Blogger and blockchain expert Stepan Gershuni reported that Vertcoin network is currently being subject to yet another 51% attack. The intruders have already managed to double spend at least $100 000 worth of VTC. According to Gershuni, hackers succeeded in their attack due to the general weakness of the hardware base underlying the network, which does not require ASIC miners to mine the cryptocurrency.
It’s worth noting that Vertcoin’s mining algorithm is deliberately geared against ASIC and ASIC-like devices by making them particularly inefficient. Instead, mining on the network is designed to be achieved solely through commonly available graphics cards. This is supposedly an attempt to hedge against mining centralization.
According to Gershuni, the cyber criminals were able to pull off at least 15 double spending totaling $100 000 worth of VTC. Vertcoin blockchain was reorganized 22 times already. The largest reorganization had a length of 310 blocks and a depth of 307 blocks.
“The attacks aimed to reorganize blocks have been conducted on several occasions since mid-November,” – Gershuni noted.
As explained by the expert, in order to execute a 51% attack, an intruder has to acquire at least 51 percent of the network’s total hashpower. This provides him with temporary control of the blockchain. After gaining control of the network, the attacker begins depositing coins at cryptocurrency exchanges while also attempting to send those same coins to a wallet under his control. Ordinarily, the blockchain would resolve this by including only the first transaction in the block, but since the attacker has majority control of the network, he is able to reverse transactions, while leaving no trace of them being sent to the exchange before. He then can make another transaction and sell the same coins once again, thus getting away with ill-gotten proceeds of double spend.
Gershuni pointed to the exact block containing the information about the first spending (about 1 300 VTC), which was excluded from the main chain and substituted by another block as a result of the malicious reorganization. The same coins were then spent once more.
The expert stressed that the problem with PoW altcoins is that their network is generally maintained by small number of nodes. Moreover, Vertcoin’s mining algorithm is deliberately geared against ASIC and ASIC-like devices by making them particularly inefficient. Instead, mining on the network is designed to be achieved solely through commonly available graphics cards. This is supposedly an attempt to hedge against mining centralization.
“In comparison, in order to achieve the same result in Bitcoin, the attacker would have to spend a lot of time accumulating computing power or producing enough ASICs, burning hundred million dollars, before it could become theoretically possible,” – the expert explained.
Tracking site Crypto51 measures the theoretical cost of 51% attacks on each network. According to it, sustaining such an attack against Vertcoin would only cost $125 per hour, while attacking the Bitcoin network would cost $255 744 per hour.
Back in May, an unidentified hacker successfully executed a combination of double spend and 51% attacks on the Bitcoin Gold network last week. As a result, he managed to get away with about 388 000 BTG (roughly worth $18 200 000 as per exchange rate at the time of the attack).