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Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions
- ryanwaggoner 8y agoIf Bitcoin became the dominant currency of humanity, eventually we’d darken the galaxy by building Dyson shells in the ultimate energy arms race to prevent a 51% attack. Joking. Mostly.
- andirk 8y agoA 51% attack, like you're saying, only needs more than half of the hashing power and that's it, and the whole thing is blown. But then again, all you need is 51% more weapons than your enemy and you can probably beat them too.
- quickthrower2 8y agoHaving fun with your idea: How do you adjust the algorithm for the communication time between opposite nodes. Let's say earth distance, 16 minutes at speed of light direct.
- deleted 8y ago[deleted]
- AlexCoventry 8y agoYou don't; it simply takes 200,000 years to confirm your transaction is in the highest-work chain in the galaxy.
- SurrealSoul 8y agoKnee jerk reaction: Good. However since it is a 'Bitcoin cash' type coin this will ultimately hurt bitcoin and the community as a whole. I can already see the buzz "Bitcoin double spending attack!" articles
- mr_spothawk 8y agoseems more ammo for the argument by Bitcoin Maximalists - cant easily own/manipulate a larger network
- jadedhacker 8y agoAlso minimalists.
- mr_spothawk 8y agoah, yes. never forget the devil you know.
- cm2187 8y agoParticularly when the mining is concentrated in a handful of big players in the same jurisdiction with an authoritarian state...
- XR0CSWV3h3kZWg 8y agoAs someone that follows the space partially because it's a really cool story, I am amped about all of the attacks these days! It looks like there weren't any protocol failures or anything that made the attack easier. It's a simple case of 51% attack. The hashrate for BTG is well below most other coins, a modest miner on another coin could easily switch and execute the attack, then switch back to their main coin and not have to pay large transaction costs for hardware acq or rental costs.
- jmeyer2k 8y agoI don't have an opinion on BTC vs. BCH, but I think network innovation through competition of these coins is ultimately a good thing. The free market will dictate what each of them is worth for different use cases. In any case, increased competition will increase the quality of Bitcoin and cryptocurrency as a whole.
- m-p-3 8y agoTo be fair I had to reread the title, as I initially read Bitcoin without focusing on the word Gold.
- XR0CSWV3h3kZWg 8y agomore details here: https://forum.bitcoingold.org/t/double-spend-attack-on-exchanges/1362/17 https://forum.bitcoingold.org/t/double-spend-attack-on-excha... Bitcoin gold was a fork to try and decentralize mining. It changed to a proof of work that is supposed to be ASIC resistant. It looks like the typical situation is mining by GPU for equihash (BTG PoW). BTG hashrate is at ~30MH/s at the moment, where Zcash's hashrate is at ~486MH/s. I don't have the numbers off hand, but it'd be interesting to see how many GPUs you'd need to pull of a double spend against BTG and if any of the other equihash coins saw a drop off during the attack. It'd be really interesting if it wasn't a rental attack, but an invested miner just switching over to BTG to achieve the hack. They reversed 22 blocks, the recommendation is to increase the # of confirmations to rely upon to 50. If you are trying to react to 51% attack doubling the number of confirmations only doubles the cost of attack, and the attacker likely just doubled the number of BTG they have. If they can pay the electricity/rental cost for the attack they have enough BTG to execute the attack in a cost effective manner again.
- s73v3r_ 8y ago"It changed to a proof of work that is supposed to be ASIC resistant." These are the absolute worst. All they're doing is causing the cost of graphics cards to go up.
- XR0CSWV3h3kZWg 8y agoIt's great if you own NVDA!
- cozzyd 8y agoMaybe Nvidia is responsible for it
- tedunangst 8y ago> If the exchange is aware of the attack, they may also freeze his account, so that all the funds will be locked inside the Exchange. A failed 21 block attack performed with a 10,000 BTG deposit where the Exchange freezes the account in time will result in a 10,262.5 BTG loss for the attacker. (From link.) That sounds problematic. If I deposited coins and the exchange determined I was attacking them (how does that work beforehand?) to confiscate my money I'd be pretty miffed.
- ada1981 8y agoCurious if this is illegal in anyway? I suppose there will be increasing incentive to do the numbers on the hash cost to take over a coin and to execute these attacks. Neat.
- mike-cardwell 8y agoI think stealing is illegal, yes.
- sizzzzlerz 8y agobut what is the jurisdiction?
- tedunangst 8y agoWherever the exchange is?
- georgemcbay 8y agoDoes wherever the exchange is recognize Bitcoin Gold as legal tender? The issue seems a lot more complex than either "of course this is illegal" or "of course this isn't illegal". I'm certainly not arguing in favor of either of those positions.
- gowld 8y agoIt's obviously not legal tender (you can't pay taxes in BTG), but that's irrelevant. If can be bought and sold, it's property that can be stolen.
- deleted 8y ago[deleted]
- PeterisP 8y agoWhy would the legal tender issue change anything whatsoever? Fraud and theft statutes in general don't have any specific limitations to what the stolen assets must be, it's sufficient if they have some nontrivial value. No matter if Bitcoin Gold is treated like a currency, a security, or other asset, the treatment of it regarding fraud or theft would be the same. In general, this seems like a clear-cut case of fraud - there's a victim (the exchange) that suffered a loss (by allowing to withdraw the coins) by deception (the attacker "demonstrated" that they deposited the coins, but reversed it), and there's clear premeditated intent to arrange the scheme for the attacker's financial benefit. The technical details of how the victim was convinced to accept the deal and how the funds were extracted, and what's the nature of the currency are not particularly relevant to whether it's fraud, they'd be used only as evidence to show what happened and to evaluate the amount of loss.
- 49bc 8y agoSatoshi really downplayed 51% attacks in his/her original whitepaper[1]: > The incentive may help encourage nodes to stay honest. If a greedy attacker is able to assemble more CPU power than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth. Apparently he didn't realize that coins could quickly be transferred to other crypto and not held, so who cares about the value of the stolen goods. [1] https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf
- XR0CSWV3h3kZWg 8y agoYeah in the next couple years I'd expect to start seeing smaller PoW chains wither away due to attacks like this and exchanges starting to have prohibitively high conf times as they'll need to protect them selves from attacks like this. Merchants are probably fine.
- gowld 8y agoThe point is that stolen goods cost as much as mined goods, so why would an attacker prefer to steal? (Unless they are trying to vandalize the ecosystem)
- 49bc 8y agoThe calculus to steal compared to mining is actually much cheaper. Just briefly hold 51% while you double spend some massive wallets.
- drexlspivey 8y agoAssuming the counterparty is an idiot and accepts your huge payment with a very low amount of confirmations.
- mikekchar 8y agoI think it's probably fair to say that he/she did not anticipate people spinning up a whole bunch of crypto-currencies and that those crypto-currencies would be worth something. How many coins are out there that are worth millions of dollars to people speculating? I certainly wouldn't have given that idea credence at the time Satoshi wrote the original whitepaper. I personally thought that BTC would either be successful (in that it would be a useful currency) or that it would tank. I did not anticipate people dumping piles of money into it to speculate on its value. I certainly did not anticipate a bunch of wannabe coins sitting on millions and providing practically no value to anyone. It's a testament to the number of people who are desperate to get rich. I probably should have taken a cue from the lotteries...
- paulie_a 8y agoI am just going to say two things: 1 it was only a matter of time 2 LoL
- joejerryronnie 8y agoBut what about my Lambo?!!
- davesque 8y agoExchange owners probably already have lambos.
- mike-cardwell 8y agoCrypto currencies are worthless unless they have an enormous amount of hashing power behind them. We could really do with a webpage with a list of crypto currencies, the hashing power currently behind them, and how much it would cost somebody to take over 50% of the network. Or does that already exist?
- madeofpalk 8y agothere is http://arewedecentralizedyet.com http://arewedecentralizedyet.com
- mike-cardwell 8y agoWhilst that's an interesting page, it lacks the most important part of my request: "and how much it would cost somebody to take over 50% of the network"
- drexlspivey 8y agoMaybe all that energy spent to secure the chain is not so bad after all.
- jacquesc 8y agoSo it's not a complete waste of natural resources because it helps secure "the chain"?
- davesque 8y agoAnd the freakout cycle begins anew.
- Havoc 8y ago>Obtaining this much hashpower is incredibly expensive Is it? Presumably you only need to maintain it for a short amount of time. Sounds like something one could smash with google cloud preemptible GPUs or similar. Especially since such an attacker is presumably not above using a stolen CC or three.
- 49bc 8y agoAlso they only need to hold 51% for as long as they can complete the double-spend attack.
- celticninja 8y agoThe article says they reversed some transactions up to 22 blocks later, which is 220 minutes, or 3 hours 40 minutes. So they would only need 51% for that time, but they didn't just add 51% of hashing power or that would be noticeable on the charts. From the looks of it [0] the hashrate has been falling slowly since BTG was created, so the miner may have just become the one with 51% by virtue of keeping mining with the same setup and then watching others stop mining, increasing his share of the network with no extra effort on their behalf. I would assume this miner also realises that BTG is dead/dying and is trying to extract as much as possible from it before they move their equipment to a new chain. If this attack method proves sufficiently profitable perhaps the miner will look at dying chains he can easily overpower instead of trying to mine a more profitable chain with a higher hash rate. [0] https://bitinfocharts.com/comparison/bitcoin%20gold-hashrate.html https://bitinfocharts.com/comparison/bitcoin%20gold-hashrate...
- Uberphallus 8y agoThe hashrate doesn't measure orphaned blocks.
- barbegal 8y agoUnder normal free market assumptions, the cost of double spending is simply the expected reward of each block multiplied by the number of blocks that need to be mined. For bitcoin, where the reward for finding a block is currently ~$100,000, that means you should be able to double spend by mining 6 blocks at a cost of less than a million dollars. The question is: are bitcoin miners subject to the usual free market assumptions? If someone offered you double the market rate to hire a bitcoin miner for an hour would you accept that offer or not?
- powera 8y agoIf Bitcoin Gold weren't worthless before, it is now. If it weren't so difficult and risky to sell this, it would be worth almost nothing already.
- gruez 8y agoonly down 10-20%
- CryoLogic 8y agoHence why Iota is still using their coordinator.
- gruez 8y agocentralization does solve a lot of issues, but at that point you might as well go with a postgres instance.
- deleted 8y ago[deleted]
- jhpriestley 8y agoWhen Bitcoin was running up to $20,000, I tried to analyze the system and come to a personal conclusion about its equilibrium value, because I didn't want to miss out if it really was the currency of the future. I ended up not investing, because of the possibility of a double-spend attack. I think that cryptocurrency enthusiasts are seriously underestimating the importance of double-spending attacks to the economics of bitcoin and other cryptocurrencies. A few points that convinced me not to put my money into this system: If hash capacity were traded on a perfectly competitive market, then it would always make sense to rent 51% of the capacity at market rates, earn the transaction fees, and also perform a double-spending attack. There is no equilibrium point for transaction fees where this attack becomes uneconomical. The only defense is that the market for hash capacity is imperfect. The market for hash capacity is going to become more efficient over time. ASIC miners will be commoditized, so that hardware investment becomes a much smaller factor in hash cost versus energy. This might be even worse during a bitcoin downturn, because there could be a glut of ASIC miners. Miners will coordinate with market prices, turning off capacity when the price dips (for example, because someone is underbidding to create a 51% attack). If mining becomes more decentralized, it will be harder for miners to act in their common interest (fending off 51% attacks) and against their immediate interest (selling their hashrate to the highest bidder, or taking it off the market during an underbidding attack). High transaction volume is not necessarily any help - the more transaction volume, the higher the cost of the attack, but the greater the rewards. The semi-anonymous nature of bitcoin means that one could easily flood the network with double-spend transactions. Attacking a huge network like bitcoin would be an audacious and expensive act, but there are certainly organizations with the resources to do it, e.g. intelligence agencies, organized crime. The massive rewards to such an attack also offset fixed costs such as writing and testing the software to carry out the attack.
- Taek 8y agoIn the bitcoin system, miners make literally billions of dollars a year protecting the network. Any successful attack on the bitcoin network is going to massively erode confidence, reduce the price, reduce the usage, and therefore reduce the value of all that single-purpose, bitcoin-only hardware. Large miners don't want to see Bitcoin get attacked because it destroys their income and de-values their incredibly expensive hardware. This is also why miners won't just let you borrow their hashrate for a while - it's a big issue if you use that hashrate to undermine their cash cow.
- nemoniac 8y agoBitcoin Gold has a director of communications?
- cies 8y agoThe team behind Cardano is proving their algorithms. I think they have even proven Bitcoin in the process, of proving their own algos. I guess this is why one would like proofs, and proglangs that can (to some extend) incorporate the proofs/laws so your code is checked against them.
- zeth___ 8y agoPurely hypothetical and mostly stupid: could double spending attacks be a way to overcome the issue of a limited supply of coins and the fact the total number of coins tends to zero as old coins are lost?
- sanxiyn 8y agoNo, because transactions are reversed in double spend attacks. It does not increase the supply.
- 21 8y agoIf you wanted you could "reclaim" coins which didn't move in 10 years let's say. Or you could just issue new coins. There is no need to go to such convoluted lengths.
- rspeer 8y agoThey already overcome the limited supply of coins by forking Bitcoin.
- daveguy 8y agoWhat do you want to bet the attacker shorted other crypto while they were at it?
- harryh 8y agoHow many millions? Is it time to update http://dayssinceacryptocurrencyexchangehaslostmorethan100million.com/ http://dayssinceacryptocurrencyexchangehaslostmorethan100mil... ? Meh. I think I'm just gonna go ahead and add it. I haven't been paying close attention. I'm sure I've missed 1 or 2.
- cutler 8y agoSo much energy from the brightest minds of our age dedicated to getting something for nothing. I'm outa here.
- CamelCaseName 8y agoThey're not getting something for nothing. They're taking money from others.
- comboy 8y agoYeah, producing software is insane.
- cutler 8y agoI was referring to those out to game the system, not the creators of the software. Then again, I have the same contempt for stock market traders, currency speculators and purveyors of financial "products", "instruments" or any other crazy term invented to make getting something for nothing sound respectable.
- zaroth 8y agoSo this would require an attacker to pay into the exchange with BTCg, have the deposit clear and approve for trading, trade it for another currency, and have that trade settle and be clear for withdrawal, and then process the withdrawal, all in under 4 hours. After which point the attacking miner surfaces a longer chain they had been keeping which doesn’t include the original BTCg deposit. Alternatively, if the exchange isn’t smart enough to pay short-term withdrawals with inputs that link back to the recent deposit, an attacker could just deposit and then withdraw with no trade and the withdraw transaction is valid even if the deposit is double-spent. An exchange that lets a trader deposit millions in one crypto-asset, exchange it for another, and clear a withdrawl in 4 hours... got what was coming to them? Where’s the KYC process for a million-dollar deposit? There’s a reason new deposits in a brokerage account take a few days to settle / be cleared for trading. And again after selling before funds can be withdrawn. And that’s a currency where most transactions can be reversed! It would be one thing to allow 10 block settlement for Bitcoin main-net. It’s another to allow it with a thinly mined alt-coin.
- josu 8y agoMany people use exchanges for arbitrage. Exchanges benefit from arbitrage since they take a fee out of every trade and because they want their prices to be close to the international price of the asset. This trade would look exactly the same as an arbitrage move.
- zaroth 8y agoI still maintain that letting the assets come in and leave on a different blockchain within 24 hours is akin to a “RTFM” level mistake. If exchanges are enticing arbitrage through insanely quick setttlement and clearance times on the order of 2 hours after closing a position, they are just playing with fire. If there wasn’t an actual trade, just transfering in and out, not chaining the transactions is similarly RTFM. If the facts are as I understand them, I think the exchange bears a significant portion of the blame. It’s like the story a couple weeks ago where Deutche Bank accidentally approved a wire transfer for $35 billion dollars.
- cat199 8y agoAnyone well versed in this topic care to comment about how these attacks might/might not relate to the 'proof of work vs proof of stake' debate in the wider cryptocurrency world?
- guiomie 8y agoHow is the price not crashing? It's down 10%, which is pretty much like the rest of the market.
- 21 8y agoBecause shitcoin prices have no relation to any sort of reality. Some shitcoins are traded on exchanges even if no actual coin or code existed.
- guiomie 8y agoThey would exist as ERC20 tokens I believe...?
- fiatjaf 8y agoEOS has begin trading without any of that. Now it's a ERC20 token, I guess, but still there is no code, no network, no nothing -- and in fact their creators have declared they won't be starting the network or whatever, they're just selling "the idea". The tokens themselves have no value at all, they only _hope_ that whenever someone starts the network they will give some privileges to the current token holders.
- glitch003 8y ago>but still there is no code, no network, no nothing EOS mainnet launch is June 2nd, 9 days away. There's lots of code: https://github.com/EOSIO/eos https://github.com/EOSIO/eos Check this cool demo out: https://eosauthority.com/space/ https://eosauthority.com/space/
- fiatjaf 8y agoOk, many things may have changed, my latest information was from about an year ago, when there were people buying the token already.
- CamelCaseName 8y ago
- hartator 8y agoStupid question: If an attack allows to successfully double spend, can you also triple spend or quadruple spend?
- Cogito 8y agoWell sort of. Double spending is just convincing the network you've sent coins to multiple places, and then undoing all of the transactions that were 'paying' for something (in this case paying for credits at an exchange). The actual details of what they were doing matters and I don't know them, but it's almost certainly simpler to chain double spends together, one after the other, than to try and do three or more transactions concurrently then reverse most of them. This achieves the same thing as a triple or quadruple spend but only necessitates reversing one transaction at a time.
- oceanman888 8y agoI met the founder of Bitcoin Gold a few month before, I can not tell if there is any other reason he forked bitcoin than mere profit. He said he was going to fork ether as well. Given the speculative nature of the people involved in this network. could this be a inside job?
- zerostar07 8y agomaybe Bitcoin Diamond will prove harder
- davesque 8y agoI see what you did there.
- apo 8y agoOddly enough, one of the selling points of Bitcoin Gold (a hard fork of Bitcoin) was its use of Equihash instead of SHA-256. The idea was that a memory-hard proof-of-work function would inoculate Bitcoin Gold from miner centralization. The problem with mining centralization is that sufficiently powerful miners can attack the network by rewriting blocks. This opens the door to double spending. This was exactly the attack the article described. It appears that Bitcoin Gold's decision to use Equihash led to this mess. The algorithm is used by several other coins. Hardware optimized for this algorithm can therefore be used with equal ease to mine on a network or attack it. Bitcoin Cash may be headed for a similar fate. It retains SHA-256, but is a minority chain in terms of hash power. A powerful Bitcoin miner deciding to perform double spends on Bitcoin Cash would have everything needed to do repeat the Bitcoin Gold attack. BTW, a similar attack recently occured on Verge: https://blog.theabacus.io/the-verge-hack-explained-7942f63a3017 https://blog.theabacus.io/the-verge-hack-explained-7942f63a3... It's possible that any altcoin that becomes sufficiently valuable will suffer similar attacks to the ones that have now taken place on Verge and Bitcoin Gold.
- hinkley 8y ago> It's possible that any altcoin that becomes sufficiently valuable will suffer similar attacks to the ones that have now taken place on Verge and Bitcoin Gold. The trust in these systems seems to be based on proving a negative. The lack of an attack is neither a proof of robustness nor proof that one or more zero days aren’t already known. We can only “know” it’s safe when the temptation to use an exploit is far too high to resist. I think there are a lot of people who imagine “an attack” as a ready-aim-fire affair. There’s a juicy target, someone concocts a plan and then uses it. But as you illustrate, maybe there is already a plan and someone is waiting for the target to get juicy enough. Aim, ready, fire.
- IkmoIkmo 8y agoThe problem I think is that there are 25 cryptocurrencies bigger than it. Particularly with its form of mining, it's trivially easy for say a big player in the 10th largest currency to shift their mining power to a smaller one like Bitcoin Gold, overpowering everything else. Normally the non-51% attack argument is that anyone who invests enough in 51% of the infrastructure and has sufficient coins to profit from double-spending, is very unlikely to do so because it would render the coins and mining equipment worthless or at least worth less than the investment had cost. That'd be true for bitcoin, but not for a GPU-mined 26th largest cryptocurrency. You can completely destroy it, cash out and use your equipment elsewhere on coins in which people still have faith.
- brudgers 8y agoTo me, this shows how Bitcoin type cryptocurrency mining incentives line up. For good actors, there is little to no incentive to seek 51% capacity whereas there is a lot of incentive for bad actors to seek it. As an economic activity, the logic of ruthless competition makes double spend capability the holy grail. Double spend is the sole reward for 51% capacity.
- root_axis 8y agoI'm just waiting for the day when it's revealed that ~70% of miners on a top 5 cryptocurrency are compromised by a specialized worm or malware. We'll probably only find out after the double spending is discovered but this type of outcome seems almost inevitable. The people writing this type of software are definitely financially motivated, but I can easily imagine such a person throwing away millions of dollars in 0-days just to fulfill such a hackneyed cyberpunk cliche. Also, we know that things like stuxnet exist. Imagine something even a fraction as crazy as that targeting mining nodes. It's going to happen eventually.
- gruez 8y ago>We'll probably only find out after the double spending is discovered but this type of outcome seems almost inevitable attacks like this is harder to pull off than you think. miners constantly submit "shares" to the pool, which are then validated to credit them a share in the block reward[1]. depending on the difficulty threshold of the shares are, these could be submitted a few times a minute to every few minutes. if you hacked and gained control of the miners, sure you can redirect all the hashing power to you, but this will be detected quite quickly. with thousands of dollars on the line per minute, you can bet that everybody has monitoring in place to detect a dip in shares submission. also keep in mind that you have to keep this going for about 1 hour (for your initial transaction to confirm) without people noticing. moreover, the core problem stealing hash power to do a 50% attack is that block times will skyrocket on the main chain, which will let everybody (and not just the pool operator) know that something's up. plus after this attack, you can bet that exchanges will start requiring additional confirmations for large deposits, and instituting withholding times for cryptocurrency withdraws. [1] I don't know whether large mining operators do this. Strictly speaking, they don't but I'd imagine they do this because it lets them know that their rigs are up and producing valid hashes (ie. not malfunctioning). It's almost certain that small mining operators use pools.
- root_axis 8y agoYou're right that there are a few canaries in the coal mine, but there are a lot of creative options if you have the ability to execute arbitrary code on a mining node botnet, assuredly some of which are yet to be discovered (as far as we know). Consider as well the many financial opportunities available to someone who may have an interest in sabotaging or disrupting some kind of mining activity, perhaps in subtle ways that are not usually noticed.
- alistproducer2 8y agoWhat's interesting to me is that the bit game theory that is supposed to make such an attack unprofitable seems not to be holding here. Supposedly the idea that the blockchain was insecure would devalue the coin to such a degree as to disincentive people from attempting these sorts of attacks. I see virtually no movement in the price of BTG and relatively little in XVG (also attacked this week). If anything, the fact that the chain's integrity can be compromised and nothing happens appears to undermine a core assumption of Nakamoto consensus.
- deleted 8y ago[deleted]
- gruez 8y ago>Supposedly the idea that the blockchain was insecure would devalue the coin to such a degree as to disincentive people from attempting these sorts of attacks The original claim was: >He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth what satoshi didn't take into account, is the rise of "cloud mining" services and thousands of competing "alt-coins" using the same hashing algorithm.
- granaldo 8y agoHow is the price https://www.coingecko.com/en/price_charts/bitcoin-gold/usd https://www.coingecko.com/en/price_charts/bitcoin-gold/usd still good when this is all over the news?
- bearjaws 8y agoThis isn't the first time terrible news has broke and somehow a coin remains valuable. Remember when Bitcoin forked into Bitcoin Cash and somehow everyone just made up a new value for the coin? It was like billions of dollars were created out of thin air, everyone started trading it and nobody batted an eye. Bitcoin even GAINED value. There is no logic or sanity in the coin market.
- carapace 8y ago> In August, a group split the chain to create a new form of Bitcoin that they called Bitcoin Cash. The two blockchains shared a transaction history up until the time of the split, giving anyone who held any number of Bitcoins until the so-called hard fork the equivalent number of Bitcoin Cash on the new fork. (A hard fork is a software change that runs the risk of splitting the blockchain into two, particularly if the community disagrees about it. If you follow Ethereum or cryptocurrency, you may have heard that Ethereum split into Ethereum and Ethereum Classic after a contentious hard fork.) However, many people who didn’t support Bitcoin Cash dumped their coins quickly, and, after initially spiking up to $900, the price has now deflated to about $300. https://firenewsfeed.com/news/635991 https://firenewsfeed.com/news/635991 Good God you're not kidding. It's like a car accident, but there's this siren song urging you to join in because some of the people are thrown free holding chunks of gold. It reminds me of a Jim Gaffigan joke. He's talking about trying to lose weight, and how hard it is when the fast food restaurant has a $2 for 2 burgers deal... "Well... I don't want to lose money on this... I'll take eighty." On the one hand this whole cryptocurrency thing seems to be gone off the rails. On the other hand, I do feel kinda dumb for not owning any.
- duxup 8y agoIs there a laymans explination for this attack? "but the attacker was able to reverse transactions since they had majority control of the network." I thought these crypto currencies didn't allow for reversing a transaction? Or is this "reversing" such as just deposit and then withdraw?
- lawn 8y agoI can try. The purpose of mining is to solve a puzzle. In Bitcoin one solution is expected every 10 min on average. This can then be used store transactions on the blockchain in one block. To add to that block you need to solve a new puzzle and so on. You can reverse transactions if you recalculate the puzzle solutions. This can take time but if you have more mining power than the rest of the network you can win this race. This is called a 51% attack. So for example you deposit to an exchange and wait for that to confirm, in maybe 6 blocks. Meanwhile you create 7 blocks in secret yourself where you did not send to the exchange and release them to the world. The blockchain works by always considering the longest chain as the correct one, therefore overwriting or reversing the old transactions.
- duxup 8y agoThank you!
- Jommi 8y agoIt's not reversing per se, it's like the transaction never happened. They send the money from their address to the exchange, the exchange credits that money. Then they release their chain (that they have been building privately). This chain is taken as the consensus and accepted. Why? Because it is the longest chain. Why? Because it has had more than 50% of hashpower behind it, allowing it to add blocks faster than the current network. Now the trick here is that because a single entity controls this new chain, they can just not include the transaction which happened between them and the exchange. So it a sense, it never happened. Yet, the exchange credited the account -- Thus the exchange account now has currency, and the original account has currency as well.
- 8y ago
- josephagoss 8y agoEvery POW coin should either switch to POS or if they are going to stick with POW they need to focus on a different algorithm and let ASIC development happen. The key to being a weaker chain is to encourage the community to build an ASIC just for your coin. I don't understand this push by many POW coins on sticking with commodity hardware, except for a few giants (zcash, eth, monero) you're going to get destroyed. Dedicated ASIC only for your chain = good. Commodity hardware = bad.
- pm24601 8y ago<snark>Remind me again why cryptocurrency are a good idea</snark> Seriously, the idea of smart contracts can truly be of value if attacks like this are no longer possible.
- Animats 8y agoThis puzzles me. Although a miner with enough hash power can do a double spend, it's obvious from the blockchain that they did so. To bring this off, you have to have huge hash power and be anonymous. That limits the number of possible attackers. Bitmain could do this to Bitcoin, but everybody knows where Bitmain is.
- thedailymail 8y agoIf all that is required to reverse transactions is 51% control, cannot the transactions that occurred during the double spend attack also be reversed by a 51% coalition once the attacker loses its majority?
- IkmoIkmo 8y agoSure but it doesn't solve anything. Remember that people do not trade token A for token A. You don't buy dollars with dollars. You use dollars to buy something else, like euros. So you may reverse one token, but you won't be able to reverse the other. i.e. suppose you have $100 and I have 100 tokens (e.g. bitcoin gold coins). You pay me $100 and I give you the coins. I now double-spend and sell the coins to someone else. You now have no coins and no money. I then double-spend that and give the coins to myself. You could at some point fix this and get the coins back, technically. But you're not going to get your $100 back. Nor is the other person. And the other person never got his coins. So both of you are out of money, and only one has the token. Theft occurred. Moreover, even if you somehow both had the coins, they ought to be worthless because the entire system is completely useless. If a system can be compromised like this, the tokens have no value. Just like a dollar bill has no value if it can be printed, or can magically be transferred to a thief at the click of a button. I used dollars in this example, but the more likely avenue of attack is for the attacker to sell his bitcoin gold for other cryptocurrencies like bitcoin over and over. Like selling an expensive bicycle to a customer but keeping the key to the lock, stealing it at night and selling it to someone else, a dozen times in the span of a few hours. All of this is a major issue without even getting into the political discussion on forming a coalition and deciding which transactions were fair, genuine, worthy to keep, and which weren't. That's virtually impossible, particularly when there's one set of double-triple-quadruple-spent coins out there to distribute with many people making equal claims that they were scammed.
- thedailymail 8y agoThanks for the clear and detailed explanation!
- asasidh 8y agoplay stupid games (like listing shitcoins) win stupid prizes
- AlexCoventry 8y agoI met the founder of Bitcoin Gold at a meetup which turned out to be a sales pitch for Bitconnect, funnily enough.
- wellboy 8y agoYes Bitcoin is vulnerable to a 51% attack right now and so are all other PoW coins. That's why crypto is still in its infancy.
- zygimantasdev 8y agoI wonder if the idea for this attack came from Silicon Valley tv series
- atlih 8y agoNope, this has been happening every year for the last 7 years. Great series though :)
- kmbriedis 8y agoThat's why Proof-of-stake is the way to go, you will never see a major coinholder undermining the coin
- tobiaswk 8y agoWell it was scamish to begin with. 100,000 coins were premined when it forked. With a lot less mining competition a double spend attack was just waiting to happen. It is possible to also do a double spend attack on Bitcoin and Bitcoin Cash. It's just not very feasible because you would need A LOT of hashing power. So this comes as no surprise to me at least.
- zaekona 8y agoOh dear, it's not looking good for Bitcoin. Will Bitcoin recover, or should we let other crypto kings such as Verge take over already?
- Lewton 8y agoA few thoughts: - It rubs me the wrong way to call it an "exploit" when 51% attacks are a core part of the way blockchains function. - I'm surprised that the price for bitcoin gold isn't tanking. That's a sign that the crypto marketplace really isn't healthy right now, imo - Conversely I'm surprised that this isn't causing a spike in coins that are more robust in regards to 51% attacks, like BTC and BURST (because they're both the majority coin in the realm of the resources they require)
- B-Con 8y ago> 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. Not a very precise explanation, just checking, what exactly does this mean? I always thought the way a 51% double-spend attack worked was by broadcasting a transaction for human consumption (eg, I'll give you Y coins for Z dollars), then secretly mining your own blockchain for the N successive chains following it. After the humans have completed the human-level transactions after waiting the standard N successive blocks with no transaction conflicts, you release your own secret blockchain fork back into the public with data that contradicts the current popular one and instruct your network to ignore the competing publicly-acceptable chain. The new private one wins so long as it is equally as long as the public one which it should be because you have more compute power than the rest of the public. Is that basically what happened here?
- swift532 8y agoYou are correct. The longest chain is accepted as the correct one, so if you have 51% hashpower and secretly mine while maintaining majority hashpower the whole time, your chain will be longer and you can publish it at any time, and effectively rewrite recent history.
- giancarlostoro 8y agoHas there been other approaches at solving the double spend problem? I know ByteCoin (which is from scratch and uses 'CryptoNote' (or CryptoNight?) and respectively it's forks which includes Monero are designed a little different and I think they boast having solved the double spend problem too but I am not sure if they just do the same decisions as Bitcoin concerning updating the Blockchain? Anyone care to weigh in on this?
- brownbat 8y agoIt's weird the reaction on cryptocurrency prices today has been so correlated, you'd expect a flight from smaller more vulnerable coins into the larger market caps. Then again maybe everyone is just freaking out about the tether expansion...
- bshastry 8y agohow the heck did he acquire majority hash? Afaiu, this requires massive computational resources that no individual has access to
- Marazan 8y agoNo one would ever actually do a double spend attack as it would be more profitable to mine the currency instead --Every cryptocurrency enthusiast ever.
- throwawaylolx 8y agoSo BTG has a hash rate in the order of tens of M using the same hashing algorithm that is used on the ETH network, which has a hash rate in the order of hundreds of T? So a millionth (10e-6) of ETH hashrate could 51% BTG?
- hwestiii 8y agoWait a minute. Isn't bitcoin supposed to be immune from this?
- fixermark 8y agoThat's going to be okay though, right? Given that it's clear fraud, the FDIC should be able to step in and make investors whole, right?
- zby 8y agoThe strange thing about this is that there is no visible effect on the price of BTG. It is going down true - but most crypto go down now - and when you look at the chart you would not guess that there was such a dramatic event: https://cryptowat.ch/markets/bitfinex/btg/usd https://cryptowat.ch/markets/bitfinex/btg/usd
- branchless 8y agoBolivar isn't goitto zero. Bitcoin base value is comedy value .. ok.
- sauravt 8y agoIs there any way to prevent 51% attacks in bitcoin forks besides increasing confirmations?
- whiteraven96 8y agoWho is taking the money? What is it going to be spent on?
- whiteraven96 8y ago3 attacks in one week?! Who needs this kind of money?
- wrycoder 8y agoI hate to toss in a commonplace, but can’t anyone here play this game?