The Ethereum Classic (ETC) blockchain suffered its third 51% attack this month, and the attackers reorganized more than 7,000 blocks on its blockchain, which is equivalent to two days of mining.
Mining company Bitfly, which controls mining pool Ethermine and the first to identify 51% in ETC earlier this month, was the first to report the attack, which was later confirmed by the developers behind Ethereum Classic.
While ETC is still making progress in evaluating proposed solutions, we are aware of the current risk to the network at these low hash rate levels.
To miners, exchanges, and other service providers we suggest keeping confirmation requirements levels well above 7K for now. https://t.co/l6nwIy5mL2
– Ethereum Classic (@eth_classic) August 29, 2020
“Although ETC is still making progress in evaluating the proposed solutions, we are aware of the current risk to the network at these low hash rate levels.
For miners, exchanges and other service providers, we suggest keeping the levels of confirmation requirements well above 7K for now. ”
What is the 51% attack?
ETC is not new to this type of attack, which has already happened twice. An attacker quietly takes control of more than half of the mining power and proceeds to mine a blockchain fork, but does not broadcast it to the public.
As the consensus system accepts the largest blockchain as the actual blockchain, once it is transmitted, the last blocks are rearranged. But before that, the attacker usually makes sure to spend as many tokens as possible on the chain that people were using.
After the reorganization, the tokens are returned to the attacker's wallets and everyone starts using the larger blockchain, which now looks like the real thing. This is how the dreaded double spending occurs on an insecure blockchain.
Will Ethereum Classic Survive?
The first two attacks on Ethereum Classic reorganized 3,693 and 4,000 blocks, respectively, and hackers spent double millions of dollars on ETC tokens. Although the amount lost in the third attack remains unclear, it appears to have been the largest.
The timing is remarkable, as it occurred shortly after ETC Labs, one of the main organizations behind Ethereum Classic, announced a multi-stage plan to prevent 51% of future attacks. The plan included defensive mining to stabilize the hashrate network's decline.
ETC Cooperative, another foundation that supports Ethereum Classic, revealed on social media that it was aware of the attacks and was "working with others to test and evaluate the proposed solutions as soon as possible."
Ethereum Classic's hashrate, the Ethereum (ETH) fork, is still remarkably low. It shares the same hashing algorithm as Ethereum, but while ETH has a hash rate of 205 TH / s, Ethereum Classic has only 2 TH / s.
In hashrate rental markets like NiceHash, it is possible to rent enough hardware to control 51% of the ETC network, according to Crypto51. In theory, attacking the network would cost just over $ 5,300 an hour.
In the first two 51% attacks, cryptocurrency exchange OKEx lost $ 5.6 million in a double-spend attack. In view of the state of the network and its losses, the exchange considered canceling the list of cryptocurrencies. To protect itself, Coinbase has extended the confirmation times for deposits and withdrawals to around two weeks.