Long-tail cryptocurrency is 51% attacked: Vertcoin edition

With the fall in cryptocurrency prices and ensuing drops in mining hash rate (as marginally profitable miners shut down), crypto-networks remain more vulnerable to attack than earlier this year.

While hash rate may go up in absolute terms due to improved ASIC efficiency (in August, Bitcoin hash rate was up 4x from January 1st), hash rate is just a proxy for network security. The key metric to note is security spend, quantifying how much money is spent on mining opex and capex to secure the network.

While larger networks haven’t seen a major attack, smaller networks have been attacked as the cost of attack (the 51% threshold of security spend) drops. This year has already seen double spends performed on Bitcoin fork Bitcoin gold and the private cryptocurrency Verge.

Websites like Crypto51 track the theoretical cost of attack, while they often don’t reflect real-world constraints of attack (e.g. obtaining cheap ASICs, marshaling enough low-cost power), they serve as a useful barometer; particularly with smaller networks that use the same hashing algorithm as larger networks.

The latest cryptocurrency to be attacked with double-spends is Vertcoin, a project with informal ties to the MIT Digital Currency Initiative and known for it’s Lightning Network implementation.

Several adversaries over the last few months launched an attack, with the latest 51% attack on Vertcoin “re-organizing” transactions and causing double spends over 300 blocks deep, as noted by Coinbase engineer Mark Nesbitt on December 2nd. The double spends amounted to over $100,000 lost on the network and was over 300 blocks deep.

Most susceptible to these attacks are exchanges, which may need to extend the number of confirmations required for deposits. If an exchange accepts Vertcoin deposits, the threshold for confirming whether a given deposit is valid and not the result of a double-spend may be extended into hundreds.

As noted by Nesbitt, one of the core claims of many long-tail cryptocurrencies is that they are as secure (or more secure) than the largest networks, achieved by implementing changes like ASIC resistance where the use of ASIC miners are discouraged by the community and hashing algorithms are chosen such that ASIC creation is difficult. Vertcoin’s explanation for this design decision:

“If mining was purely just a distribution method then people should be able to use the most powerful equipment which would be an ASIC. Vertcoin exists as a long-term bet that mining trust through higher hashrate devices will never achieve an appropriate level of decentralization due to their manufacturing situation of such devices.”

While many in the Vertcoin community are still in support of ASIC resistance after this attack, some of their core assumptions are being heavily tested, particularly as hash rate leasing marketplaces like NiceHash lower barriers to entry to mine or attack the network.

The post Long-tail cryptocurrency is 51% attacked: Vertcoin edition appeared first on The Block.

Long-tail cryptocurrency is 51% attacked: Vertcoin edition written by The Block @ https://www.theblockcrypto.com/2018/12/03/long-tail-cryptocurrency-is-51-attacked-vertcoin-edition/ December 3, 2018 The Block

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