51% Successful Altcoin Attacks
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| 51% Successful Altcoin Attacks |
We have already figured out what a 51% attack is and the fact that Bitcoin is almost impossible to attack. But let's find out if this has happened with younger cryptocurrencies.
Earlier, we wrote material on the vulnerability of Bitcoin to 51% attack. We figured out that young cryptocurrencies using the PoW (Proof-of-Work) consensus algorithm, the proof of the work, are most exposed to the 51% attack.
Cryptocurrencies that are just entering the market usually have a fairly small network hash rate. That is why it is quite easy for attackers to concentrate a “controlling stake” in their hands. Many new cryptocurrencies are forks or are simply based on existing ones and use the same mining algorithms. Thus, if any pool is already mining some popular cryptocurrency and contributes only a small share to the network hashrate, then by switching its powers to mining a cryptocurrency that has just appeared with the same algorithm, the pool can easily capture 51% of the network hashrate. With monsters of the cryptocurrency world, such as Bitcoin and Ethereum, the likelihood of such an attack is practically reduced to zero due to its incredibly high cost and limited technical resources.
What threats does this attack pose and what benefits do attackers get?
The most common goal for attackers is to double-spend the same coins (double-spending) - a transaction for a certain amount is sent to the exchange, and after receiving all the necessary confirmations and processing it by the exchange, the transaction is canceled and the funds are sent again, but to another exchange. Thus, the main victims will be exchanges, which paid the attackers funds for canceled transactions, but this will not cause direct losses to the coin holder. Nevertheless, such a precedent will certainly cause reputation damage to cryptocurrency in general.
Also, blocking the passage of transactions of ordinary users can undermine the reputation of cryptocurrency. Since the price of cryptocoins, in most cases, is formed by the market, an attack on the reputation caused by the attack will significantly reduce their price, which will ultimately affect the end users. In the case of the young cryptocurrency, such an incident can even lead to its complete market crash. But attackers can also make very good money by dropping the price, because now many exchanges provide the opportunity for margin trading, which allows you to profit by playing at a lower rate (opening a position, the trader takes the required amount of cryptocurrency and sells it on the market at the current price, and after lowering the price, the trader buys the same amount, but at a lower price and repays the loan, leaving himself the difference between the cost of sale and purchase). Due to the fact that an attacker can say with almost 100% probability that the rate of the attacked currency will go down - he can make very profitable transactions on his exchange account without the risk of being associated with the attack.
What cryptocurrencies were attacked by 51%?
On April 4, 2018, thanks to an error in the mechanism for signing blocks, hackers were able to successfully carry out a 51% attack on the Verge network, while signing blocks more than once every 30 seconds, as prescribed by the protocol, but once a second, faking the time stamp of the previous block. The problem was discovered by the user of the Bitcointalk ocminer forum, while Verge officials first tried to hush up the incident, calling it insignificant, but then recognized the problem and fixed the error in the code within a few days. According to the official version of Verge, the attackers managed to mine about 250 thousand coins, although according to the calculations of Bitcointalk users, the figure was very more significant - almost 4 million coins. This attack caused a XVG rate drop of 25% over several days. Unfortunately, Verge's problems did not end there: on May 22, the SuprNova mining pool reported that the Verge network was again attacked by 51%, as a result of which all valid blocks were rejected for several hours, which once again undermined the reputation of the cryptocurrency.
In May 2018, Bitcoin Gold Communications Director Edward Iskra said that from May 16 to 18, a 51% attack was carried out on the Bitcoin Gold network, as a result of which attackers managed to steal up to 388200 BTG from exchanges and exchangers (about $ 18.6 million at the time of the attack). Attackers received at least 51% of the network’s capacity (most likely, they used their own mining pool, as well as those rented on NiceHash). After gaining control over the network, they sent amounts from 8,000 BTG to 12,000 BTG to the addresses of exchanges, creating a public block chain and simultaneously creating a private block chain with the same funds sent to their address GTNjvCGssb2rbLnDV1xxsHmunQdvXnY2Ft, waiting for the required number of confirmations, changing funds to another crypt they deduced it, after which they canceled the entire public chain of blocks with a longer prepared private chain. Bitcoin Gold developers recommended waiting at least 50 confirmations from the network to fully process the incoming transaction as the longest canceled chain in this attack was 22 blocks (it was canceled by a chain of 25 blocks).
Another cryptocurrency that suffered as a result of a code error in mid-May was MonaCoin. This attack cannot be called a full 51% attack, but it allowed one miner to replace the entire transaction chain from May 13 to 15. One of the miners managed to create two blocks in a very short time, instead of one, and start a private branch of the block chain, which was one block larger than the main one. Thus, after the publication of this branch on May 15, it was recognized by miners as the only true one since contained more blocks, and transactions of the main blockchain were canceled. As a result of the incident, the attackers managed at least 90 thousand dollars due to double spending.
On June 2, 2018, the official ZenCash channel reported a successful attack of 51%. Details were later posted on the official blog. The purpose of the attack was a double expenditure of funds. The kidnappers managed to steal at least 23152.3 ZEN (about 680 thousand dollars at the rate at the time of the attack). The address used by the suspects is znkMXdwwxvPp9jNoSjukAbBHjCShQ8ZaLib, the longest rejected chain is 38 blocks. Representatives of ZenCash immediately published a recommendation on how to secure their funds with exchanges, in particular, they suggested increasing the number of confirmations to 100 and initiated a vote on increasing the complexity of the mining algorithm.
To attract attention to the problem of 51% attacks and to demonstrate an estimate of the costs of implementing such an attack, the crypto51.app website was created. Knowing the current hash of the network and the cost of renting the miners, it is easy to calculate the cost of capturing 51% of the network's power per unit time. The data is obtained from several sources: the hashrate of the networks is taken from the Mine The Coin website, the price of cryptocurrency with CoinMarketCap, and the rental prices for mining facilities with NiceHash. For example,
One hour of attack on ZenCash currently costs about 5 thousand dollars per hour. The cost of the attack, calculated by the crypto51 resource, is only approximate, but gives an idea of the reality of the attack. Although the costs of an attack of 51% are quite high, up to 80% of the costs are compensated by commissions and rewards for mining.
As you can see, 51% attacks on young cryptocurrencies are not only theoretically real, but have been repeatedly successfully implemented in practice. Most likely, the attacks will not stop there, and many newcomers to the cryptocurrency market will undergo similar tests for strength and readiness for adulthood among large market players
# Altcoins # Attacks
Also, blocking the passage of transactions of ordinary users can undermine the reputation of cryptocurrency. Since the price of cryptocoins, in most cases, is formed by the market, an attack on the reputation caused by the attack will significantly reduce their price, which will ultimately affect the end users. In the case of the young cryptocurrency, such an incident can even lead to its complete market crash. But attackers can also make very good money by dropping the price, because now many exchanges provide the opportunity for margin trading, which allows you to profit by playing at a lower rate (opening a position, the trader takes the required amount of cryptocurrency and sells it on the market at the current price, and after lowering the price, the trader buys the same amount, but at a lower price and repays the loan, leaving himself the difference between the cost of sale and purchase). Due to the fact that an attacker can say with almost 100% probability that the rate of the attacked currency will go down - he can make very profitable transactions on his exchange account without the risk of being associated with the attack.
What cryptocurrencies were attacked by 51%?
On April 4, 2018, thanks to an error in the mechanism for signing blocks, hackers were able to successfully carry out a 51% attack on the Verge network, while signing blocks more than once every 30 seconds, as prescribed by the protocol, but once a second, faking the time stamp of the previous block. The problem was discovered by the user of the Bitcointalk ocminer forum, while Verge officials first tried to hush up the incident, calling it insignificant, but then recognized the problem and fixed the error in the code within a few days. According to the official version of Verge, the attackers managed to mine about 250 thousand coins, although according to the calculations of Bitcointalk users, the figure was very more significant - almost 4 million coins. This attack caused a XVG rate drop of 25% over several days. Unfortunately, Verge's problems did not end there: on May 22, the SuprNova mining pool reported that the Verge network was again attacked by 51%, as a result of which all valid blocks were rejected for several hours, which once again undermined the reputation of the cryptocurrency.
In May 2018, Bitcoin Gold Communications Director Edward Iskra said that from May 16 to 18, a 51% attack was carried out on the Bitcoin Gold network, as a result of which attackers managed to steal up to 388200 BTG from exchanges and exchangers (about $ 18.6 million at the time of the attack). Attackers received at least 51% of the network’s capacity (most likely, they used their own mining pool, as well as those rented on NiceHash). After gaining control over the network, they sent amounts from 8,000 BTG to 12,000 BTG to the addresses of exchanges, creating a public block chain and simultaneously creating a private block chain with the same funds sent to their address GTNjvCGssb2rbLnDV1xxsHmunQdvXnY2Ft, waiting for the required number of confirmations, changing funds to another crypt they deduced it, after which they canceled the entire public chain of blocks with a longer prepared private chain. Bitcoin Gold developers recommended waiting at least 50 confirmations from the network to fully process the incoming transaction as the longest canceled chain in this attack was 22 blocks (it was canceled by a chain of 25 blocks).
Another cryptocurrency that suffered as a result of a code error in mid-May was MonaCoin. This attack cannot be called a full 51% attack, but it allowed one miner to replace the entire transaction chain from May 13 to 15. One of the miners managed to create two blocks in a very short time, instead of one, and start a private branch of the block chain, which was one block larger than the main one. Thus, after the publication of this branch on May 15, it was recognized by miners as the only true one since contained more blocks, and transactions of the main blockchain were canceled. As a result of the incident, the attackers managed at least 90 thousand dollars due to double spending.
On June 2, 2018, the official ZenCash channel reported a successful attack of 51%. Details were later posted on the official blog. The purpose of the attack was a double expenditure of funds. The kidnappers managed to steal at least 23152.3 ZEN (about 680 thousand dollars at the rate at the time of the attack). The address used by the suspects is znkMXdwwxvPp9jNoSjukAbBHjCShQ8ZaLib, the longest rejected chain is 38 blocks. Representatives of ZenCash immediately published a recommendation on how to secure their funds with exchanges, in particular, they suggested increasing the number of confirmations to 100 and initiated a vote on increasing the complexity of the mining algorithm.
To attract attention to the problem of 51% attacks and to demonstrate an estimate of the costs of implementing such an attack, the crypto51.app website was created. Knowing the current hash of the network and the cost of renting the miners, it is easy to calculate the cost of capturing 51% of the network's power per unit time. The data is obtained from several sources: the hashrate of the networks is taken from the Mine The Coin website, the price of cryptocurrency with CoinMarketCap, and the rental prices for mining facilities with NiceHash. For example,
One hour of attack on ZenCash currently costs about 5 thousand dollars per hour. The cost of the attack, calculated by the crypto51 resource, is only approximate, but gives an idea of the reality of the attack. Although the costs of an attack of 51% are quite high, up to 80% of the costs are compensated by commissions and rewards for mining.
As you can see, 51% attacks on young cryptocurrencies are not only theoretically real, but have been repeatedly successfully implemented in practice. Most likely, the attacks will not stop there, and many newcomers to the cryptocurrency market will undergo similar tests for strength and readiness for adulthood among large market players
# Altcoins # Attacks