Earlier today it was revealed that last week Bitcoin Gold were the victims of what is the Achilles Heel of any cryptocurrency – a 51% attack. Can the BTC fork survive such a catastrophic incident?
This morning (May 25) it was revealed that Bitcoin Gold – a cryptocurrency brought about by a Bitcoin fork – had been the victim of the worst kind of breach of security and protocol – a “51 % Attack”. In a nutshell, what this means is an “attacker” (i.e., a malicious hacker) has taken control of and then altered its blockchain, then set about defrauding cryptocurrency exchanges by exchanging large amounts of BTG for other digital currencies, before cashing out anonymously.
The 51% Attack Explained
By design, a blockchain is created to be decentralized, but if an individual or group controls the majority – 51% or more - of a blockchain’s processing power, they can subsequently tamper with its transactions, opening it up to the possibility of fraud. This is known as a 51% attack.
The possibility of a 51% attack is the one major weakness in blockchain technology, and has been a concern for finance and tech companies looking to use blockchain technology since its creation.
Thus far, the attacker has stolen $17.5 million worth of Bitcoin Gold (BTG) from cryptocurrency exchanges. The Bitcoin Gold team released this statement:
“An unknown party with access to very large amounts of hashpower is trying to use "51 percent attacks" to perform "double spend" attacks to steal money from exchanges. We have been advising all exchanges to increase confirmations and carefully review large deposits. There is no risk to typical users or to existing funds being held.”
BTG 51% Attack Response
The Bitcoin Gold team have subsequently released an update, which is in fact a response to last week’s 51 percent attack. The update confirms what had been initially feared; that a malicious attacker has gained a minimum 51% majority control of the BTG hash rate, then reorganized the blockchain and reverse transactions.
The attacker then made BTG deposits at various crypto exchanges, traded those coins for Bitcoin or another digital currency, then withdrew the funds and forced the rest of the BTG blockchain network to accept falsified blocks, which reversed their initial deposits. These funds then vanished from exchange-controlled wallets.
BTG’s project developers have blamed the attack on the fact that Equihash - Bitcoin Gold’s mining algorithm - is also used by several other cryptocurrencies, resulting in the available hash power being far greater than Bitcoin Gold’s individual hash power, making a 51% attack far easier to accomplish.
New BTG Algorithm
Prior to this attack, Bitcoin Gold’s developers – aware of this vulnerability – had been working on a new algorithm. Now, in the wake of this devastatingly successful attack, team BTG will deploy the new algorithm they have been working on as quickly as possible.
Team BTG released this statement:
“We’ve been working at an incredible pace the past days to put the plan and pieces together, and we expect to upgrade our mainnet approximately seven days after the necessary software is up and running on our testnet.”
“While it would be better to give all our partners more than seven days to test and deploy to avoid disruption, these attacks have already forced disruption on us all, so we feel it’s best to get the upgrade completed as soon as we possibly can.”
Posted from my blog with SteemPress : https://www.bitmoneynews.com/bitcoin-gold/can-bitcoin-gold-survive-the-fallout-from-its-51-attack/