Ethereum Classic 51% Attack! What happened? Here are the facts!
According to Arstechnica, the attackers have stolen 88,500 Ethereum Classic Tokens, which is almost equivalent to $500,000 via a double spend attack.
Ethereum Classic has however tweeted that the situation may not actually be a 51% attack as there is currently a number of conflicting information. The Ethereum Classic organization appears unaware as to what actually took place, as no one is sure whether the confusion is due to the new Linzhi ASIC Miners that are currently running, or an actual double spend attack on the Ethereum Classic blockchain.
So what exactly happened in the last few days? On January 6, (just two days ago) Ethereum Classic tweeted that “there have been rumours of a possible chain reorganization or double spend attack. From what we can tell the ETC network is operating normally. “
But the organization began to tweet seven hours after, that cryptocurrency exchanges should be careful when it comes to processing Ethereum Classic trades. This was contradictory information and led to many exchanges temporarily increasing the number of confirmation required (from 120 to approximately 500) for Ethereum Classic.
The Ethereum Classic organization then followed up with a tweet highlighting that ASIC manufacturer Linzhi confirmed the testing of new LavaSnow Ethash ASICs. Kevin Lord, the Ethereum Classic community manager for cryptocurrency and blockchain engineering company Input Output Hong Kong, believes that it was more of a selfish miner than a 51% attack.
While it remained unclear whether Ethereum Classic was being attacked, there are currently many different opinions about what actually happened. Etherchain, a mining pool operator mentioned that they managed to identify “a successful 51% attack on the Ethereum Classic network.”
Donald McIntyre, the founder of Etherplan, mentioned that at one point, one Ethereum Classic miner temporarily controlled more than 60% of the network’s hash rate. This theory was also supported by Blockscout a block explorer in the Ethereum network, and major cryptocurrency exchange Coinbase.
It appears as though Coinbase actually knew about the ETC problem a few days ago when it detected some unusual behaviour. According to Coinbase’s application security engineer, Mark Nesbitt, Coinbase had detected a deep chain reorganization of the Ethereum Classic blockchain that included a double spend on Saturday 5th, 2019. While Ethereum Classic has not yet confirmed whether this was the case, they claim that the investigation into the problem is currently an ongoing process.
Coinbase has, however, decided to temporarily disable all sends and receives for Ethereum Classic tokens to protect consumer funds. Kraken has also followed in Coinbase’s footsteps, temporarily halting Ethereum deposits and withdrawals as well.
We think the current Ethereum Classic situation just shows that building a reliable and trustworthy network is still pretty difficult. While Ethereum Classic hasn’t admitted it, it’s likely a 51% attack. It really highlights the fact that it’s hard to build a decentralized network where everyone is incentivized to do the right thing. Furthermore, it’s also a big loss for Ethereum Classic, especially since they have been cut from both Coinbase and Kraken, and most likely many more to come. Nesbitt, the engineer from Coinbase, noted that it doesn’t mean that Ethereum Classic was especially vulnerable since the potential for an attack like this is an issue faced by all cryptocurrencies.
If you guys remember, the Ethereum Classic attack reminds a bit of the Bitcoin Gold 51% attack which occurred in May 2018. While the price of Bitcoin Gold did fall based on the news, there was no sign of any panic selling. We’re hoping a similar case will occur for Ethereum Classic. According to CoinMarketCap Ethereum Classic’s token value has fallen by approximately 7% in the last 24 hours. Its token value has dropped from $5.51 to $4.93 in the last day. Ethereum Classic currently has a market cap of $528.9 million and is currently ranked as the 18th most popular cryptocurrency.
As a big believer of cryptocurrencies and blockchain technology, we definitely see tokenization and decentralized networks as a major component of our future. However, this attack just goes to show how young and preliminary all this emerging technology is. We don’t think this event will have a major dent in the cryptocurrency industry. We just see this as a warning of using Proof of Work as a mechanism, and the importance of continuously updating the technology that we have. It makes sense that, until we reach a certain level of technical proficiency, mass adoption is still quite far away. Mass adoption generally occurs when state organizations and governments jump on board to regulate and adopt the new technology. This, however, cannot happen when there are still many flaws, bugs, and problems that exist.
What are your thoughts on the situation guys?
Do you think Ethereum Classic is suffering from a 51 Percent Attack? Do you think this uncertainty and confusion will have a major impact on the token? Or do you think it’s just a small speed bump that we’re going to quickly recover from?
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Disclaimer: Cryptopig content is written by a team of blockchain passionate people. We are not registered as investment advisors. Don’t take the information in this post as investment advice and make sure you do your own research before investing. Cryptocurrencies are a very risky investment, never invest more money than you can afford to lose.
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