Bitcoin

A 51% attack led to double spending of USD 70,000 to the Bitcoin Gold blockchain

The Bitcoin Gold ( BTG ) blockchain has suffered a 51% attack that has resulted in more than USD 70,000 of double BTG spending. According to a GitHub post by James Lovejoy, a researcher at the MIT Digital Currency Initiative, two deep reorganizations of more than 10 blocks hit the hard fork of Bitcoin on January 23 and 24.

A 51% attack is a situation in which a single entity or group controls more than half of the hashpower by securing a blockchain. This allows control over the confirmation of new transactions, and the power to reverse completed transactions, allowing double spending of coins.

Two 51% attacks in six hours

In the first attack, just after 18:00 GMT on January 23, 14 blocks were removed from the blockchain and another 13 were added. In the redirection of a transaction 1,900 BTGs were spent, with an approximate value of USD 19,000 in that moment.

A 51% attack led to double spending of USD 70,000 to the Bitcoin Gold blockchain
A 51% attack led to double spending of USD 70,000 to the Bitcoin Gold blockchain

Just over six hours later, at the dawn of January 24, another attack eliminated 15 blocks and added 16. In the redirection of three transactions, 5,267 BTG were spent, with an approximate value of USD 53,000 at that time.

Do you pay the crime?

Bitcoin Gold uses the Equihash algorithm known as Zhash, in order to remain minable on consumer graphics cards. Based on Nicehash's market prices for Zhash, the estimated cost of each blockchain reorganization attack was around USD 1,700.

The attacker would have recovered around the same value in block rewards, which means that the attacks at least reached the breakeven point, and were possibly profitable if double spending was successfully removed from the system.

After the attack, the price of Bitcoin Gold soared. On January 26, the currency went from USD 10.42 to 11.60 in a matter of hours. At the close of this edition, the currency has risen almost 14% on the day to quote USD 11.74.

Binance increases escrow periods

At the time of the attack, the great cryptoexchange Binance allowed the negotiation of BTG deposits after six confirmations, and withdrawal after 12 confirmations. Therefore, a block reorganization of 14 or 15 would have avoided these two deposit periods.

Since then, Binance has increased its withdrawal obligation to 20 blocks, which does not exclude the possibility that a 51% attack will be financially viable.

As Cointelegraph reported , Bitcoin Gold was previously subject to a 51% attack in May 2018, when an estimated USD 18 million was spent on BTG, which led to Bittrex withdrawing the currency from its lists.

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