One thing driving this trend, he says, has been the rise of so-called hashrate marketplaces, which attackers can use to rent computing power for attacks. The hit against Ethereum Classic, which netted more than $1 million, was the first against a top-20 currency.ĭavid Vorick, cofounder of the blockchain-based file storage platform Sia, predicts that 51% attacks will continue to grow in frequency and severity, and that exchanges will take the brunt of the damage caused by double-spends. In the fall, hackers stole around $100,000 using a series of attacks on a currency called Vertcoin. Toward the middle of 2018, attackers began springing 51% attacks on a series of relatively small, lightly traded coins including Verge, Monacoin, and Bitcoin Gold, stealing an estimated $20 million in total. Slumping coin prices make it even less expensive, since they cause miners to turn off their machines, leaving networks with less protection. But it gets much cheaper quickly as you move down the list of the more than 1,500 cryptocurrencies out there. According to the website Crypto51, renting enough mining power to attack Bitcoin would currently cost more than $260,000 per hour. The attacker, who controls most of the mining power, can make the fork the authoritative version of the chain and proceed to spend the same cryptocurrency again.įor popular blockchains, attempting this sort of heist is likely to be extremely expensive. A miner who somehow gains control of a majority of the network's mining power can defraud other users by sending them payments and then creating an alternative version of the blockchain in which the payments never happened. In this process, also known as mining, nodes spend vast amounts of computing power to prove themselves trustworthy enough to add information about new transactions to the database. That’s because most are based on blockchains that use proof of work as their protocol for verifying transactions. Susceptibility to 51% attacks is inherent to most cryptocurrencies. That changed in January with the 51% attack against Ethereum Classic. And many of those heists could be blamed on poor basic security practices. Still, most of the recent headline-grabbing hacks weren’t attacks on the blockchains themselves, but on exchanges, the websites where people can buy, trade, and hold cryptocurrencies. In September, developers of Bitcoin’s main client, called Bitcoin Core, had to scramble to fix a bug ( also in secret) that could have let attackers mint more bitcoins than the system is supposed to allow. To trade cryptocurrency on your own, or run a node, you have to run a software client, which can also contain vulnerabilities. The protocol isn’t the only thing that has to be secure. Fortunately, no one seems to have actually done that. An attacker could have exploited it to make unlimited counterfeit Zcash. Earlier this month, the company in charge of Zcash-a cryptocurrency that uses extremely complicated math to let users transact in private-revealed that it had secretly fixed a “ subtle cryptographic flaw” accidentally baked into the protocol. Even central banks are now looking into using them for new digital forms of national currency.īut the more complex a blockchain system is, the more ways there are to make mistakes while setting it up. Soon-to-launch services from big-name institutions like Fidelity Investments and Intercontinental Exchange, the owner of the New York Stock Exchange, will start to enmesh blockchains in the existing financial system. That’s what’s made the technology so appealing to many industries, beginning with finance. If set up correctly, this system can make it extremely difficult and expensive to add false transactions but relatively easy to verify valid ones. The protocol employs cryptography, game theory, and economics to create incentives for the nodes to work toward securing the network instead of attacking it for personal gain. A blockchain protocol is a set of rules that dictate how the computers in the network, called nodes, should verify new transactions and add them to the database. Before we go any further, let’s get a few terms straight.Ī blockchain is a cryptographic database maintained by a network of computers, each of which stores a copy of the most up-to-date version.
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