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Do You Know That Decentralized Cryptos Are More Hackable Than Safe?

Maya Mandzikasvili | Jan. 9, 2019
Do You Know That Decentralized Cryptos Are More Hackable Than Safe?

January 09, 2019 | AtoZ Markets - Litecoin (LTC) creator Charlie Lee, in a tweet on January 7, said that a decentralized cryptocurrency is by definition vulnerable to 51% of attacks. What caused this message from the developer of one of the first cryptocurrencies using Scrypt as a hashing algorithm?

Recent Unusual Mining on ETC Was Entitled as 51% Attack

The 51% attack refers to the attack on the blockchain for which such is still hypothetical - a group of miners controlling more than 50% of the network hashrate or computing power. Such blockchain attackers could later prevent the new transaction confirmations and suspend payments between some or all users.

In a case of 51% attack hackers also get access to cancel transactions that were completed when they controlled the network, which means they can double the cost of coins. However, the attacker will not be able to create new coins or change old blocks, so an attack of 51% probably will not destroy digital assets based on blockchain.

Litecoin developer shared his observation after recent reports of unusual mining activity on the Ethereum Classic (ETC) network, which many continue to call 51% attack. As developer of Litecoin explained on his Twitter account, "a decentralized cryptocurrency should be under attack in 51%, be it hashrate, cola, and / or other resources obtained without permission." Lee added that if cryptography cannot be attacked by 51%, "it is allowed and centralized."

The aforementioned statement by Lee(pictured below) was a response to another tweet from the user CryptoTesla who said that if “he cannot be attacked by 51%, he is not decentralized,"

Coinbase Discovery Boosted Its Activity

CryptoTesla tweet in its turn was a response to the Coinbase a digital currency exchange headquartered in San Francisco statement. Company carry out exchanges of Bitcoin, Bitcoin Cash, Ethereum and Litecoin with fiat currencies in about 32 countries and transactions and storage in 190 countries.

Exchange said that they had discovered a “chain reorganization” and doubled the cost of the ETC blockchain on 7 January. The next day, Coinbase updated the data, reporting that 12 additional reorganizations were held, which included double costs totaling 219,500 ETC (about 1.1 million US dollars). Coinbase announced that on January 5, it had suspended ETC's input and output and three days later  a freeze had occurred.

ETC Denies “51% Attack” Occurrence

On January 7, ETC representatives denied that the consolidation of the hash capacity was a 51 percent attack, saying that it was “most likely selfish mining” and that there were no double costs.

The ETC group later tweeted that an increase in hashing speed might be related to testing the new Ethash algorithm with a capacity of 1,400 megabits per hour, which is due to a new chip Linzhi (ASIC) company is designing for ETC. Linzhi (ASIC) is a miner manufacturer of integrated circuits with the headquarters in Shenzhen.

Operations Director of Linzhi Wolfgang Spraul dismissed ETC assertions in his Twitter post, saying “They are entirely baseless.” His post has since been removed.

The ETC team continues to avoid applying the term “attack 51%” to the incident. In one of their latest tweets on this issue, the request for all crypto exchanges and mining pools is repeated from today to significantly increase the confirmation time for all withdrawals and deposits.

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Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ Markets.com, nor should they be attributed to AtoZMarkets.