Disclaimer: no financial advice or endorsements of any kind are given by this article.
A social experiment is just that, an experiment. Or is it? Since the inception of Bitcoin, there have been very big challenges to negotiate, namely, scaling, mining, and increasing usage to the point of mass adoption.
Ethereum
Blochain 2.0 as Ethereum had become known as was created in order to deal with these innate challenges of Bitcoin. Ethereum did well to get where it is today. This article is not a critique. Rather it is a reflection on the 51% attack on Ethereum classic.
51% Attack/Double Spend Problem
A unique characteristic of cryptocurrency is its ability to be copied and double spent. Double spending is when the same cryptocurrency coin is spent twice. Bitcoin was the first vitual currency to solve this problem. That is why it was such an incredible achievement!
There is only 1 problem, double spent attacks can still be made, if and only if, a user can publish a Blockchain chain that is at least 1 block further than the actual, collective Blockchain. This is possible because of the simple rule: if there is a discrepancy between competing Blockchains for whatever reason, the longest chain”wins” and becomes the commonly accepted Blockchain.
Double Spend: A Picture is Worth 1000 Words
Here is what a double spend looks like when depicted by illustrations:
Phase 1: Create 2 competing chains by spending the same cryptocurrency coin twice from the same parent block in one the public Blockchain and one on the private Blockchain:
Then mine the private Blockchain until it is one block ahead of the public Blockchain and publish the private Blockchain, so it becomes public too:
With the longest chain always replacing shorter chains, the new Blockchain with a transaction that sends the same cryptocurrency coin back to the sender wins and becomes the new accepted public Blockchain.
51 % Attack on Ethereum Classic
This is what happened just a few days ago on Ethereum Classic. It looks like an ASICs company has taken the blame. However it is worth noting and being concerned about the attack or replacement of the Blockchain. This is because if an ASIC hardware can do this and you own the hardware, then you can double spend. That means either everyone who mines needs this specialised hardware or Ethereum Classic needs to reduce the difference the hardware makes to mining. The latter can be achieved through increasing the memory needed to a point where it is close enough to the ASIC do that an ASIC will be useless. This seems like a better solution than expecting every miner to get an ASIC.
Implications of this Attack
The main problem of a 51% attack is that preventing double spending is a vital part of a cryptocurrency. Without this solution, cryptocurrency is useless as a currency. So it is worrying for all cryptocurrencies when this type of attack happens. The major “prevention” of such an attack is the amount it takes to create a 51% majority. It seems like Ethereum Classic is still not at the capacity where such a 51% advantage is almost impossible to achieve.
Summation
So briefly, Ethereum Classic had a 51% attack or double spend problem. Either way it is worrying for the community and for cryptocurrencies. This is because solving the unique double spend problem is critical to cryptocurrencies working and succeeding. Bitcoin and Ethereum were not affected, but confidence in cryptocurrencies has been affected by Ethereum Classic’s issue the other day, namely this 51% attack/double spend ASIC issue.
