Bitcoin Gold (BTG), a minor hard fork of the Bitcoin protocol, has been subject to a 51% attack with $72,000 stolen so far.
51% attacks are possible when attackers manage to seize control of the majority of a cryptocurrency’s hashing power, resulting in the network becoming vulnerable to double spending.
Double spending refers to a transaction that uses the same input as another transaction that has already been validated on the network, meaning the user can spend the same digital asset more than once.
GitHub user ‘Metalicjames’ was the first to reveal the attack, identifying two separate attacks from the same address over two days.
Bitcoin Gold differs from Bitcoin in its mining method. It’s a GPU-mineable coin that uses “Zhash” algorithms, which generally require more computing power than basic Bitcoin ASICs.
On Thursday January 23, the attackers removed 14 blocks from the BTG network, replacing them with 13 blocks and double spending 1,900 BTG, worth around $19,000 at the time.
The next day, the attackers removed 15 blocks from the network and issued another 16 blocks, which resulted in the double spending of 5,267 BTG, which was just over $53,000 at the time.
Attackers mined the double-spent blocks on both days through the same address, pointing to the same attacker or group.
It was likely easier for attackers to gain control of the majority of the hashing power because the protocol is not adequately decentralised.
This occurs when network participation is low – either because a coin has declined in popularity or use – or when a centralised cluster of node operators holds the majority of the hashing power.
This may have made Bitcoin Gold an easy target for attackers.
In the wake of the attack, Binance has increased its withdrawal requirement for BTG to 20 confirmations in an effort to stem the flow of funds.
What is Bitcoin Gold?
Bitcoin Gold debuted in November 2017 as a hard fork of the original Bitcoin protocol. Although it received heavy attention at the time, the protocol has since faded into obscurity.
The project was criticised by many in the cryptocurrency community as being hastily thrown together, and the project’s website suffered a DDoS attack shortly after its release.
To make matters worse, BTG was the target of another 51% attack in May 2018, which saw the loss of 388,000 BTG – worth around $18 million USD at the time. The perpetrator was never identified.
In an exclusive interview with Coin Rivet in November 2019, BTG co-creator Alejandro Regojo shared that the protocol is now looking to expand into emerging markets such as Venezuela and Ghana.
You can read more about Bitcoin Gold here.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.