A recent cyber attack on the cryptocurrency, ‘Ethereum’, allowed hackers to spend the currency twice.
The Attack That Disrupted the Crypto Market
Cryptocurrencies have been in the limelight because of various reasons. They were also being touted as the future of digital transactions with guaranteed security aspects like end-to-end encryption. However, the recent vulnerabilities have raised a question mark on the safety aspect of cryptocurrencies.
Coinbase, one of the highly rated trading platforms for cryptocurrencies, refused to mediate trades for Ethereum classic. The exchange platform cited a hacking attack on Ethereum as the reason for it. This allowed the hackers to spend the same currency twice.
- Ethereum Classic
- Price $48.94
- Market Cap
Experts, however, saw this attack coming as cryptocurrencies work on Blockchain technology, which means that records of each transaction are stored in a database that is universally accessible. One of the drawbacks of using blockchain is that it relies a lot on the discretion of the users that maintain the record of cryptocurrency transactions. The records that have to be maintained on the blockchain need to be done by people with complete ethical integrity, which may not always be the case.
With this attack, Ethereum Classic was knocked off from Coinbase. It was soon followed up by Kraken, a similar exchange, which removed Ethereum Classic from its platform. This can potentially cause Ethereum Classic to lose a major chunk of its investors.
What Caused The 51-percent Attack?
Mark Nesbitt, a security engineer for Coinbase, termed it as a classic case of 51 percent attack. In his blog post, he revealed that the company found 12 instances of double-spending Ethereum classic, running into a total value of around $1.1 million.
According to Nesbitt, Coinbase is ‘very confident’ that double spending occurred due to the takeover of 51 percent of the Ethereum Classic network. It is still quite unclear as to how the hackers could have gained complete control of 51 percent of Ethereum Classic network.
Although Ethereum Classic’s team confirmed on Twitter that the suspension has indeed occurred, it did not quite confirm that the double spendings took place. It has also accused Coinbase of unethically invoking the suspension before trying to contact Ethereum first.
Nesbitt denied these allegations by saying that despite trying to reach Ethereum Classic on Monday, they were unsuccessful in doing so. They are currently in touch with the team and a truce may be in the pipelines.
What The Future Holds For Ethereum?
This attack is quite shocking as not only were hackers able to access Ethereum’s ledger, but could also spend these tokens multiple times. The software developers, machine owners, and the support team have to come up with concrete steps regarding the future course of action.
A possible solution would be coming up with a new version of the software that can somehow manage to reverse the double spending transactions. Post this, they should work to create credibility in the investors so that they adopt this new version.
This would require making significant changes to Blockchain. Making such changes would not be easy as in the past, the Ethereum community has strongly advocated against making changes to Blockchain.
It is now left to be seen how Ethereum reacts to such adversity.