ETC 51% Attack and What It Means for Proof-of-Work and Crypto Exchanges | Haseeb Qureshi
Hidden Forces
Demetri Kofinas
4.8 • 1.6K Ratings
🗓️ 12 January 2019
⏱️ 46 minutes
🧾️ Download transcript
Summary
In Special Episode of Hidden Forces, Demetri Kofinas speaks with Haseeb Qureshi of MetaStable Capital about the recent 51% attack against Ethereum Classic, its implications for exchanges that continue to list smaller market-cap cryptos like ETC, Dash, Monero, etc., and what it means for the debate between proof-of-work and proof-of-stake.
On January 5th, 2019, the digital currency exchange Coinbase detected a deep chain reorganization of the Ethereum Classic blockchain. In order to protect customer funds, they immediately paused interactions with the ETC blockchain. Coinbase reported the 51% attack on January 7, 2019, but a few people on Twitter had already become aware that something wasn't right with ETC. Pierre Rochard, an emerging thought-leader in the Bitcoin space, asked ETC developer Donal McIntyre on Twitter: "Was there a deep reorg on Ethereum Classic yesterday?… 75 blocks deep I hear, with a double-spend." Donal McIntyre replied: "Well ETC is still small and has many enemies so an attack with sufficient GPU power may be plausible, but I will check with others in the ecosystem."
Cryptocurrencies that are not dominant in their respective mining algorithm, especially ones for which hashing power can be easily rented out, are more vulnerable to being 51% attacked than are other cryptocurrencies with larger market-caps that are not ASIC-resistant. According to Charlie Lee, founder of Litecoin, "ETC has less than 5% of the total Ethash hashrate and is 98% NiceHash-able. 1-hr attack costs $5k," making it particularly vulnerable according to these two metrics.
Reports of the amount stolen in the attack range from the low six-figures to over one million dollars worth of ETC. Perhaps what is most remarkable is that this is only the latest 51% attack against a smaller-cap currency where the attack did not materially impact the price of the cryptocurrency in question.
Demetri and Haseeb explore the reasons why the price of ETC was largely unaffected, what this latest attack means for the listing (or delisting) of similarly sized cryptocurrencies, and how this is sparking a larger debate about the efficacy of proof-of-work vs. proof-of-stake as mechanisms for securing a cryptocurrency.
Producer & Host: Demetri Kofinas
Editor & Engineer: Stylianos Nicolaou
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Transcript
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| 0:00.0 | And the What's up everybody? I actually recorded this segment originally to air for my |
| 0:25.3 | subscribers on our overtime feed through Patreon and I decided last minute to |
| 0:30.2 | actually make it available to regular listeners because it's different than what I've |
| 0:34.0 | been doing so far. |
| 0:35.5 | All the stuff that I've released so far on Hidden Forces has been overtime, it's been extra |
| 0:39.8 | audio that I've recorded with my guests from the previous episodes, but this is something |
| 0:44.2 | new and it's something that I'm going to be doing more of, which is calling up people having impromptu conversations |
| 0:49.5 | not necessarily in the studio about timely market events or events in politics current affairs |
| 0:55.2 | technology whatever it happens to be and this is very much in line with that. |
| 1:00.4 | I decided to do this last night. I saw something that has seen had written on |
| 1:04.8 | Twitter related to the 51% attack against the Theorem Classic. I was actually |
| 1:09.4 | interested in this attack, not so much about the attack itself but more in terms of the minimal |
| 1:16.2 | impact that had on the Theorem classics price and what that signifies what that |
| 1:20.5 | implies about the validity of the pricing that exists in |
| 1:25.0 | cryptocurrencies, what the value is. It was a bizarre thing for me anyway. It also |
| 1:30.4 | afforded us the opportunity to go down a number of threads including a conversation about 51% attacks themselves |
| 1:36.5 | about A6 about the differences between proof of work in etheorem versus proof of work in Bitcoin. |
| 1:43.5 | Also the efficacy of proof of steak, |
| 1:45.9 | a lot of different things. |
| 1:47.4 | So I thought it was super interesting |
| 1:48.8 | and I wanted to make it available to you. |
| 1:51.0 | If any of you are interested in subscribing to Hidden Forces, there are two ways to do that. |
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