How 51% Attacks Crippled This Ethereum Crypto Offshoot
This past week Ethereum Classic suffered not one, but two 51% attacks. The culprits were able to make off with millions as a result.
While this doesn’t directly cause the underlying network to slow, due to the attacks this cryptocurrency’s confirmation times have increased drastically. Exactly how bad have these attacks hurt ETC?
Crypto As A Financial Technology: Fast, Low Fees, etc.
Cryptocurrencies have several immediate use cases. They can act as an investment or a store of value. The asset class also enables users to act as their own personal bank.
The new technology, however, is most interesting due to its relatively low fees and speed when sending large sums of value, compared to the same cost and speed at banks.
For example, over a billion in Bitcoin was sent recently by one of the largest wallets in existence and the fee was under $4 total. A similar transaction at a traditional commercial bank would involve a far more substantial cost, depending on a number of factors.
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Bitcoin block generation takes roughly ten minutes as one of the slower crypto assets. XRP takes seconds, for comparison.
After several confirmations and less than an hour, that Bitcoin arrived at its destination at very little cost. But would Bitcoin be as valuable if it took two full weeks for those same confirmations to occur?
Two-Week Confirmation Time Cripples Ethereum Classic Speed, Investors Can’t Sell
Over the last week, Ethereum Classic was given a one-two punch by hackers.
The crypto asset and blockchain network suffered two 51% attacks only days apart resulting in millions stolen. This type of attack occurs when hackers gain control of over 51% of the network’s hash rate and use the power to double-spend.
The hacker sent ETC tokens to exchanges that they later spent over again, essentially deleting the originally sent tokens.
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To prevent and protect from loss exchanges are now extending confirmation times on Ethereum Classic transactions by as long as two weeks, according to a tweet from Coinbase.
This means, that even if ETC is sent legitimately by token holders to Coinbase, the coin is then stuck in limbo for two weeks while the user waits to receive their crypto.
Given the recent network attacks on Ethereum Classic, we have increased the confirmation time for ETC sent to Coinbase & Coinbase Pro to ~2 weeks. We are actively monitoring the situation and will provide updates as they become available.
— Coinbase Support (@CoinbaseSupport) August 8, 2020
Even worse, any investors looking to dump their bags due to ongoing attacks will be stuck having to wait and deal with whatever market consequences get priced in in the meantime.
Ethereum Classic may offer they crypto industry several key benefits, but currently, on many exchanges, it takes two weeks to receive and can’t be sold until confirmed, essentially crippling the cryptocurrency for some time.
ETCUSD Daily Chart | Source: TradingView