Altcoin News: 51% Attack at Bitcoin Cash — Here Is What Really Happened
As reported on the evening of May 24, Bitcoin Cash (BCH) has recently been hit by a serious incident, the block bailout, namely the attack on the heart, the consensus mechanism.
This serves to make an agreement in the network about which state of the distributed database is globally valid.
The 51% attack occurs when someone controls most of the mining power in the Proof-of-Work blockchain network. This means that the verifier of the majority block may prevent other users from mining and reverse transactions.
Since the Bitcoin Cash Fork in 2017, coins have been repeatedly sent to “anyone can spend” addresses. How exactly this came about is unclear. These were probably BitwiNet (BTC) SegWit transactions, also broadcast on the BCH network. Since BCH does not implement SegWit, the transactions ended up there on the undefined P2SH addresses. In any case, the developers of BCH have implemented a feature called CLEANSTACK in the protocol to prevent anyone from easily taking these coins.
On May 15th, BCH had a hard fork in which the protocol was changed and these coins were made transferable again. An unknown miner tried to steal some of the coins but at that time, two mining pools, BTC.TOP and BTC.com together had 54% of the hash power.
When they realized that the miner wanted the coins, they took advantage of their dominance to reverse the transactions in favor of their own. They themselves had plans for the coins, namely to give them back to the legitimate owners. Guy Swann from The Cryptoconomy asks critically — how they located the legitimate owners?
In the end, two blocks already mined that contained the transactions of the unknown miner were replaced with those of the mining pools, thus overwriting the transaction history.
The reactions from the community
While some celebrated the intervention as an act of justice, there were many critics who judged the project, which wrote the claims of censorship resistance and immutability, as a guiding paradigm, to have failed. The course was relatively unimpressed by the incident.
Although many believe that the 51% attack is carried out solely with malicious intent, a lot of BCH maximalists claims that the aforementioned incident occurred when two mining pools tried to prevent an unknown miner from obtaining a certain amount of “public” coins. They believe that BCH devs are good guys.
“That this didn’t negatively impact BCH is a pretty good argument that it wasn’t an attack, but rather a defense and that there is nothing wrong with “good” mining pools to reorganize the blockchain,” claims one of them.
But why Reddit moderators of subreddit r/btc [BCH]set comments thread to 0 points to censor the dissent. Perhaps some of the comments were also deleted?
In the Proof of Work Governance, the power, in the standard form of Proof of Stake, lies in the hands of the miners. The one who has the majority of hash power can basically decide which transactions to go through and which not.
Not only that who has more than 50% of the hash power can turn back the blockchain but can also undo transactions.
It is very likely that Satoshi Nakamoto, the architect of Bitcoin’s consensus mechanism, wanted to create a system that distributes power (hash) so that the following claims are never violated: censorship resistance and immutability.
Bitcoin Cash has proven that in its network only two cooperating parties are sufficient to enforce its will. The argument that the end justifies the means is an indication of failure in the case of Bitcoin Cash, whose purpose it is to make “the means” technically impossible.
The fact that the price showed no noticeable reaction suggests that the majority of investors either do not understand the meaning behind Proof of Work or that they do not care about the technology or the future of the project.
In any case, there is no punishment due to the stability of the price, which does not exactly counteract the motivation for further actions of this kind.
According to Coin.Dance statistics, BTC.TOP and BTC.com currently control 43% of Bitcoin Cash hash power.
Regardless of whether the actions of the two mining pools are now considered an attack or a well-intentioned attempt to prevent worse: the fact is that BTC.TOP and BTC.com simply reach over 50% of the BCH hash power and thus the Blockchain could rewrite to their will. At times, even BTC.TOP alone had 54% of the total hash rate. So it’s not good for the decentralization of Bitcoin Cash. Actually, we can assume that BCH is not decentralized at all.
The question we need to find the answer is: Should mining pools reorganize the blockchain in an emergency or should the iron law of immutability not be broken?
Author: Marko Vidrih