Bitcoin Gold (BTG) has been hit by a double-spending attack that has cost exchanges millions of dollars.

At the end of last week, a rogue miner acquired enough hashrate to execute a 51% attack — that is, he was able to strong-arm the Bitcoin Gold network by using more processing power than all the other miners put together.

Cryptocurrencies are designed to avoid this kind of problem. The blockchain’s security is maintained by the fact that it’s very difficult to fight against the rest of the network. It’s only possible at great cost, or if the network is weak — i.e. has relatively low hashrate. In this instance, the attacker likely chose BTG because of the ratio of network value to hashrate. In other words, it was worth the cost.

When you have 51% of a blockchain network’s hashrate, you can rewrite the blockchain more or less as you wish. The hacker sent his BTG to an exchange, and sent the same coins to another wallet — a double spend attack. The funds were deposited with the exchange, but that transaction was subsequently erased from the ledger. Analysis of the BTG blockchain and addresses associated with the attacker suggest that he netted more than $18 million from the exploit.

Recently, Verge has suffered a similar double-spend attack, along with one or two other smaller coins. Where the network is very small, an attacker may simply be playing games with hashrate just for fun. Where the network is larger and the coin has significant value, there is serious money to be made — as the case of Bitcoin Gold’s 51% attack shows.

Bitcoin was created on the premise that it would be prohibitively expensive for an attacker to acquire 51% of the network’s hashrate. That remains true, and no one has ever successfully attacked Bitcoin. But there are now many blockchains in existence, many of them with orders-of-magnitude smaller hashrate than Bitcoin’s. It might be uneconomical to attack Bitcoin, but if you already own that much hashrate, it might very well be worthwhile to redirect it for a few minutes to attack a smaller chain. Bitcoin Gold uses Equihash, and is designed to be GPU mined, so this wasn’t hashrate redirected from Bitcoin Core. (ZCash was the first to use Equihash, back in April 2016.) One way or another, someone with a lot of GPUs decided to go rogue for a while rather than mine honestly.

We can expect more and more of these attacks to occur in the future. This will be one of the ways in which low-utility coins are weeded out of the market. More broadly, proof-of-work coins will suffer because of this: PoW is great if you’re the biggest, not so good if you’re way down the pecking order.

Read more at https://www.ccn.com/bitcoin-gold-hit-by-double-spend-attack-exchanges-lose-millions/

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