The Ethereum Classic, a 2016 hard branch of the Ethereum’s main Blockchain, has suffered multiple attacks on the network in the last two years. Two of those attacks occurred within seven days, totaling millions of dollars in losses. With the dust having settled after the two attacks of 51%, more details are now coming in, as provided by several industry experts.
„There is no debate about the attacks,“ Terry Culver, CEO of ETC Labs, told Cointelegraph on August 7, responding to a question about whether the network difficulties were in fact 51% attacks. „Community members shared the most accurate information available as soon as possible – while the attack was happening,“ he added.
Culver mentioned the industry’s emphasis on transparency, but also noted that early assessments of incidents may not be as accurate as later conclusions, pointing to the July 31 attack on the Ethereum Classic network as an example, adding: „You may know your house is on fire, but you don’t always know the cause until the smoke clears.
ETC Labs founder James Wo initially said that the manipulation of the network was not a 51% attack on an August 1st tweet. Culver’s comments, however, show updated conclusions after Wo’s first statement, as well as justification for Wo’s initial assessment of the attack.
Two ETC attacks in one week
On August 1, 2020, an initial analysis revealed a reorganization of the Ethereum Classic network, which was thought to be accidental – the result of a miner’s outdated software along with a 12-hour break in mining.
Updated details showed that a nefarious actor deliberately took control of the majority of Ethereum Classic’s mining power between July 31 and August 1, in an effort to allow double spending on the ETC network – essentially printing money. With his efforts proving successful, the perpetrator allegedly stole 5.6 million dollars through the double-spending attack.
Researchers claim that hacking into crypto currency exchanges occurs in three ways
Five days later, news came that revealed another 51% attack on the ETC network. One perpetrator carried out a reorganization of the 4,000-block network. It should be noted that the network also faced another 51% attack over a year ago, in January 2019.
As a result, the OKEx crypto-currency exchange stopped ETC transactions on its platform on August 1 after noticing strange activity involving the asset. OKEx CEO Jay Hao told Cointelegraph that crypto assets that work with Proof-of-Work at their core are at risk of attack at 51%, pointing to their decentralization as the reasoning behind this:
„If it were physically impossible to carry out a 51% attack on a decentralized crypto currency, either by the hash rate or by staking, then that crypto currency would be really centralized/permitted.
However, Hao mentioned that „the cost of doing this to large currencies like Bitcoin outweighs the advantages of carrying out an attack,“ adding that smaller market-capitalization assets are at greater risk of such an attack, especially when those assets have lower hash rates.
The July 31-August 1 attack saw a nefarious actor gain majority control of the ETC network by renting hash power from a NiceHash broker, according to a Bitquery report. The attacker spent $192,000 on hash power, resulting in a 2,800% gain of approximately $5.6 million from the attack.