Bitcoin Gold Network Hit by 51% Attack

The network of the bitcoin fork Bitcoin Gold has suffered a so-called 51% attack, in which a miner temporarily obtained 51 percent of the hashpower and thus could influence the blockchain. He may have funneled millions of dollars.

The attack started on May 18, but according to an exchange, the attacker was already active before that. According to spokesperson for Bitcoin Gold Edward Iskra, the attacker succeeded in carrying out a so-called double-spend attack on exchanges with a 51% attack.

In a 51% attack, an attacker deploys such a high hashrate that he can control a majority of the network. For example, he can mine his own private blockchain, which is longer than the public chain. This allows him to send coins to himself and at the same time send the same coins to an exchange, which approves them after a number of confirmations based on blocks. Then the attacker sells the Bitcoin Gold and withdraws the money. He releases the private blockchain to the public network, which manipulates it and makes it look like the coins were never sent to the exchange. Hence, the attack is known as double spending.

The Bitcoin Gold account the attacker uses has received more than 388,200 coins, potentially taking $18.6 million from exchanges, CCN estimates. To obtain sufficient hash power, significant investments are required, which means that attacks target relatively small networks. Bitcoin Gold started last October as a fork of Bitcoin; the developers’ goal was precisely to make the network more decentralized than that of bitcoin. It is currently the 25th largest cryptocurrency by market value. According to CCN, there have been three attacks on networks in the past week alone.