Almost $500,000 in Ethereum Classic coin stolen by forking its blockchain

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marknesbitt

#1


via ars

Attackers have stolen almost $500,000 worth of the Ethereum Classic digital currency by carrying out a compute-intensive hack that rewrote its blockchain, officials with Coinbase, one of the leading crypto currency exchanges, said on Monday.

The heist was the result of carrying out what’s known as a rollback attack, which allowed the attackers to reorganize the Ethereum blockchain, Coinbase security engineer Mark Nesbitt said in a blog post. From there, the attackers were able to “double spend” about 88,500 ETC, meaning they were able to recover previously spent coins and transfer them to a new entity. As a result, the coins were effectively transferred from the rightful recipients to new entities chosen by the attackers.

“We observed repeated deep reorganizations of the Ethereum Classic blockchain, most of which contained double spends,” Nesbitt wrote. “The total value of the double spends that we have observed thus far is 88,500 ETC (~$460,000).”

Rollback attacks are often referred to as 51-percent attacks, because, in theory, they require an attacker to control a majority of the CPU power generating a blockchain. Such an arrangement violates a core requirement of any blockchain-based currency: it allows a single entity to write the contents of its universal shared transaction history.

Nesbitt wrote:

The function of mining is to add transactions to the universal, shared transaction history, known as the blockchain. This is done by producing blocks, which are bundles of transactions, and defining the canonical history of transactions as the longest chain of blocks. If a single miner has more resources than the entirety of the rest of the network, this miner could pick an arbitrary previous block from which to extend an alternative block history, eventually outpacing the block history produced by the rest of the network and defining a new canonical transaction history.

This is called a “chain reorganization,” or “reorg” for short. All reorgs have a “depth,” which is the number of blocks that were replaced, and a “length,” which is the number of new blocks that did the replacing.

Stated a different way, a rollback attack generates a new fork of the blockchain. This causes nodes to replace the original blockchain with the new one and makes it possible for attackers to reverse previously made transactions. Rollback attacks require control of a substantial fraction of the total hashpower devoted to generating the coin’s blockchain for a period long enough to pull off the attack. Bitcoin creator Satoshi Nakamoto warned of the key limitation in his white paper introducing the digital coin.

Coinbase paused movements of affected ETC funds to prevent any double spends from hitting its users. Meanwhile, the Kraken Exchange temporarily halted ETC deposits and withdrawals and plans to bring ETC funding back online once exchange officials believe it is safe to do so. ETC officials, for their part, have confirmed that double spends are affecting the currency, but they have yet to say more.


Ethereum Classic Risks Permanent Damage After Alleged 51% Attack
#2

This is the time when people say:
“I’m in it for the technology!”
“I’m in it for the project… the people… the team!”

But really… you just hodling those bags!


#3


#4

Please help us secure ETC
Use honeyminer on any pc to mine ETC and earn BTC for securing $ETC

and please tweet @gethoneyminer to keep mining on ETC. or just retweet https://twitter.com/KingTrump16/status/1082674850802688001

thank you.

In it for the Tech!


#5

Ethereum Classic (ETC) began to unravel Tuesday after Coinbase identified at dozen or more attacks on the network, which allowed the perpetrators to double spend at least $1.1 million worth of ETC. The malicious party has apparently launched a 51% attack on the network, which allows users to falsify transactions and spend the same holdings twice.

ETC Begins Long Descent

Ethereum Classic has fluctuated wildly in the last 36 hours, falling from a high of $5.34 on Monday to a low of $4.86 on Tuesday. After rebounding to $5.12, the ETC price has since fallen back to $4.94, according to CoinMarketCap. That represents a 24-hour decline of 4.9%. It’s also a 10% drop from Sunday’s swing high.

The decline has pushed Ethereum Classic down to 18th spot in terms of market capitalization. At the time of writing, the protocol was valued at $531 million.

Trading volumes have nearly doubled in the last week, reaching a high of $180 million. Despite all the news surrounding Coinbase, OKEx and EXX were the largest spot markets for ETC trades. Each platform processed more than 15% of daily transactions, based on latest available information.

51% Attack

Cryptocurrency exchange Coinbase announced Tuesday it had suspended trading in Ethereum Classic after it identified at least 12 attacks on the blockchain network. Coinbase initially detected eight chain reorganizations where double-spending had occurred. The total amount affected was 88,500 ETC, or roughly $437,000 at current prices. The San Francisco-based exchange later said there were 12 additional reorganizations valued at 219,500 ETC ($1.08 million). It’s not entirely clear whether the reorganizations totaled 12 or 20.

In any case, the perpetrators were able to gain control of more than 50% of Ethereum Classic’s network – a so-called 51% attack. This allows them to falsify transactions (i.e. spend the same holdings more than once) and carry out any decision that requires a consensus. As one might expect, a 51% attack is a potential deathblow to any public blockchain. For more on this story, read: State of Emergency.

Smaller cryptocurrencies are most vulnerable to 51% attacks because controlling more than half of the network isn’t as costly as some of the larger blockchains like bitcoin. Case in point: Litecoin Cash and Zencoin both suffered 51% attacks in 2018.

After maintaining a fairly low profile, Ethereum Classic surged into the spotlight last summer after Coinbase announced it would support the cryptocurrency on its platform. The announcement came as a surprise to many people who were expecting Coinbase to select a more highly touted project. At the time, ETC was the 11th largest cryptocurrency by market cap.


#6

Could be more??!


#7

Is this the start of the sequence of events, that will set BTC on a downward spiral to $1200.00 or nah?


#8

Doubtful. These attacks have been going on for months. Verge, zcash, Etc. I think this is the sixth time, and the market has completely ignored them.


#9

nah if anything this makes bitcoin’s case as the only secure cryptocurrency out there. Minority POW chains lack bitcoin’s security.


#10

I am ever more a fan of proof of stake rather than proof of work.