A tsunami of FUD (Fear, Uncertainty, Disorder) washed through the cryptocurrency and blockchain community as the original version of the Ethereum network, Ethereum Classic (ETC) came under attack.
An unidentified perpetrator, allegedly for all intents and purposes, rolled back and altered transactions on the network. Some exchanges, in response, have halted transactions in the digital asset. On the other hand, others are requiring longer confirmation times to keep themselves away from being gamed while processing trades.
On 8th Jan, the official Twitter handle for the $550 million ETC network warned of “a possible chain reorganization or double spend attack.” Nevertheless, they noted that from what they can tell the ETC network is working normally. Notably, the handle tweeted again, urging cryptocurrency and digital asset exchanges to be careful while processing trades, just seven hours following the incident.
Mining pool operator Etherchain also issued a warning, shortly after the network’s announcement, mentioning that it identified a successful 51% attack on the Ethereum Classic blockchain network. Bad things can happen, once a party starts controlling more than 50% of a cryptocurrency’s computing power, also known as the hashrate.
Donald McIntyre, the founder of Etherplan, said that an ETC miner temporarily had more than 60% of the network’s hash rate. If one person or cartel controls more than fifty percent of a cryptocurrency network’s hash power, he gets the control over the transactions which get processed on the blockchain. Notably, this allows them to mine a disproportionately large amount of the network’s blocks. Moreover, they can double-spend the coins by altering the blockchain. Generally, they are able to reward themselves unjustly.
Interestingly, several blocks produced by the suspected miner are empty. This essentially means that they contain no transactions.
ETC community manager for blockchain engineering company IOHK, Kevin Lord is of the opinion that it was more of a selfish miner rather than a 51% attack.
But, the motives were more sinister-as per chief cryptocurrency exchange-Coinbase. When it spotted some disreputable activity, Coinbase knew about the ETC problem a few days ago.
Primarily, the Ethereum Classic fiasco demonstrates how complex it is to build a trustworthy public network. Notably, a fork of the original cryptocurrency, Bitcoin Gold came under a 51% attack in May last year. Moreover, it also exposes the vulnerability of less trendy digital assets. As per CoinMarketCap, Ethereum Classic is the 18th-largest cryptocurrency. ETC is exchanging hands at the rate of $5.06 with a with a market cap of $543.3 million, at press time. By looking at the recent events, it seems that not all blockchains are immutable.