Hackers Pull Off Rare 51% Attack on Ethereum Classic

According to Sky News, an anonymous hacking group may have managed to carry out a rare “51% attack” on the Ethereum Classic blockchain.
Major cryptocurrency exchanges such as Coinbase have temporarily frozen trading of the token due to concerns that the highly uncommon blockchain attack has taken place.

On Tuesday, 5th January 2019, Coinbase noticed a deep chain reorganisation of the Ethereum Classic blockchain that included a double spend. In a bid to protect its customers’ funds, the company halted all interactions with the ETC blockchain. Coinbase subsequently detected a further twelve reorganisations that included double spends, totalling over 219,500 ETC.

Ethereum Classic split from Ethereum three years ago, and although it remains in the cryptocurrency top twenty, it has failed to prove as successful as Ethereum, which is currently the world’s second-largest cryptocurrency.

Blockchain is the underlying technology that’s used by cryptocurrencies, and it records all transactions on the digital currency’s network. Each block represents a list of authorised transactions, and in the case of ETC, a transaction is only considered confirmed and final if it appears in the blockchain with the most blocks.

The blockchain is powered by cryptocurrency mining, and while the technology is supposed to be a transparent and unchangeable edger, experts have long warned that any hacker who gains control of over 51% of a network’s mining could choose to double-spend coins.

Double-spending can occur when the hacker creates a fork in the network by transmitting conflicting data to multiple users, allowing them to send the send coin to more than one person.

However, it’s not all doom and gloom for ETC traders as the cryptocurrency seems to be recovering swiftly from the blockchain attack.

Yesterday, Patrick McCorry who is an Assistant Professor at the cybersecurity group at King’s College London, took to his Twitter account to say that although Ethereum Classic initially “took a bit of a hit”, “it’s mostly recovered in a day”.

The team behind Ethereum Classic are still investigating exactly how the attack was carried out and by whom, and according to Twitter, it’s working with Slow Mist and others in the crypto community regarding potential solutions to improve on Proof of Work.

PoW cryptocurrencies such as Bitcoin and Ethereum require burning an external resource (mining hardware), and the PoW protocol is designed to deter and prevent cyber-attacks. The other main protocol used in blockchain is Proof of Stake which is also used to validate transactions but obtains the results in a different way.

When Ethereum Classic made its debut in 2015, it was designed to be “more than just a blockchain”. In fact, its creators claim that the cryptocurrency’s capabilities mean that ETC is like a smartphone whereas Bitcoin is like a landline phone. It describes ETC as “a smarter blockchain” which is a cryptocurrency, a community, and a network “that takes digital assets further” by allowing users to send currency to one another, and also allowing for “complex contracts that operate autonomously” and cannot be censored or modified.

By Laura Kilby

Sources:

https://news.sky.com/story/ethereum-classic-hackers-hijack-blockchain-in-rare-51-attack-11601786 and https://blog.coinbase.com/ethereum-classic-etc-is-currently-being-51-attacked-33be13ce32de