Ethereum classic has found its name added to the less than illustrious list to have suffered a 51% attack, after blockchain reorganization and a double spend was spotted by exchange giant Coinbase. Coinbase immediately ceased interaction with the chain to protect customers, but not before some 219,500 ETC tokens were stolen, worth in the region of $1 million. They quickly put out a Tweet and a blog post to summarize the situation:
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
What is a 51% Attack?
A 51% attack occurs when a single party controls at least 51% of the mining power of a Proof-of-Work coin, which then allows them to control what it broadcast to the network. This allows them to prevent other miners from mining blocks, prevent other transactions gaining confirmations, and allows the possibility of double spend, where the chain can be manipulated to make it seems like a transaction didn’t happen.
Timing Not Coincidental?
Theories suggest that the timing of the attack was not coincidental, with Honour Masters, Director of Business Development at CoVenture, putting forward a rationale that involved the recent addition of Ethereum Classic futures to OKEx’s platform:
Recent ETC ongoing 51% attack targeting OKEx exchange.
3 days ago, OKEx enabled ETC shorting capabilities. Coincidence?
It’s certainly a compelling argument, given the coin, the platform, and the timing of the attack, and in the often manipulated world of cryptocurrency, motivations such as this cannot be discounted. Some have also questioned why Coinbase would list a coin that was susceptible to such an attack in the first place, while others questioned its legitimacy in the space:
NO dapps & NO devs on $ETC yet the market still values this garbage at $500 million? @coinbase what are you doing adding real ‘shit coins’ like this? How about add the best projects first with most adoption, devs + track record. There’s plenty to go around.
— Token State (Tokenize the World) (@tokenstate) December 3, 2018
Low Prices Attract Attacks
51% attacks are nothing new and apparently remain an attractive source of fraudulently obtaining funds, with Vertcoin suffering a similar attack less than a month ago. With the price of conducting such attacks generally quite low across the board we can expect many more while the potential rewards outweigh the risk, that is until the coin price grows to the point where it is no longer cost-effective to attack it.