[2018-05-23] Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions

[vit05]

Source: CCN
A malicious miner successfully executed a double spend attack on the Bitcoin Gold network last week, making BTG at least the third altcoin to succumb to a network attack during that timespan.

Bitcoin Gold director of communications Edward Iskra first warned users about the attack on May 18, explaining that a malicious miner was using the exploit to steal funds from cryptocurrency exchanges.

To execute the attack, the miner acquired at least 51 percent of the network’s total hashpower, which provided them with temporary control of the blockchain. Obtaining this much hashpower is incredibly expensive — even on a smaller network like bitcoin gold — but it can be monetized by using it in tandem with a double spend attack.

After gaining control of the network, the attacker began depositing BTG at cryptocurrency exchanges while also attempting to send those same coins to a wallet under their control. Ordinarily, the blockchain would resolve this by including only the first transaction in the block, but the attacker was able to reverse transactions since they had majority control of the network.

Consequently, they were able to deposit funds on exchanges and quickly withdraw them again, after which they reversed the initial transaction so that they could send the coins they had originally deposited to another wallet.

Source: CCN

[hatshepsut93]

Strangely, BTG hasn't dropped much as a reaction to these news, which means that attacker should have been able to get some profit from this attack by selling coins that he got back after executing their attack. I think this and other double-spend attacks demonstrate the weakness of smaller altcoins and the value of Proof of Work - people are forgetting that hashpower is the cornerstone of cryptocurrencies, and without the necessary amount of it any coin is in constant danger of such attacks. Altcoins like to claim that Bitcoin is dying and they are the solution, but in reality Bitcoin is thriving while altcoins have huge systematic flaws that will eventually lead to their failure.

[dE_logics]

Smaller cryptos are particularly susceptible to the 51% attack. I like mining coins' ability to shape the supply to meet the demand, but it is not without its risks.

[Carlton Banks]

Altcoins like to claim that Bitcoin is dying and they are the solution, but in reality Bitcoin is thriving while altcoins have huge systematic flaws that will eventually lead to their failure.

There are smaller rivals to Bitcoin where it's a publicly known fact that the hashpower is controlled by 1 miner. Apparently, the only thing that's stopping that miner doing similar 51% attacks is how ethical they are

[IconFirm]

Altcoins like to claim that Bitcoin is dying and they are the solution, but in reality Bitcoin is thriving while altcoins have huge systematic flaws that will eventually lead to their failure.

There are smaller rivals to Bitcoin where it's a publicly known fact that the hashpower is controlled by 1 miner. Apparently, the only thing that's stopping that miner doing similar 51% attacks is how ethical they are

Exactly - & the chances of that miner being ethical are pretty much zero....

[hatshepsut93]

There are smaller rivals to Bitcoin where it's a publicly known fact that the hashpower is controlled by 1 miner. Apparently, the only thing that's stopping that miner doing similar 51% attacks is how ethical they are

I always thought that the profitability of 51% attacks can be a bit tricky to calculate, because it should crash the price very quickly, so attacker's coins that they have rolled back should cost less than before they have attacked. But by looking on the recent charts, we can see that both Verge and BTG haven't dropped significantly, just the usual cryptocurrency volatility and some minor downtrend of the whole market. So, if attacker was able to sell their coins twice, they could have gained close to 100% profit.

Also, exchanges should really have some flexible deposit confirmation times that proportionately increase with deposit amounts, it's a huge flaw if they don't do this. If they require only a few confirmations for depositing millions, and those few blocks cost only thousands to mine, then double spending is extremely profitable.