Last January 6th, the platform lost millions of dollars. A supposed attacker returned USD 100,000 in ETC. Experts explain their opinions
SlowMist, a China-based cybersecurity firm, warned of a private mining group from Ethereum Classic (ETC) that, apparently, is accumulating a lot of the network’s hashpower. This is one of the possible signs of risk in the platform.
SlowMist was one of the first organizations to discover the 51% attack on the Ethereum Classic blockchain network, which occurred on January 6th as a “reorganization of the network” and caused the theft of millions of dollars in cryptocurrencies.
People affected could feel distrust in the security of this network, even when a supposed attacker returned USD 100,000 in ETC to the exchange house Gate.io.
The company reports that the return was made on January 10th and that it has been trying to contact the attacker, but without getting any response. The team estimates that the attacker was possibly looking to make people aware of the security risks of a cryptoactive with a low requirement of hash power.
How to Know that there are Risks?
SlowMist was based on the Proof of Work (PoW). This time, SlowMist sent a new alert regarding the encryption: 0x58b3cabd0c5c777da2c1c4d4f7ecc8afe5674f20. Apparently, this address has been accumulating hashpower since the last attack of 51%. The hashrate of the private pool increased considerably from 300 GH / s to 3,263 GH /.
“According to the distribution of ETC hashrate during the last 24 hours, the hashrate of the private mining pool (0x58b3cabd) has accumulated 10% of the total hashpower. The private group is currently in fourth place, just after EtherMine, NanoPool and MiningPoolHub”, explained the Chinese company.
Due to security issues, SlowMist research analysts recommend that users should wait at least 400 confirmations when conducting ETC transactions.
Coinbase, the US cryptocurrency exchange service, also detected the 51 percent attack and decided to stop all ETC transactions. “At the time of writing this report, we have identified a total of 15 reorganizations, 12 of which contained double expenses, for a total of 219,500 ETC (USD 1.1 million)”, it explained.
SlowMist believes that a concerted effort by all the exchanges involved could help identify the attackers: “Through our intelligence analysis, the identity of the attacker can be located if the relevant exchanges are willing to help”.
An attack on a blockchain which uses a PoW algorithm is possible if the attackers have more than 50 percent control of the network’s hash rate.
When this occurs, the power of the control CPU allows the attackers to create a separate chain from any previous block in the blockchain. Since it has most of the computing power, its new chain exceeds the chain accepted by the network and creates a new transaction history.
In this new chain, attackers can spend twice their virtual money, which means funds that have already been spent in the network chain could be spent again in the attackers’ chain.
The main developers of Ethereum (ETH) reached a tentative consensus to implement a new PoW algorithm. They explain that the more people use this network in an honorable way, the more secure the network will be because these honest transactions will avoid the development of any malignant mutation.
Once the development team and the community have taken stock of the damage, they will define what to do to prevent future attacks. This may include a change in the working method of the network.
By María Rodríguez