Bitcoin Gold Hacked: Lose $18 Million
Bitcoin Gold’s development team recently announced details of the attacks last week. At that time, the attacker stole money from the cryptocurrency exchange through “51% attacks” to perform “double spend” attacks.
What is a Double-Spend?
This is an attempt to spend the same coins twice – for example, the attacker might send a deposit to an Exchange wallet, and then sending those same coins to another wallet of their own at the same time. This is normally resolved on a blockchain when transactions are added to blocks – when added to blocks, the transactions are put in an order. The payment which came first will be valid, and the transaction which came second will be ignored – even if the transactions were sent at the exact same time, the order of transactions in a block is clear. This way, the coins can only be sent to one place – either to the Exchange, or to the private wallet.
What is a 51% attack?
An attacker that controls more than 50% of the network’s computing power can, for the time that he is in control, exclude and modify the ordering of transactions.
Bitcoin Gold’s development team confirmed that the attackers gained most of the power of network computing power and used these calculations to restructure Bitcoin’s gold blockchain and conduct reverse transactions.
In this incident, the attacker deposits funds into a cryptocurrency exchange transacts it into Bitcoin or other cryptocurrencies and then withdraws funds. Subsequently, the attacker used most of the acquired power to force other parts of the network to accept forged data blocks, modify the initial deposit funds, and cause these funds to disappear from the exchange-controlled wallet.
According to previous reports, the address associated with the attacker sent more than 380,000 Bitcoin gold to itself in a series of “double spending behavior” transactions. It is not yet clear how many of these transactions resulted in a theft of funds. Theoretically, if all transactions result in theft of funds, the attacker can profit from $18 million.
The project’s developers stated that the attack was partly because Bitcoin’s gold mining algorithm “Equihash” was also used by other cryptocurrencies, resulting in a larger computing pool than the Bitcoin gold network.
Bitcoin Gold has planned to migrate to the new algorithm. Earlier, mining hardware manufacturer Bitland announced that the first Equihash AISC mining machine has begun to accept bookings. According to developers, migrating to new algorithms can significantly increase the security of the network.
