Ethereum Classic Dips Amid 51% Attack Concerns

Ethereum Classic Dips Amid 51% Attack Concerns

Ethereum Classic’s price has nosedived to its lowest of the year as concerns surrounding the security of the network reach fever pitch. As talk of a potential 51% attack attempt circulates, the official Ethereum Classic Twitter has been trying to calm things down. Unfortunately, Coinbase has had other ideas.

How’s it all playing out?

According to analysis from CoinNess earlier on Monday, a specific mining pool saw a surge in hash rate that alerted them to a potential issue. The article states, “An analyst from CoinNess detected certain abnormality in regard to the mining hash rate of the ETC network. A private pool, with an address starting with 0x3ccc8f74, clutched at his attention with its recent hash rate swings. According to data from Gas Tracker, the weekly average of its hash rate is slightly off 300 GH/s. However, the private pool recorded an upsurge in its hash rate around 11:00 (UTC) on Jan 6, all the way to 3,263 GH/s, making itself a temporary largest pool.”

The theory behind a 51% attack is that a mining pool could take control of over 50% of the network. This would mean that they could halt transactions, double spend and effectively rewrite the ledger. This would be a complete monopoly, and extremely damaging for the blockchain. Of course, to gain control of a currency requires an enormous amount of computing power. The Bitcoin network, for example, has too great a hash rate for this to be possible. But Ethereum Classic only requires a fraction of this, making it more of a possibility.

However, the developers of Ethereum Classic are trying to put out the fire. In a tweet earlier today, they claimed:

Their insistence that Linzhi are testing new machines has been repeated through the day, with the official Twitter promising ongoing updates as they have them.

Coinbase Stops All Trading

But Coinbase are not convinced, and have put a stop on all trading, withdrawals and deposits. In a blog post on the Coinbase Medium page, the company say that they have detected an abnormal hash rate but also 8 chain reorganizations, with double spends totalling almost half a million dollars (88,500 ETC). The post goes on to list the specific reorganizations, stating “The Coinbase team is currently evaluating the safety of re-enabling sends and receives of Ethereum Classic and will communicate to our customers what to expect regarding support for ETC.”

The firm insist that they have not been affected though, and that all Coinbase customer accounts are completely secure. This is a major blow to ETC though, with the currency heavily reliant on Coinbase trade. In fact, the exchange only launched ETC compatibility in June this year, which saw an immediate 25% price jump. Following that, wallet support was added a mere six weeks ago.

While ETC investors and companies involved with the cryptocurrency await confirmation of developer claims, the advice is to increase the number of confirmation blocks to over 400, as a precautionary measure. Still, ETC developer advisor Cody Burns was quick to add on Twitter, that the increase was more likely to be a result of selfish mining than an attack. He wrote, “Chain reorganization is a client-local phenomenon; the entire Ethereum network doesn’t “reorganize” simultaneously. It would be more likely that someone discovered all of coinbase etc nodes and ‘surrounded’ them”.