Panic broke out as a glitch was mistaken as a potential 51% attack on the Ethereum Classic blockchain
The beginning of August has brought mayhem for Ethereum Classic investors, with problems for users and exchanges. Deposits and withdrawals were halted after tweets from various prominent members of the community warned of serious problems.
Shortly after the issue was identified, it was revealed that a sudden 3,000 block-insertion by an offline miner using obsolete software continuously for 12 hours caused the chain to split.
“There was about 3,000 block-insertions by a miner who was mining (either offline or there) total difficulty could have exceeded current network difficulty…All Ethereum Classic Parity/OpenEthereum nodes couldn’t handle about 3,000 block reorg from the Core-Geth chain, so there was a chain split which made the network unstable”
The diagnosis confirmed that the reorg was an honest mistake, and ended by warning miners to keep, “mining the chain as-is”.
What is a 51% attack and why is it a problem?
At the beginning of the chain reorganisation, all signs bore a resemblance to a 51% attack on the blockchain.
However, blockchain is not perfect as there is a serious flaw in the proof-of-work model. Rewards are given to miners when a block is finalised, which is then immediately cross-checked by the decentralizing ledger to prevent double-spending.
If a majority of miners with over 50% the entire system’s mining power eventually prevent the public ledger from verifying transactions, they can reverse past transactions without the system interfering.
Furthermore, a 51% attack could be used to gain a monopoly over new blocks and reap the rewards for themselves. However, the diagnosis confirms that no double-spending occurred and the Ethereum Classic blockchain appears to be on the mend.
This has happened before
The incident was met with fear and speculation, as there were warnings of an alleged 51% attack in January 2019. ETC developers quickly dismissed it as a side effect of a powerful ehash machine.
Shortly thereafter, Coinbase halted ETC transactions, because it had detected a 51% attack and also double-spending. In its release, Coinbase stated, “We have identified a total of 15 reorganizations, 12 of which contained double spends, totalling 219,500 ETC (~$1.1M)”.