That's not good!
A few weeks back I was hearing rumors about an unknown entity called Qubic attacking the XMR network and reorganizing blocks to steal money. I didn't really look into it further, but it sounded like a pretty dire situation especially with number going down at an alarming rate.
Tales of my demise have been greatly exaggerated.
As we can see from the chart no one is able going to go back and point to the moment that XMR was 51% attacked. Nothing about this looks out of the ordinary, and in fact XMR still has potentially the best looking chart of all the cryptocurrencies out there; not in terms of gains of course but of stability and predictability.
I personally bought XMR for the first time in a HODL bag relatively recently when it dipped down to $100 after the Binance delisting, so obviously I'm still way up on that small move. I'd say there's a pretty strong chance this entire thing blows over, especially considering the fallout of this event.
The Fallout
Qubic has marketed this event as a huge win for their network and...
... a pivotal moment in the crypto industry, serving as the ultimate validation of Qubic's "Outsourced Computations" and "Useful Proof of Work" (UPoW) models.
So the argument being made here is that the "ultimate" expression of useful proof-of-work algorithms is to attack other networks and challenge the security model of all POW chains? Turns out Qubic is itself a POW chain so this logic is beyond ignorant and foolish.
This does represent an interesting example of the Prisoner's Dilemma. Qubic has bolted on their POW rewards onto another chain, which means that XMR miners had the option to mine the Qubic blockchain for both Qubic and Monero rewards. Now participants have the option mine Qubic at a higher reward (in the short term) at the expense of XMR. The "prisoners" always have the option to work together for a better long-term payout, but will almost always "defect" knowing that other people are going to defect and ruin the entire operation.
This is why we can't have nice things.
The fact that Qubic seems to believe what they've done is a sustainable action baffles the mind. Apparently they reorganized the Monero blockchain and rolled it back by 6 blocks. Interestingly enough it's also been reported that 60 blocks were orphaned, which doesn't even make sense unless a lot of XMR miners continued mining the dead path even after the chain was reorganized.
So what did Qubic do with their 6 block reorganization? Who did they steal from? How much did they double-spend? Well, first of all, because XMR is a privacy chain it's a lot harder to figure that out considering that every operation is masked in terms of sender, receiver, and amount sent. However, I think it's being implied that they did not steal anything and just did this to gloat.
As a reminder there are very few ways to actually steal money from a 51% double-spend attack, and all of them are felony crimes, whereas the law surrounding the original 51% attack itself is much less clear and infinitely easier to get away with.
It's also pretty obvious that Qubic is heinously centralized, because getting decentralized consensus to hack another network just for a idiotic marketing campaign would basically be impossible to achieve otherwise.
Wholly Unsustainable
So what stops someone from cloning Qubic and then using that clone to hack Qubic for triple rewards, and then another clone popping up to hack that clone for quadruple rewards? The entire premise of this scam is an obvious pyramid scheme, and eventually purposeful 51% attacks themselves will become a serious crime, negating any potential gain from such action.
The most bothersome part of this story is that it would be very easy to justify banning Qubic mining altogether, which then opens a Pandora's Box to allow other legitimate networks being banned as well, because politicians and lobbyists don't have to worry about silly little things like critical details.
There was no 51% attack
As of Thursday August 21 Qubic had a maximum hashpower of 2.6 Gh/S, which was self-reported by them. The (proven) Monero Network Hashrate was at 6.25 Gh/s – which places Qubic at far below 50%. This still sounds like a lot, but show that any claims of a 51% attack are provably wrong: there was no 51% attack, and more importantly: is very far from being a “successful 51% attack” or network takeover.
Based on some of the information floating out there Qubic got lucky with their attack and probably wasted a lot of money on failed attempts before actually getting one through, again pointing to the unsustainability of it all. Not to mention now that this has happened miners will be less likely to trust or mine Qubic, even if the rewards are higher. There are a lot of big miners out there who'd like to avoid association with obvious criminals/bad-actors.
The wake of an event such as this makes me wonder if the crypto ecosystem needs some kind of immune-system-network to utterly destroy networks like Qubic without mercy or quarter. If your stated use-case is be a parasite there's absolutely no reason why you shouldn't be annihilated by the greater good.
I'd like to think that this ordeal lends itself as another reason how POS and DPOS networks can be superior to POW in various ways, but there's really nothing to stop someone from employing this exact tactic against other forms of consensus. Take Hive for example: we clone Hive and then bolt that clone onto Hive for double-rewards. The rewards from Hive are used to buy and burn the clone token, while centralized access to a huge amount of Hive stake allows the bad actors of the clone chain to exploit the host network. 50M HP later the parasite chain is funding proposals to use HBD to buy and burn their own token. 90M HP later every single top 20 witness can be replaced by a sock-puppet again. Something to think about.
Conclusion
The one valuable lesson to come out of all of this is that Qubic reminds us that proper financial incentives are the core frame of sustainability and the ability to scale into the future. This is something that many big players on Hive speak to at length, including myself. Unfortunately Qubic's bastardization of this concept has led to anything but a sustainable outcome. I invite them to have the day they deserve.