Coinbase: Ethereum Classic Chain Attacked, $450k+ In Crypto Double Spent
Coinbase Reveals Ethereum Classic Chain Was Attacked
On Monday morning, Coinbase took to its official Twitter page to reveal that on Saturday, its internal developers detected a “deep chain reorganization” of the Ethereum Classic (ETC) blockchain.
On 1/5/2019, Coinbase detected a deep chain reorganization of the Ethereum Classic blockchain that included a double spend. In order to protect customer funds, we immediately paused movements of these funds on the ETC blockchain. Read more here: https://t.co/vCx89dz44m
— Coinbase (@coinbase) January 7, 2019
Mark Nesbitt, a security engineer at the world-renowned $8 billion startup, broke down Coinbase’s findings in a recent blog post. Nesbitt revealed that Ethereum Classic’s Proof of Work system, which runs on the ETHash algorithm, had fallen victim to “repeated” block “reorgs,” meaning that an unnamed attacker [group] managed to alter blockchain transactions repeatedly in recent memory.
Per data gathered by the firm, which is mandated to monitor the blockchains it supports, approximately 88,500 ETC has been double spent, a sum that amounts to $450,000 at their transaction time. Citing data from Minergate, Nesbitt broke each reorg down one-by-one, doing his utmost to find the extent of each individual attack.
The first two attacks, which came on Saturday, were innocuous enough, as no overt double spends were detected. Interestingly, the second attack was “highly suspicious,” but considering that no ETC was double spent, no red flags were triggered. Yet, as the third attack hit on Sunday, Coinbase shut down its “interaction with the ETC blockchain,” as ETC was double spent. Over the hundreds of blocks that followed, thousands of ETC was double spent.
As it stands, Coinbase is the only leading cryptocurrency platform to have commented publicly about this situation.
Community Reacts With Skepticism
As this news spread like wildfire, pertinent crypto personalities, analysts, and researchers took to their Twitter soapboxes to comment on this unfortunate situation. Charlie Lee, the creator of Litecoin, claimed that users should be careful with coins that aren’t dominant in their mining algorithm. Lee explained that Ethereum Classic has less than 5% of the cumulative ETHash hashrate, meaning that a NiceHash-based attack cost a mere $5k. To give this $5k sum some perspective, over the course of multiple hours, over $450,000 has fallen into the pockets of the unnamed attackers, meaning that the attack was likely quite profitable.
Be careful w/ coins that are not dominant in their respective mining algorithm, especially ones that are NiceHash-able. ETC has less than 5% of the total Ethash hashrate and is 98% NiceHash-able. 1-hr attack costs $5k. Almost $500k has been double spent. https://t.co/REwM2lFA9Z https://t.co/bqw54LUjke
— Charlie Lee [LTC⚡] (@SatoshiLite) January 7, 2019
Tim Swanson, a leading blockchain builder, took the opportunity to bash PoW blockchains, noting that this form of consensus cannot guarantee settlement finality, even if hundreds of blocks have passed.
this is one of the reasons why “code is not law” because if mission critical and/or long dated assets are issued and stored on an anarchic chain, the disruption to commercial activity could be devastating.
PoW chains, by design, cannot guarantee settlement finality. https://t.co/9oLI3YepRn
— Tim Swanson (@ofnumbers) January 7, 2019
Bitfly, the company behind Etherchain and Flypool, recently advised stakeholders to closely mintor the chain and “significantly increase required confirmations [for deposits].”
ETC Falls As News Propagates
At the time of writing, ETC has begun to plummet, with its chart looking much like a “falling knife.” ETC is currently valued at $5.02 a token, posting a 7.5% loss over the past 24 hours, as the rest of the crypto market trades relatively flat. If historical 51% attacks are any indicator (Verge, Bitcoin Gold, ZenCash, etc.), it is likely that the top cryptocurrency could have further to fall. However, if the Ethereum Classic team and other entities involved in the ecosystem can stabilize the chain, ETC could recover over time.
This is a developing story, so Ethereum World News will be sure to keep you in the loop. Make sure you keep on checking in with us!
Title Image Courtesy of Luca Bravo Via Unsplash