Is Ethereum Classic being 51% attacked or not?

The team behind ETC has sought to pour cold water on Coinbase’s claims of double-spending and a 51% attack, but it’s not backing down. So what’s the truth?

Yesterday, the security team at the Coinbase exchange took to its Medium blog in order to allege that the Ethereum Classic blockchain was under a 51% attack. In response, it has since shut down all movements of ETC to-and-from its wallets. In a post on its incidents log it told customers that:

“Due to unstable network conditions on the Ethereum Classic network, we have temporarily disabled all sends and receives for ETC. Buy and sell is not impacted. All other systems are operating normally.”

The post outlined what it described as a deep re-organisation of the Ethereum Classic blockchain, that had allowed the perpetrators to ‘double spend’ approximately $440,000 of the currency. Such attacks – first posited by Satoshi Nakamoto in the original Bitcoin white paper – can happen when a single party gains control of the majority of mining power related to a blockchain. The miner in question can then use this power to begin a ‘reorg’ of the Blockchain at a point of their choosing – when this new blockchain surpasses the length of the previous version, it can become recognised as the new version of the ‘truth’.

Decentralisation of mining has long been understood as the main way of defeating such efforts – the more people there are mining a cryptocurrency, the more power is required to mount such an attack.

This means that, unfortunately, while larger coins like Bitcoin and Ethereum may be relatively insulated from such attack vectors – it was recently posited that it would require something like the amount of electricity consumed by a country the size of Morocco to attack the Bitcoin network – smaller coins with less ‘hash power’ aimed at them have increasingly dropped into the much lower budget ranges. Currently, the site Crypto51 estimates that the cost of mounting a 51% attack on the Ethereum Classic network would cost around $5,000 an hour – putting it within the budget of a far wider range of bad actors.

Eventually, the Ethereum Classic team came back to social media to refute the Coinbase version of events. The official Ethereum Classic Twitter account attempted to pour cold water on the claims from the blog; specifically, it began pointing the finger at ASIC manufacturer Linzhi and its testing of new equipment, as being behind the “recent mining events”.

Selfish mining is effectively mining blocks in secret; it is another possible form of attack on a blockchain akin to a 51% attack whereby a mining pool can increase its rewards by mining, but not releasing, its blocks until it has surpassed the public version of the ledger – causing other miners to jump to this new version. However, the Ethereum Classic tweet touts the idea that there was no malicious intent to the Linzhi mining, and that the blocks were dumped after the test on the new equipment was completed.

Rather than backing down from its claims in the face of the sort-of denials from Ethereum Classic’s PR team, Coinbase has instead decided to double-down on them. It updated its blog in the early hours of this morning (10.27pm Pacific Time, 6.27am GMT) reiterating its claims of double-spend detection, and upping the amount it alleges to have been re-org’d to $1.1m from the initial estimate of $440,000.

With neither party as yet blinking as to whether their version of events is wrong, the Ethereum Classic ecosystem is currently at something of an impasse. In a later tweet the Ethereum team denied that it had been trying to play down events, or avoid commenting on them, and floated the idea that both stories may be true.

I guess they’re right, and only time will tell. Either way, however, it’s not a great day for ETC – nor other coins in a similar position, whose backers will now be only too aware of their somewhat precarious nature as price declines put increasing pressures on miners – and make the profits of a 51%-style attack all the more attractive to the less honest among them.