After suffering two 51% attacks in a week, the ETC community is reeling. Vitalik Buterin suggested that ETC change its consensus algorithm to Proof of Stake. But is the conservative “Code Is Law” protocol ready for a change?
On July 31, Ethereum Classic was hit by the first of two 51% attacks. Analysis by forensics firm Bitquery showed that the attacker spent about 17.5 BTC (~$190,000) renting hash power on power broker NiceHash.
As a result, the attacker made off with an estimated 807,260 ETC. The payout was about $5 million, and that’s not counting the estimated 13,000 ETC in block rewards that were earned during the attack.
On the following Wednesday, mining company Bitfly discovered an attack that got away with a further $94,000 in block rewards.
Ethereum Classic: Proof of Forsake
The official Ethereum Classic Twitter account urged exchanges to increase confirmation times in response to this attack. Binance froze ETC deposits and withdrawals.
Understandably, people in the community want something to be done. Responding to a Bitfly tweet about Wednesday’s attack, Ethereum founder Vitalik Buterin suggested ETC change to a proof of stake (PoS) consensus algorithm.
Though nobody wants to lose money, the risks of these recent attacks are relatively small. When blockchain adoption is more widespread in the Internet of Things, an attack like this could have dire consequences.
John P. Conley, the chief economist of the Geeq protocol, explained in an interview with blogger Blockchain Brad his more deep-seated fears about blockchain 51% attacks:
It would be worth purchasing those tokens if it was an economic attack. You know, North Korea, Russia or China, whoever. If something lived on a chain and I could buy a hundred million dollars worth of tokens and control the chain, that’s a really cheap cyberattack.
When Ethereum originally forked in 2016 to return $50 million of stolen tokens, ETC held steadfast to the original code. Thus, ETC adamantly holds a “Code Is Law” ethos—the idea that the chain should remain as originally intended. A change to PoS could be seen as backpedaling on the protocol’s founding principles.
ETH 2.0 will be more resistant to this type of hack. Buterin said in an interview with the Centre for International Governance Innovation that there is a mechanism to stop such an attack automatically.
The Geeq protocol, which released a native token today, claims to use “proof of honesty” to achieve a 99% Byzantine Fault Tolerance (a measure of resistance to an attack).
Alternatively, Twitter user @LigerLite pointed out that a PoS Ethereum Classic would be just like mainchain Etheruem.
They suggested using Proof-of-Capacity. In this algorithm, mining is done on free hard drive space. The bigger the hard drive, the more hashing power. It is nearly as secure as PoW, but up to 30 times more energy efficient.
Another alternative is the SHA3 algorithm, a cryptographic method built for security. Yaz Khoury, an ETC developer, suggested this secure method of mining could make ETC a majority chain.
Hopefully, developers can solve these security issues before an attack on a global scale occurs. In the meantime, Ethereum Classic can remind us of simpler times.