Has the Current Bear Market Made Crypto More Susceptible to 51% Attacks?
It’s no secret that the cryptocurrency market has been suffering major downturns lately with its original, and arguably still one of the most popular, Bitcoin being at the top of that list. However, the seldom thought of result is a higher prevalence of 51 percent attacks, made even easier by the low price of cryptos.
Enthusiastic supporters of cryptocurrencies the world over (or more accurately, the internet over) argue and debate over the build of this blockchain technology and blockchain technology in regards to protection from hacking and attack but this moment gives light to the importance of network effects on this security.
Blockchain bases itself on confirmation from within through all its users but these attacks stall that and only work when over half of that market is owned by one group of people all working together or single person to stall that.
Coinbase announced this week that they were in the process of detecting multiple deep chain reorganizations within ETC, a 51 percent attack where the user was disrupting and rewriting the information in the chain of command. This person, with majority control of hashing power, altered past transactions to the tune of $1.1 million dollars at a time with something that blockchain peer-to-peer assurance is supposed to prevent- double spends.
As arguably one of the worst 51 percent attacks on any cryptocurrency ever, it’s an especially painful awakening for ethereum classic’s “true believers”.
True believers are a small but fierce group of miners and developers who refused to leave ETC after the DAO hack resulted in leading developers creating new software that was unaffected. Their stance, while maybe stupid to some, remains that new software shouldn’t invalidate all previous transactions and however imperfect, the old deserves to be put back on track and should remain immutable, regardless of losses.
But principled or not, it meant little when their network was raided by an attacker in this way.
The current Ethereum is the reality of a forked version of blockchain (where developers splintered off the original chain before the DAO attack) and has thus far remained unaffected by this attack on the original and has suffered no 51 percent attacks of its own.
Because the value of Ethereum and all cryptocurrency pools has dropped so dramatically, it has left them all open to an attack of this nature. Luckily, the largeness and cost of an attack on Ethereum has protected it so far with Crypto51 putting out estimates of such an attack as much as 21x the cost of the ETC one ($88,633 compared to $4,571 for ethereum classic) for just a one-hour attack.
A positive feedback loop encourages developers to continue working on the code and brings in more developers all the time. The broader the group of users, the more protected the blockchain becomes. Security of these coins depends on its ongoing development. This doesn’t just mean improvements but more eyes watching each other within the blockchain itself.
The competing and main Ethereum chain would have naturally had more protection as the larger group of users dwells here.
The lesson these attacks serve is a creepy one: maybe the only risk blockchain truly has is not hacking from without but from within, with the users themselves.
To check where your favourite cryptocurrency lies in terms of safety or for the numbers on any at all, check CoinDesk’s Crypto-Economics Explorer which explores the potential for this type of attack through 5 metrics of value- social activity, developer interest, exchange transactions, price, and network size.