ZenCash (ZEN) is the latest in the ever-growing list of virtual currencies, who have been targeted by the so-called ‘51% attack’. For those, still not familiar with one the most infamous frauds of the crypto sphere, a 51% attack means that an attacker manages to obtain over 50% of the hash power in the proof-of-work blockchain.
This basically grants the fraudsters full control of the blockchain, allowing for various exploits, such as double spending, which is spending the same funds twice by first selling them and then rearranging the blockchain to return them to the attacker’s wallet.
This is exactly what happened in the case of ZenCash, with the attacker double spending two sizeable transactions (13,000 and 6,600 ZEN), which in total are worth over $550,000 at current prices. The team of ZenCash was quick to react initially as it was informed on the hash rate changes by the mining operators and immediately contacted exchanges to increase confirmation time to prevent the double spending.
Nonetheless, it was too late as the team still found the two double-spent transactions, with the hacker reorganizing 38 blocks of the blockchain. According to the ZenCash team, the ZenCash cryptos were further deposited in address zneDDN3aNebJUnAJ9DoQFys7ZuCKBNRQ115.
Regarding the attack, the ZEN team officially stated that “a 51% attack or double spend is a major risk for all distributed, public blockchains. All Equihash-based networks are exposed to an influx of new Equihash power and therefore the best short-term mitigation strategy is to recommend that all exchanges increase their minimum required confirmations to at least 100.“
A 51% attack can prove to be quite costly to the attackers themselves, as gathering such amounts of hash power requires significant resources. While ZEN is definitely not the cheapest coin to attack, even at the early stages of its development it already has a quite visible public profile while still maintaining a relatively low hash rate.
This is most likely the biggest reason of why it was targeted by the hackers. According to estimates by 51Crypto, an hour of the 51% attack on the ZenCash network costs around $7,000. Since the attack lasted for a little over 4 hours, it cost them approximately $30,000, while the reward was almost 20 times larger.
Numerous other virtual currencies have fallen prey to the 51% attack recently, including Verge, Bitcoin Gold, and Electroneum. There were suggestions that the same group attackers might be behind all these assaults as there were similarities among all of them.
Unless a network is secured by a vast amount of hash rate as is the case in most popular cryptocurrencies like bitcoin, ethereum or ripple, it is difficult for developers to protect their blockchain against such assaults. Especially now, when you can simply rent the hash power via sources like NiceHash and eliminate the costs of electricity, hardware, and maintenance.
Therefore, there are increasing voices claiming that such attacks will destroy all small coins, operating of the proof-of-work consensus and the switch to proof-of-stake is necessary. Another solution is a fork to render the ASIC mining impossible.
Such attacks usually result in the token price plummeting, as was the case in the aforementioned digital currencies, which are yet to rebound after their respective 51% attacks. Curiously, ZEN took only a slight tumble, falling by around 4% to trade around $28 at press time.
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