Coinbase Suspends Ethereum Classic Transactions

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Coinbase has been forced to temporarily suspend all transactions on the Ethereum Classic (ETC) network following detection of deep chain reorganization in the blockchain. This was caused by a 51% attack, where hackers managed to double spend and steal just over $1.1 million (219,000 ETC). The attack seems to have come to an end, but the damage caused by the 51% attack will be felt for months as the blockchain is reverted back to its original state.

First 51% Attack of the Year

2019 was barely a week old before hackers decided to hit the ETC network and bring it to its knees. 51% attacks are fairly commonplace on low-value altcoins, as the required hash rate needed to take over the chain is significantly lower. According to data from crypto51 – a website that calculates how much it would cost to take over a mineable crypto network – a one hour 51% attack on ETC would only cost $4,700. That makes a $1.1 million pot for hijacking the network rather rewarding and you can quickly understand why hackers commit 51% attacks. To put the cost of this 51% attack into perspective, it would cost a staggering $101,310 per hour to 51% attack Ethereum (ETH).

Pigeoncoin Shot Out the Sky

In October 2018, a hacker committed a different type of attack against Pigeoncoin – another altcoin. This time the hacker exploited a known bug in the code to print 235 million Piegoncoins – worth an estimated $15,000 at the time of the hack. Hacks of this nature are relatively rare as the bugs often remain hidden for long periods of time. Pigeoncoin was just an unlucky victim of a hacker looking to make a quick few dollars.

Not Everything is as it Seems

As with every great event in the world, there is already an army of conspiracy theories in place. Just hours before the attack, OKEx launched short options on ETC – the ability to bet the price of ETC will fall. Many are starting to believe that top members at OKEx were behind the attack after loading up on ETC shorts. If this was the case, the hackers will be rather disappointed with their double payout plan. The price of ETC only fell between 7% and 8% as exchanges quickly shut down trading of ETC.

Ethereum Classic could be in real trouble moving forwards, and its plans for a bumper 2019 will definitely be on hold. It finished 2018 relatively well compared to other cryptos, but after this 51% attack it’s safe to say that any momentum has been lost. Hopefully, the developers can fix the chain and get the project back on track as soon as possible.