The Bitcoin Gold development team has recently released an update about the situation of the currency after last week’s attack. During the attack, hackers were able to control 51% of the Bitcoin Gold network and weaponized it via a double spend attack, which allowed them to steal funds from cryptocurrency exchanges.
The update has officially confirmed that the attacked gained control of the network by having majority control of its hashrates and reorganizing the blockchain to reverse transactions, which enabled the hacker to get $18,6 Million USD worth of Bitcoin Gold.
How Bitcoin Gold Was Hacked
After seizing control of more than 51% of the network, the attacker made many deposits at cryptocurrency exchanges and traded the coins for other tokens like BTC, withdrawing the money soon after. The main part of the trick was that the attacker used its computing power to force the network to acknowledge falsified blocks that reverted the initial deposits.
This way, the fund vanished from exchange-controlled wallets and the user was able to steal the money. We reported that the attacker sent itself more than 380,000 BTG tokens and that he might have earned more than $18 million but that it is hard to know without knowing the success rate of this enterprise.
Bitcoin and Bitcoin Gold. pic.twitter.com/PHnOhUzA5v
— Kevin Pham (@_Kevin_Pham) May 24, 2018
Bitcoin Gold Developers Blame Equihash For the Attack
The Bitcoin Gold developers see the currency’s mining algorithm, Equihash, as the main problem that enabled the attack. Equihash, which is also used by many other currencies, renders a large pool of available hashpower, which is bigger than the individual hashpower of the members of the network and the attacker used this as an exploit.
Bitcoin Gold got 51% attacked. Miners have no issue with attacking BTG because if it dies, they could easily switch to mine another coin that also uses Equihash POW. This is not the case for Bitcoin/Litecoin where they are the dominant coin for their respective mining algorithms. https://t.co/ThOzSFz5tQ
— Charlie Lee [LTC⚡] (@SatoshiLite) May 24, 2018
Jack Liao is spreading rumors now that Bitmain 51%ed BTG. No, it was not Bitmain. It is possible that Jack Liao himself attacked BTG as a way to further steal funds from the community and attack BCH fork.
— Jihan Wu (@JihanWu) May 25, 2018
Then of course we also reported on Dr. Craig Wright talking to Bitcoin Gold's Jack Liao
Craig Wright – Bcash vs Jack Liao – Bitcoin Gold in Taiwan.
— Blockcamp (@Blockcampio) May 23, 2018
The team had already started to plan to move to a new algorithm since Bitmain announced that it would be selling the first Equihash ASIC miner of the market soon, but the attack speed up the process. The developers believe that changing the algorithm will make the network considerably safer against further attacks.
While the team believed that it would cause less disruption to wait more to change the algorithm, they also believe that the attack has caused enough disruption, so they agreed on changing it as soon as possible.