Last week, Bitcoin Gold (BTG) was in the hands of a miner, and this led to a double-spend attack on the popular network, which resulted in substantial losses from exchanges. As it stands, BTG is just one of the three altcoins that have been exposed to hacking attacks during the previous weeks, but what decisions will be taken later on to protect the exchange is not yet certain.
The miner who took control of BTG’s network managed to complete such a comprehensive and rough attack by acquiring around 51% of the network’s total hash power, a hard thing to do considering that it would cost an arm and a leg even to get there. However, the double spend attack made it easier for the miner. Also, according to reports, the miner that attacked the network is thought to have also deposited Bitcoin Gold at exchanges and wallets in his name –and so far, the money is pretty much gone.
If your mind jumped to blockchain and what it could have done to remedy the situation, the fact of the matter is that due to the control of more than half of the nodes, the attack was not only feasible but also a guaranteed success.
From what other news outlets have reported, the attacker first took more than 50% of the hash rate of BTG’s network in order to have the records altered. Afterwards, he sent the BTG tokens to wallets of exchanges, with funds being withdrawn to his wallet. Once that was done and dusted, the reversal of the initial deposit transactions was nearly instant, requiring only the change of records –showing as if nothing had ever been sent.
To better explain it in simple terms, the double attack consisted in one person giving another interested party a total sum, which the latter would then put into their personal wallet. Then, the mastermind, person number one, would then steal the money from the third party, thus creating a smokescreen.
All this happened between May 16 and May 18, and one day later, the Bitcoin Gold official website featured the following statement as a response:
“An unknown party with access to enormous amounts of hashpower is trying to use “51% attacks” to perform “double spend” attacks to steal money from Exchanges. We have been advising all exchanges to increase confirmations and carefully review large deposits.”
The damage was already done, with the attacker having stolen approximately 388,200 BTC, the equivalent of $18.6 million. What this will mean for Bitcoin Gold we can’t yet predict. But, what we do know is that Bitcoin is the 26th largest cryptocurrency with a market cap of $827 million, and the possibility of the same or another hacker repeating the double spend attack is still a chance.
The Way Forward
Thankfully, these attacks have forced developers to think outside the box and reach a solution. In fact, they have encouraged exchanges to increase the number of confirmations to nearly 50 blocks, as in the first instance, the attacker went to 22 blocks.
But, of course, Bitcoin gold isn’t the only one facing problems from hackers. Two others that have been affected in the last week, including XVG, where the attackers managed to manipulate a hashing algorithm to mine more than 35 million XVG. The second one is Monacoin, where a miner gained as much as 57% of the network’s hash rate.
If there was any time to rethink policies and rethink securities strategies, now would be it.