Bitcoin Gold has just been hit with a 51 percent attack. The attack used a double spend tactic to steal funds from various cryptocurrency exchanges.
The development team of Bitcoin Gold confirmed last Thursday that the attacker manipulated the blockchain to reverse transactions. This was done by gaining majority of the control over the network’s hashrate.
The attacker first made deposits to various cryptocurrency exchanges as typical users. Soon after trading one cryptocurrency for another, the attacker then started the network manipulation. The exchanges’ computing power was then used to inject falsified blocks into the network to reverse the deposits initially made. As a result, it was as if the funds simply disappeared from digital wallets under the exchanges’ control.
The address traced back to the attacker was found to have attempted to steal over 380,000 BTG through the double spending attack, according to CCN. If converted to fiat, this would be over $18 million at the time of the theft. Although not all of the 380,000 BTG was successfully stolen as the success rate of the attack (the number of successful transactions and funds associated with them) is yet to be established.
A vulnerability pointed by the BTG developers was the mining algorithm being used – Equihash. Since many other cryptocurrencies use the Equihash pool, the combined hashpower of the network is much larger than Bitcoin Gold’s own hashpower.
This incident only reminds the BTG team of its plans to migrate to a new algorithm. According to the developers, this algorithm would have a layer of protection so the network is much safer from 51 percent attacks. With an attack of that scale, the team is urged to speed up the deployment timeline:
“While it would be better to give all our partners more than seven days to test and deploy to avoid disruption, these attacks have already forced disruption on us all, so we feel it’s best to get the upgrade completed as soon as we possibly can.”