The blockchain of Bitcoin fork – Bitcoin Gold cryptocurrency – was 51% attacked. The hackers managed to implement double-spending and withdraw funds via the Binance crypto exchange.
The amount of damage was 7,167 BTG (approximately $ 84.7 thousand). The attack was discovered by the leading developer of Vertcoin cryptocurrency, James Lovejoy.
Note, the value of the digital asset has grown significantly after the attack and is still growing.
Bitcoin Gold ($BTG) was 51% attackedhttps://t.co/KxFvrsOhuO
— James Lovejoy (@metalicjames) January 24, 2020
What does 51% Attack Mean?
A 51% attack refers to a situation in which one of the participants in the blockchain controls the computing power that exceeds the combined hashrate of other network participants.
Such a miner is able to conduct transactions, and then cancel them from the blockchain.
According to the post on GitHub, Lovejoy, who is also the presidency of the Bitcoin Club of the Massachusetts Institute of Technology (MIT), spoke about two large-scale reorganizations that took place on the Bitcoin Gold blockchain.
According to him, the reorganization of the “fourteen or fifteen” blocks allowed attackers to bypass the rules of the Binance exchange regarding the retention period of funds.
Lovejoy claims that the attack turned out to be beneficial for its organizers: by his calculations, hackers spent about 0.2 BTC (about $ 1,700) for each reorganization.
Lovejoy relied on the prices of the NiceHash cloud mining service for the ZCash algorithm in his calculations.
Attackers withdrew the cryptocurrency this way with two transactions. They brought out 1,900 BTG on January 23, and further 5,176 BTG on January 24. Lovejoy noted that a dozen block confirmations are not enough to prevent such attacks.
Bitcoin Gold Price Keeps Growing
The exchange rate of Bitcoin Gold cryptocurrency did not fall but rather increased by more than 19% after the 51% attack. The BTG value keeps growing right now. The digital asset is ranked 34th according to the CoinMarketCap rating. The token is trading at the level of $ 12.19.
Note, the developers of Bitcoin Gold recommended to cryptocurrency exchanges to increase the number of confirmations to at least 50 blocks back in 2018. The recommendation came when in May of that year, the blockchain was also attacked by 51%.
Then, more than 388 thousand BTG tokens were transferred to the addresses of the attackers, which was equivalent to $ 18 million at the exchange rate of that time.
Over the past two months, Bitcoin Gold has become the second fork of the largest cryptocurrency, which is attacked by 51%.
Recall, that in December last year, the cryptocurrency blockchain was attacked, at which Lovejoy was working himself.
According to Lovejoy, the attackers used NiceHash cloud power to attack Vertcoin. As a result of the actions of hackers, VTC token holders lost about $ 100 thousand, but for the criminals themselves the attack turned out to be unprofitable. The cost of the attack was about 0.5-1 BTC, while only 0.44 BTC managed to get during the fraud scheme.