacturer Linzhi may have been a potential cause.
ETC developers said that the attack was “most likely selfish mining,” noting that they had not detected any double spends at the time.
Following this, American cryptocurrency exchange and wallet service Coinbase also detected what it described as a 51 percent attack. The company then paused all ETC transactions.
Coinbase had identified a “deep chain reorganization” of the ETC blockchain which included a double spend on Saturday, Jan. 5. By the evening of Jan. 7, the company had taken stock of multiple double spends on the network:
“At time of writing, we have identified a total of 15 reorganizations, 12 of which contained double spends, totaling 219,500 ETC (~$1.1M).”
The Coinbase team seems to have conducted a thorough blockchain analysis and provided specific instances of blockchain reorganization.
Crypto exchanges Coincheck and BitFlyer followed suit, announcing halts of ETC transactions on their platforms.
On Jan. 9, SlowMist released a detailed report on the 51 percent attack, corroborating the same chain reorganizations released by Coinbase, as well as other transactions targeting Binance and Bitrue wallets. Bitrue also confirmed the attack on Twitter.
SlowMist also believes that a concerted effort by all the exchanges involved could help identify the perpetrator:
“Through our intelligence analysis, the identity of the attacker can be finally located if the relevant exchanges are willing to assist.”
Cryptocurrency exchange also confirmed that it had picked up at least seven double spend transactions after conducting its own investigation into the attack. Users of the exchange were guaranteed to be paid back for any losses experienced. Unpacking blockchain reorganization
The notion of a 51 percent attack is not new, and there have been instances of this over the years — even being popularized by the Hollywood sitcom Silicon Valley.
An attack on a blockchain that uses a PoW algorithm for consensus is possible if the attackers have over 50 percent control of the network hash rate.
If this is the case, the controlling CPU power will allow an attacker to create a seperate chain from any previous block in the blockchain. Given that it has the majority of computing power, its new chain will eventually overtake the accepted chain by the network, thereby defining a new transaction history.
In this new chain, the attackers are able to double spend virtual currency, meaning that the funds that have already been spent on the network’s chain could be spent again on the attackers chain.
As Emin Gün Sirer , a developer and professor at Cornell University, told Cointelegraph , a 51 percent attack is bad, but it does not give attackers omnipotent power:
“Miners at 51 percent or more have a lot of powers, but they do not have the ability to change the actual rules of the system, nor can they usurp funds. They can rewrite the existing blockchain in a limited fashion: they cannot introduce transactions that don’t already exist, they can omit any transaction that they want, and they certainly cannot change any of the existing rules.” The reality of consensus
Proof-of-work consensus requires a network of miners to process transactions. This is clearly set out in Satoshi Nakamoto’s Bitcoin white paper , which also makes it clear that more than half of the network must be so-called “honest” workers: “If a majority of CPU power is controlled by honest nodes, the honest chain will grow the fastest and outpace any competing chains.”
Thus, vulnerability is inherently built into PoW consensus algorithms, as the network assumes that mining nodes are honestly validating transactions. The evolution of ...