Attacks 51% is the worst nightmare for cryptos that use the Proof of Work (PoW) consensus method. And the recent attack on Bitcoin Gold has awakened all the demons that had slept time. In addition, the PoS vs. PoW debate has resurfaced with more force than ever.
51% Attack in Bitcoin Gold (BTG)
This new attack on a small crypto with PoW has caused a great debate within the crypto ecosystem.
BTG suffered a 51% attack a few days ago, which resulted in more than 7,000 Bitcoin Gold, or $ 73,000, being victims of what is known as Double Spent.
According to a GitHub post by James Lovejoy, a researcher at MIT, the altcoin emerged from the Bitcoin hard fork (BTC) was attacked by 2 “reorganizers”; which changed the content of more than 10 blocks between January 23 and 24.
In the first attack on January 23 of this year, a total of 14 direct blocks were removed from the Blockchain and then another 13 were added. With a total of 1,900 BTG for a total of approximately $ 19,000, these were also “Double Spending” 2 times in one transaction.
On January 24, another attacker removed 15 blocks, and added 16, for a total of 5,268 BTG, or $ 53,000 in 3 different transactions.
It is worth noting that BTG is a very small crypto, it barely has 200 million dollars of market capitalization, vs 172 billion BTC. And according to Chainalisys data, the price of the attack was only $ 1,700. Necessary to overcome the computing power of 51% of network miners.
Is the PoW a flawed consensus?
Unless you are Bitcoin (BTC), which has a computing power and a simply impressive Blockchain depth, any small crypto would be the victim of such attacks.
As has happened on multiple occasions, a 51 percent attack leaves a large part of the crypto verse discussing whether small altcoins like Bitcoin Gold should exist or not.
But, very few inhabitants of the crypto ecosystem seem to focus on the underlying problem: the Proof of Work.
It is true that the algorithm was revolutionary when it was presented along with the creation of the Blockchain and Bitcoin by Satoshi Nakamoto in 2008.
Another thing that is also true, is that this consensus method also has major flaws; which have been exploited in multiple occasions.
- Feathercoin (FTC)
- Vertcoin (VTC)
- Bitcoin Gold (BTG)
- Ethereum Classic (ETC)
- Verge (XVG)
These altcoins have been hit one, or more times, by these same problems. What has led the most extremist to think that the 2 big crypts currently BTC and ETH will be the next to suffer a violation of their consensus method.
Defects in Proof of Work
One of its less commented defects is the legal ambiguity that exists on these attacks.
While obtaining force control of 51% of the computing power of a Blockchain network is seen within our cryptoverse as atrocious; The act itself is not an illegality. For possessing computing power does not violate any traditional law.
According to the American lawyer specialized in crypto regulation, Josh Lawler:
There is no legal definition for a 51% attack. Although the law of the United States recognizes the Double Spend as a robbery, attacks of this type within a Blockchain remain unexplored territory, said Josh Lawler.
In addition to this serious problem, these cryptocurrencies with the PoW consensus method have centralization problems. Since the majority of mining hardwares manufacturers are Chinese, some estimates have shown that up to 65 percent of all Bitcoin mining in 2019 came from China.
The centralization of the mining power of BTC has been one of the most debated problems in the cryptoverse. But, the fact that a 51% attack on the world’s largest crypto would cost the staggering $ 1.4 billion seems to have reassured much of the industry. Well, this issue is not even taken into consideration in most cases.
The figure to gain the necessary computing power for other altcoins is considerably lower. For example, to get the majority of the Bitcoin Cash (BCH) Hash Rate, you only need $ 72,000, or Lightning Network $ 65,000, or an attack on Ethereum Classic $ 15,000.
Mass migration to PoS
Because not many cryptos can keep up with Bitcoin or Ethereum; There has been a massive migration to a “new” consensus method called Proof of Stack in recent years.
This fits more with the realities of most cryptocurrencies. Which do not have an ecosystem of miners so wide and strengthened that any 51% attack is not financially viable. We have already seen that the attack on BTG cost only 1,700%.
The world of PoS is dominated by Cardano’s successful “Ouroboros” algorithm, which has put pressure on those crypto projects that don’t want to abandon the original PoW.
Even the very Ethereum Foundation is moving, very slowly the road to migration to PoS. Is it the end of the PoW?
What do you think should the smaller crypts migrate to PoS ?, or will they still rely on the PoW originating in Bitcoin?
Economics student of the UCV. Defender of individual freedoms and of course also of the market and cryptocurrencies.