Most Feared Attack in Blockchain’s Crypto Asset Protocol Could Be Prevented by Fining Miners


The biggest threat to the cryptocurrency community has to do with the idea of a 51% attack.

A 51% attack is an attack on the blockchain that is still hypothetical, but it would mean that there’s a group of miners that controls over 50% of the hashrate. With this power, the attackers would “be able to prevent new transactions from gaining confirmations, allowing them to halt payments between some or all users. They would also be able to reverse transactions that were completed while they were in control of the network, meaning they could double-spend coins,” according to Investopedia. However, crypto project Horizen believes that there’s a way to solve this potential issue.

Horizen, which was formerly ZenCash, lost over half a million dollars in an attack this year. In a paper that they released on Wednesday, they proposed a new algorithm that could penalize any miners that create this type of attack. The algorithm would be an updated version of the proof-of-work consensus protocol, involving a “delay function.”

In a 51% attack, the miner(s) would have to make blocks secretly before they are added to the blockchain. With a delay function in the algorithm, attacks would be incredibly costly for the miner to perform. Co-founder Rob Viglione added, “So what it does is essentially it poses a massive cost, a 10x cost, on trying to launch one of these attacks.”

The idea of this hypothetical attack on the crypto market has been on the minds of investors for quite some time, considering how the June attack impacted five different cryptocurrencies. The attacks also put the cryptocurrencies at risk, as investors see them as less secure after an attack, which make them a “negative externality on the entire industry.”

After 36 fake blocks were added to the blockchain in the attack on Horizen, Viglione noted, “Right after the attack our engineers started brainstorming and we think we have a very elegant, simple solution to make sure that this doesn't happen again.” Continuing, he said, “Technically, to make it costly if it were to ever happen again.”

The new delay protocol penalizes delayed blocks added to the chain. Basically, let’s say that a miner attempted to add a block that is at least five blocks behind the most recent one, they would be charge with the penalty. That penalty would be multiplied by the number of blocks behind added in that instance. However, based on the architecture of Horizen, this penalty would specifically be assessed to malicious miners. Viglione said, “We have an average block find time of 2 and a half minutes, maximum latency to broadcast anywhere in the world is like one or two seconds, so there's no way you could be 5 blocks behind legitimately.”

Still, there’s a risk. There could be a network partition on the blockchain as a result. If that’s the case, then it is up to the miners to vote on which branch of the blockchain is authentic. Viglione said, “They essentially elect which chain is legitimate and they start mining on that just like they would any longest chain rule.” To ensure that the network split doesn’t permanently post to the blockchain, the penalties are reduced on the chain that is deemed legitimate.

When speaking with CoinDesk, Viglione explained,

“Blocks are added and there's a negative one decrement to the penalty that was previously assessed, so there's always a convergence that can happen to prevent the network partition being permanent.”

In the whitepaper that elaborates on the whole algorithm, saying that the rejected chains of blocks would result in the freezing of suspicious deposits on the exchange. This freeze would continue until the problem is solved. Still, since this protocol is still being applied, Viglione noted that the specific penalties could be altered, if the network conditions support it. “We can tune and dial up the cost if we ever think it’s insufficient relative to hashrates and all that.”

These kinds of changes have been researched for a while, but there are plenty of enthusiasts that wonder if there’s any way for Horizen to follow through with their proposal. The leading proof-of-stake Ethereum researcher, Vlad Zamfir, even said, “The design space doesn’t include miracles.”

Other experts called the protocols difficult to implement and correctly setup, but Viglione remains confident that it will work, based on months of testing. He said,

“We’ve been testing it internally for a little while now, a couple of months, so we’re pretty confident with the code. I’d imagine that other projects should, they really should update their code as well.”

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