Ethereum Classic (ETC), a spin-off of the world's second most popular cryptocurrency, suffered a series of major attacks on its blockchain network. Unidentified hackers managed to steal more than $1.5 million (£1.2m). The scheme worked like magic since they performed the so-called 51 percent attack on Ethereum classic's underlying technology.
Just so you know, the 51 percent attack is technically possible on any cryptocurrency, though by its nature, it is difficult to carry out. Why? Because it involves taking control of more than half of the network's mining computer power. The power itself is used for a double purpose - to generate new units of the cryptocurrency and confirm transactions on the network.
After the attack occurred, Coinbase - the cryptocurrency exchange, was forced to cease trades of ETC. Coinbase announced its users via a blog post that more than $1.5 million had been lifted by hackers through the double-spend event.
In a case of such an attack, the first issue of any cryptocurrency exchange is to protect the customer funds. Coinbase immediately paused interactions with the ETC blockchain. Following this attack, they also detected additional reorganizations that included double-spending. They keep monitoring the status of the network.
The so-called double-spends mean that whoever is in control of the network can spend units of the cryptocurrency twice. ETC, being hit by a 51 percent attack, allowed hackers to make off with $1.5 million.
In Bitcoin 2008 white paper, pseudonymous creator Satoshi Nakamoto described this type of attack. If a majority of CPU power is controlled by honest nodes, the honest chain will grow the fastest and outpace any competing chains.
Currently ranked on CoinMarketCap as the 33rd most valuable cryptocurrency, today, ETC is traded for $5.52. The latest attack is likely to damage traders' trust in the asset only. Previously, the 51 percent attacks on cryptocurrencies like bitcoin spin-off bitcoin gold have resulted in a decrease in their market value.
Ethereum Classic Statistics. Source: allcoincap.com
Ethereum Classic Cryptocurrency Chart for the last 24h. Source: allcoincap.com
It's not the first, nor the first attack, but each one gives everyone valuable lessons and new purposes.