The panic started when a technical anomaly was mistaken for a potential 51% attack on the Ethereum Classic blockchain
The beginning of August brought chaos for Ethereum Classic investors, with problems for users and exchanges. Deposits and withdrawals were halted after tweets from several key members of the community warned of serious problems.
Shortly after the problem was identified, it was revealed that a sudden insertion of 3,000 blocks by an offline miner using obsolete software continuously for 12 hours caused the chain to split.
According to hackmd.io, the diagnosis is as follows:
“There were about 3,000 block insertions by a miner who was mining (offline or there) the total difficulty could have exceeded the current difficulty of the network… All of the Ethereum Classic Parity / OpenEthereum nodes were unable to handle about 3,000 block reorganizations Core-Geth Chain, so there was a chain split that made the network unstable ”
The diagnosis confirmed that the reorganization was an honest mistake and ended up warning miners to “mine the chain as it is”.
What is a 51% attack and why is it a problem?
At the beginning of the chain’s reorganization, all signs had a resemblance to a 51% attack on the blockchain.
However, blockchain is not perfect, as there is a serious flaw in the proof of work model. Rewards are awarded to miners when a block is completed, which is immediately cross-checked by the decentralization ledger to avoid double spending.
If the majority of miners with more than 50% of the mining power of the entire system eventually prevent the public ledger from verifying transactions, they can reverse past transactions without the system interfering.
In addition, a 51% attack could be used to gain a monopoly on new blocks and reap the rewards for themselves. However, the diagnosis confirms that no double spending has occurred and the Ethereum Classic blockchain appears to be recovering.
This has happened before
The incident was met with fear and speculation, as there were warnings of an alleged 51% attack in January 2019. ETC developers quickly dismissed it as a side effect of a powerful ehash machine.
Shortly thereafter, Coinbase stopped ETC transactions, because it had detected a 51% attack and also double spending. In its launch, Coinbase stated: “We identified a total of 15 reorganizations, 12 of which contained double expenses, totaling 219,500 ETC (~ US $ 1.1 million)”.