Bitcoin Gold (BTG) was victimized over the weekend when malicious miners overtook its blockchain as a means of performing a 51 percent attack.
A 51 Percent Attack Can Be Very Dangerous
The miners saw to it that approximately $72,000 in BTG funds were double spent. This is money in their pockets after they gained control of the network’s hash rate. They performed two separate attacks on the network; the first saw them net gains of approximately $19,000 while the second earned them more than $50,000 in BTG funds.
Crypto developer James Lovejoy says that the miners more than likely spent no more than $1,200 to execute the attacks, meaning this was a very profitable maneuver on their part. This is now the second and third time that the BTG network has suffered attacks like these over the past two years.
A 51 percent attack occurs when someone gains control of the majority of a cryptocurrency’s network. They can decide how that blockchain is used, and they can reject or accept transactions as they see fit.
The double-spending scare – which was witnessed in these attacks – leads to a scenario in which the malicious actor can instigate transactions, only to reverse them and then reorganize the network in question so that they can spend the same money a second time. In other words, they engage in two separate transactions and earn double the rewards by spending only one stash of funds.
This happens when a third party – either inadvertently or willingly – accepts the transaction and the network returns the money to the individual, allowing the attacker to initiate the double-spend tactic.
Many have shown concern in the past that companies like Bitmain – a Chinese mining conglomerate – could empower a 51 percent attack in the future given that it boasts heavy control over the world’s crypto mining syndicate.
We note that at the time of the attack, on Binance, deposits of BTG were credited to one’s account for trading after six confirmations and were available for withdrawals after twelve confirmations. A fourteen or fifteen block reorganization would thus evade both of Binance’s escrow periods.
They Don’t Always Work
These kinds of attacks have occurred several times in the past. The good news is that they’re not always successful. One such incident involved Vertcoin, in which the attacker spent as much as $7,300 according to analysts to maintain the equipment necessary to carry out the attack. However, it’s believed he (or she) may have earned only half this amount.
The 51 percent attack in early 2018 that Bitcoin Gold initially suffered resulted in losses exceeding $18 million. For this reason, BTG was removed from crypto trading platforms like Bittrex, which commented that the currency was not safe and that executives of BTG were not taking responsibility for what had happened.