Coinbase Inc. and Kraken have been forced to suspend ETC (Ethereum Classic) trading after the altcoin was a victim of a 51% Attack.
What is a 51% Attack?
A 51% Attack takes place when a group of miners take control of more than 50% of a crypto’s hash rate. The hash rate is the measure of computing power that is being consumed during the process of mining for the cryptocurrency so that the Blockchain stays continuously operational.
If a group of miners are able to take control of a Blockchain (control than 50% hash rate), they can prevent new transactions from being confirmed. They can halt payments and even reverse transactions that had been completed. Reversing transactions that have already been completed is called a double spend.
51% Attack on Ethereum Classic
This possible 51% attack was discovered late on Sunday night by at least two different block explorers – Blockscout and Bitfly (Etherchain). Over 100 blocks of Ethereum Classic were re-organized and, according to Coinbase’s blog post, about 88,500 ETC were identified as being double spent, which totaled about $460,000.
On Monday, it was reported that an in-house analyst had detected abnormal hash rates going into one mining pool. This was potentially causing reorganizations of previously mined blocks.
The ETC core community first refuted these observations, but was later forced to confirm that there was a cause for concern. The core team tweeted that it was working with Slow Mist, a Chinese security firm, as well as others within their community to resolve this issue.
The Question of Duration
How long the 51% attack lasted is in dispute. Blockscout reported the attack lasted from 0200 UTC to 0500 UTC on Monday. Bitfly, on the other hand, stated that the attack was ongoing at 1700 UTC on Monday.
Blockscout’s project leader Andrew Cravenho admitted that the reorganization of ETC’s blocks may have started before they noticed it. Coinbase had reported on its blog that first noticed reorgs as early as January 5.
Whether this was a 51% attack is also under dispute. While all agree that a massive reorg of Ethereum Classic’s blocks took place, not everyone is willing to accept that it was a 51% attack.
According to the ETC developer advisor, Cody Burns, this activity could not be called a 51% attack. Rather, it was a “selfish mining attack” instigated by a client local phenomenon.
Coinbase and Kraken have suspended trading in Ethereum Classic and have adopted a wait and watch approach for the time being. Poloniex also announced that it had disabled its ETC wallets for the time being.