A potential attack on a blockchain network where a single entity gets control of the majority, of the hash rate of the network is a 51% attack. In such a scenario, an attacker can exclude or modify the transactions, their order and even prevent any new transactions from getting confirmations. The attack can even reverse transactions, leading to a double-spending problem.
Because of the fact that blockchain is maintained by a distributed network of nodes, it tends to be highly secure and the bigger the network, the stronger it is.
Bitcoin Gold is the 33rd largest cryptocurrency with a market cap of $205 million. Despite the reports of the attacks, its price today jumped to $12.56.
Currently, it is trading at $11.83, up 130% YTD but down 98% from its all-time high of $518.
$72,000 worth of BTG Double-Spent
According to a report on GitHub by James Lovejoy, a researcher at MIT’s Digital Currency Initiative, on Jan. 23 and Jan. 24 two reorgs occurred on the Bitcoin Gold, a network that aims to be GPU-mineable by using the Equihash algorithm also known as “Zhash”.
Bitcoin Gold team also took to Twitter to announce these two 51% attacks that successfully reversed deposits to an exchange, the first one reverting ~1900 BTG, the second ~5267 BTG.
However, there is no information on if the attacker “successfully extracted any value from an exchange,” they said.
Novel 51% resistant decentralized consensus algorithm coming
The advanced risk control systems in exchanges make it likely that either or both the attacks failed, said Bitcoin Gold team. They are also in contact with exchanges to offer security help and reported that the targeted exchanges have taken effective measures. Binance has increased its withdrawal requirement for Bitcoin Gold to twenty confirmations since then.
The hash power for the attack, the team found came through NiceHash. Based on NiceHash price data for Zhash, the estimated cost of generating a reorg is just 0.2 BTC which at its current price is just about $1,750.
This, however, wasn’t the first time that Bitcoin Gold suffered a 51% attack. Back in May 2018, it was hacked for $18 million.
Bitcoin gold team, however, says it has been working on a “novel 51%/Double-Spend resistant decentralized consensus algorithm since last year” and plan to release it in 2020 Q1.