Bitcoin Gold (BTG) was in the power of a miner last week, which led to a double spend attack on its network. BTG is one of the three altcoins that have faced hacking attacks during the previous week.
Bitcoin gold is a distributed cryptocurrency which belongs as a hard fork of Bitcoin. Currently, it is the 26th largest cryptocurrency with a market cap of $827 million.
The miner who took control of BTG’s network was able to execute the attack because of acquiring 51 percent of the network’s total hash power. It would not have been easy to take control, as it costs a fortune even for a fork like Bitcoin gold. However, the double spend attack made it easier for the miner.
The miner who attacked the network started depositing BTG at cryptocurrency exchanges and also a wallet under his control.
Blockchain would have solved this issue, thanks to its high-security feature where records are all kept on Blockchain. However, due to the control of more than half of the nodes, this became possible. The attacker first took more than 50% of the hash rate of BTG’s network so that the records could be altered. Then he sent the BTG tokens to wallets of exchanges, which followed by withdrawing them quickly to the attacker’s wallet. Once the tokens were in his wallet, he reversed the initial deposit transactions to the exchanges by changing the records of Blockchain. It showed that nothing had been sent.
In simple terms, a double spending attack can be explained by a person called X giving $100 to a person called Y. Person Y puts the $100 in the wallet and goes away. Person X follows Person Y, steals his very own $100. Person X uses that $100 somewhere else after that.
Therefore the person who is at a loss is the Person Y as who took the $100 as he owes Person X the $100 back.
This attack has been taking place since May 16th till May 18th, but the first warning to users was only on May 18th by Bitcoin Gold’s Director of Communications Edward Iskra.
May 19th the Bitcoin Gold blog officially posted-
“An unknown party with access to very large amounts of hashpower is trying to use “51% attacks” to perform “double spend” attacks to steal money from Exchanges. We have been advising all exchanges to increase confirmations and carefully review large deposits.”
A total of 388,200 BTC has been stolen, which equals $18.6 million worth of funds.
The fear is the attacker has still not be found and can resume his double spend attack at any time if access to enough hashpower is regained.
Bitcoin Gold’s developers have come to a solution! They have encouraged exchanges to increase the number of confirmations to as many as 50 blocks before credit deposits to a customer account. 50 blocks were estimated as the attacker went to 22 blocks in the first attack.
The other two that have been affected in the last one week include XVG where the attacker manipulated a hashing algorithm to mine more than 35 million XVG. The other is Monacoin which a miner gained as much as 57% of the network’s hashrate.
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