Ethereum Classic Falls Victim to 51% Attack, More Than $1 Million Lost
An ongoing Ethereum Classic 51% attack sparks a panic in the ecosystem.
ETC Network Hit by the Onslaught of 51% Attacks
Crypto assets platform Gate.io confirmed on January 8 that the ETC 51% attack successfully took place on the network. Researchers from Gate.io detected a total of seven rollback transactions during the 51% attack, four of which were conducted by the hacker, involving 54,200 ETC in total.
As Gate.io put it, the underlying reason why Ethereum Classic fell prey to the 51% attack lies in a decrease in both market cap and hash rate. This makes it easier for hackers to set off a chain of attacks on Ethereum Classic blockchain through renting the mining hardware (hash power).
According to data compiled by blockchain security company PeckShield, the network suffered a total of 15 attacks during the period from January 5 to 8, resulting in the loss of $1.1 million worth of ETC at least.
How Much Does it Cost to Launch Such an Attack?
Dr Liu Changyong, Co-Founder of ChainVC, shed some light on this issue during an interview with blockchain media platform BiShiJie. As he put it, the attacker conducted four rollback transactions during the 51% attack, transferring a total of 54,200 ETC (around $270k) within four hours.
According to Crypto51.app, a platform that focuses on tracking the theoretical cost of 51% attack on each network, the cost of performing a 51% attack on Ethereum Classic was a mere $5,168 per hour at that time. In this way, the attacker managed to earn a profit of $270k, more than ten times that of the cost (around $20k), Dr Liu pointed out.
Researchers from PeckShield, however, hold different views. They think that it would take at least several days launching such an attack, so the actual cost may be hundreds of thousands of dollars—much higher than $20k. According to the security company, launching a 51% attack, or double-spend attack, on large blockchain like BTC and ETH would be futile for attackers, because the cost would be astronomical.
ETC has stumbled in recent days due to the attack. According to data from CoinMarketCap, the price of ETC posted a 15% loss over the period from January 7 to 10, falling from $5.50 to $4.66 at press time.
What Insiders Say About ETC Attack
Donald McIntyre, Founder of Etherplan, said on blogging platform Medium that he is still optimistic about Ethereum Classic. He revealed two main reasons for the ETC 51% attack:
- The ETC network is still small
- ETC shares the same mining algorithm as other larger networks, e.g. Ethereum, making it vulnerable to 51% attacks through renting compatible hardware with the same algo
Mr McIntyre also believes there is an opportunity for ETC, claiming that:
- It is a proof of work, Turing-complete blockchain, with the cryptocurrency and smart contracts both fully integrated in the base layer
- The above value proposition is different and more secure (provided that it gains significant size in the future) than all competitors as Bitcoin is not Turing-complete and requires sidechains for smart contracts, and all the other Turing-complete blockchains are either PoS or some other BFT consensus mechanisms, some including treasuries and voting, which are all significantly less secure than proof of work
- The ETC ecosystem is still very focused on immutability as a core value, not having any formal governance mechanism, and guaranteeing emergent decision making thru free adoption of the network and rule changes
- ETC has a fixed monetary policy
- ETC is unique and the only blockchain in its niche
- ETH, which currently shares the same proof of work +Turing complete niche, will very likely migrate to PoS and sharding which are both less secure technologies
- Although Bitcoin is highly secure, it is unlikely that the world will use only one base layer blockchain to build all systems on top
- The above is especially the case if that implies merged mining and drivechains which will create risky “super-miners” in that ecosystem