Ethereum Classic ($ETC) was the largest cryptocurrency that has ever been 51% attacked, and it has really interesting implications for the future of Proof of Work (PoW) currencies. I had a SUPER interesting discussion on the subject with a group of top miners. Literally each one of them can easily do it. We talked about cost, timing, feasibility and ethics of such a move. It is pretty clear, however, 51% attack is the evolutionary feature of PoW coins.
The Evolutionary Feature of Proof of Work Coins
$ETC is using the same algo as $ETH with 4-6% of the hashrate. As long as you have access to rent 2-3% of $ETH’s, which is quite accessible, you will be able to attack it.
The cost is relatively low as NiceHash is a on-demand hashrate marketplace. From the chart you can see NiceHash is able to cover 100% of $ETC, and $DASH is on the verge of over 50% NiceHash-able, which can be an ideal target for another 51% attack down the road.
In order to 51% attack $ETH, you will need to negotiate the with multiple big mining farms, as NiceHash doesn’t carry enough hashrate. Such negotiation is quite hard since the top 4 pools combined obtain over 72% of ETH hashrate. But it’s a non-zero chance that they may collude.
The timing is also very interesting: 12 months ago, $ETC’s hashrate was even lower than its current level but 8x the price; to maximize profit, bull market is better timing. @bit_kevin confirmed it as “the attacker is very nice by attacking it in a bear market.”
Another benefit of attacking during bull market is that higher price sensitivity/volatility + a thicker order book in options trading can make the attacker more money on shorting than just the double spent part. So why not just attack in during the optimal time?
One reasoning on the timing paradox might be how currently there are lots of excessive GPU hashrate since the market crash. GPU mining profit is approaching 0. Previously, GPU mining could net investors up to $150 per month per unit on various coins ($ETH, $ETC, $ZEC, $XMR etc).
Low Barriers to Entry
GPU mining had relatively low barriers to entry. Many small miners and crypto enthusiasts joined the game during the crypto boom, especially before the release of ZEC/ETH ASIC. Now, due to the price crash and ASIC on coins which were mined by GPU, GPU is largely oversupplied.
We also see the oversupply GPU hashrate led to an over-crowded mining rush of Beam/Grin, the two MimbleWimble coins. Beam, only 5 days after the launch, its hashrate is over 2.5MSol/s, close to the entire $XMR hashrate.
After 48hr of the first MimbleWimble implementation went live, it acquired 1/3 of $XMR hashrate. We had a round of discussion on “whether it’s ethical to 51% attack.” This might surprise many folks – most of them agree with what @bit_kevin said in the screenshot. 51% attack is a natural way of survival of the fittest in crypto, the fittest here is the most secured.
Currently with the advent of centralized exchanges, there is still remedy to thwart future 51% attacks, as with long confirmation or limits on deposit etc. However, in a really crypto-native set up, with DEX/Shapeshift style liquidity, 51% attack is inevitable
What’s more important, having 51% as a feature, it’s actually a protection against forking of the same hashing community. Foking will dilute the security level and makes those coins remaining more vulnerable. (In the pic is the earliest BTC miner in China and founder of HaoBTC and Bixin):
There is an interesting analogy: Proof of Stake (PoS) Aristocracy vs PoW is Meritocracy. Many miners’ resent of PoS is from a very pragmatic though fundamentally insightful view.
Not About Decentralization or Fairness
PoW is a natural way to enforce separation of power. It’s not about decentralization or about fairness;instead itss cash burning mechanism makes it impossible for miners to save up tons of coins and become monopoly over the commodity money — they have to sell to cover costs.
Miners, or in PoS the validator, are guardians of the protocol. Coins being minted are the commodity resources in the economic system. PoW enforces a separation of the two roles: protocol guardian vs commodity resource owner. Hence it makes social mobility possible within the ecosystem.
There are TONs of great insight from this group. I hope one day AI can be sufficient enough to bridge the language barrier so we humans coordinate and exchange much better, and you can hear from them first hand.
Reprinted from Dovey Wan
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