Cryptocurrency, Ethereum Classic, Under Attack

Since 2009, when Bitcoin begin its meteoric rise in the cryptocurrency marketplace, there have been more than 2,000 different cryptocurrencies invented. While some believe, strongly, that cryptocurrencies represent the future of money, worldwide, skeptics consider cryptocurrencies to be little more than virtual Ponzi schemes.

Ponzi scheme or not, hackers recently made way with $1.5 million by performing what is known as a 51 percent attack on cryptocurrency Ethereum Classic, forcing Coinbase to cease training Ethereum classic as a result.

Prior to the attack, Ethereum Classic was the second most popular cryptocurrency in today’s marketplace. The implications of this attack could be far reaching.

What is a 51 percent attack?

While possible on practically any cryptocurrency, this type of attack is notoriously difficult to pull off. It involves taking more than half of the networks mining power to allow for a “double spend.” When that happens, whoever controls the network can spend units of the cryptocurrency twice.

These types of attacks seriously devalue the cryptocurrencies affected when carried off successfully. In the past it has happened to Bitcoin Gold (a spinoff of Bitcoin). Other cryptocurrencies to fall victim to 51 percent attacks (which are becoming increasingly common despite their complexity) include, Krypton, Shift, Zencash, MonaCoin, and Verge.

Once considered outlandish attacks, Zencash co-creator Rob Viglione argues that with users renting mining hardware without being forced to go to the expense of purchasing it, these attacks are likely to become increasingly common.

What are the consequences of attacks such as these?

Initially, the greatest impact of these types of attacks is shaken confidence in an industry that continues to have little mainstream support. As attacks such as these become more commonplace, that little bit of support is going to erode with cryptocurrency investors exiting specific currencies if not the entire industry.

The attack on Ethereum Classic was particularly impactful as it was large enough that many thought it to be untouchable. This recent attack is forcing everyone to re-evaluate what is safe, as far as cryptocurrencies go. The bottom line is that the industry is going to have work together to put an end to these risks. A Finance Gradeup, of sorts. With more than 2,000 players in the game (and counting) it seems like a difficult mission. But there are millions of dollars on the line to motivate cryptocurrencies to do just that.