Exchanges Could ‘Mount Active Defense’ Against 51% Attacks by Counter-Forking

Colin Muller

“[E]xchanges are the primary targets for 51% attacks,” wrote Haseeb Qureshi in a tweetstorm while considering the recent 51% attack on Ethereum Classic (ETC). Pointing out that “individual users don't even notice unless they check Twitter,” Qureshi proposed creative measures that exchanges could use to protect their assets - which would be far less costly than compensating users after the fact.

The former Airbnb software engineer and pro poker player framed 51% attacks as unfortunate realities, and essentially a “tax on exchanges” that must be paid in the cheapest way possible.

While suggesting the obvious fix - delisting Proof-of-Work (PoW) blockchains with dangerously low hashrates - he said that exchanges could actively fight back by re-mining the original chain at a much lower cost than their attackers, thus avoiding considerable losses after successful attacks.

‘Markets Basically Shrugged It Off’

Qureshi began his proposal by claiming that individual users are, in practice, hardly affected by 51% attacks, also known as a “chain reversion” or “chain reorganization.”

Indeed, between January 5 when the attack was first realized and January 10 when ETC’s community had fully reacted, the asset’s market value hardly flinched. Retail investors either weren’t aware or didn’t care, it seems - after all, as Qureshi pointed out, “[bystanders’] transactions pay fees, so why not include them in your fork?”

Attacks are effective because attackers trade soon-to-be-attacked cryptoassets for either other cryptoassets or fiat money. In this vein, Qureshi points out that “There's only one major business that sells real-world things for crypto: exchanges.”

 

hour_CryptoCompare_Index_ETC_USD_337_11547466111202.png(source: CryptoCompare)

Exchanges therefore have the biggest dog in the fight when it comes to reorg attacks. In the aftermath of the ETC attack, there has been confusion for the hardest-hit exchange, Gate.io, which did not manage to close withdrawals fast enough.

CryptoGlobe first reported that Gate.io would reimburse almost $200,000 worth of lost ETC to its customers. But it now appears that the attack may have been a white hat attack, as $100,000 worth of ETC has been returned to the exchange.

At any rate, it is clear that exchanges stand to lose big during such attacks.

Exchanges Fight Back?

The crux of Qureshi’s point lies in what exchanges can do about it. He proposes that exchanges can mine their own versions using the same weapon that attackers use: Rented hashrate on sites like Nicehash.com.

He writes:

The exchange, upon [detecting an attack], rents some hashrate and starts RE-MINING on the original, shorter chain. By expending more hash rate than the attacker (they don't need to mine as far, only a few blocks back), they can re-revert the chain.

Haseeb Qureshi

A defending exchange would only have to re-mine a few blocks, whereas attackers have to mine much further back in order to cancel out their own transactions and accomplish a double-spend. Because of this, re-mining a much more recent chain would be far less costly for an exchange than it was for the attacker to re-mine their attacking chain.

Qureshi posits that this deterrent could keep attackers from even bothering, because “if exchanges commit to doing this, the incentive to attack goes down tremendously.”

Crypto Market Update: Ethereum (ETH), XRP, Bitcoin Cash (BCH), and Chainlink (LINK)

Siamak Masnavi

This article provides: an overview of how Ethereum (ETH), XRP, Bitcoin Cash (BCH), and Chainlink (LINK) has been doing over the past 24-hour period; a recap of interesting recent news that might have affected their prices (or might do so in the future); and recent useful observations from Crypto Twitter regarding these cryptocurrencies.

To give you a rough idea of how well the crypto markets are doing today, 13 out of the top 20 cryptoassets (by market cap) are currently in the green (against the dollar). 

All market data used for the price charts in this article was taken between 15:30 UTC and 16:00 UTC on 22 October 2019 from CryptoCompare, which also generated the price charts shown in this article.

Ethereum (ETH)

ETH-USD 24 Hour Chart - 22 Oct 2019.png

Since October 16, ETH has been trading between $170 and $180. 

Earlier today, Hudson Jameson, Community Manager at Ethereum Foundation, said on Twitter that he is not happy with Ethereum's current governance structure and asked the crypto community for suggestions on how it could be improved:

Ethereum Foundation researcher Vlad Zamfir had this say in his reply to Jameson's tweet:

XRP

XRP-USD 24 Hour Chart - 22 Oct 2019.png

Although XRP is up only slightly down, in the past 30-day period, the XRP price has risen 6.96%. 

Earlier today, Ripple announced that it had expanded its global regulatory team and opened an office in the heart of Washington, DC. Furthermore, Craig Phillips, former Counselor to the Secretary at the U.S. Treasury Department, is now part of Ripple's Board of Directors. Lastly, Ripple has become a member of the Blockchain Association, and Michelle Bond, Ripple’s Global Head of Government Relations, will be sitting on its board.

Bitcoin Cash (BCH)

BCH-USD 24 Hour Chart - 22 Oct 2019.png

On October 17, CryptoGlobe reported that Changpeng Zhao (aka "CZ"), Co-Founder and CEO of Binance, the world's largest crypto exchange by trading volume, had proposed (on the Binance community forum) the idea of listing BCH on Binance DEX, Binance's decentralized exchange platform.

In his post on the Binance community forum, CZ said that Binance was proposing to list (on Binance DEX) BCH-1FD, "a pegged token that tracks the value of the native asset of the Bitcoin Cash" to allow "Binance DEX users to trade BCH on the DEX." CZ went on to say:

BCH-1FD is backed by real BCH assets, and Binance, the largest cryptocurrency exchange, will provide conversion between BCH and BCH-1FD through deposit/withdraw. As such, there isn’t much development work in this token or any potential of conflict of interest.

Yesterday, Binance announced that Binance DEX had listed this new token (i.e. BCH-1FD) and that trading in the pair BCH/BNB had gone live. Since then, there have been 2116 transactions.

Chainlink (LINK)

LINK-USD 24 Hour Chart - 22 Oct 2019.png

Chainlink continues having a great October, going up almost 10% today (highest gainer among the top 20 cryptoassets).

Chainlink continues to impress the crypto markets with a non-stop flow of partnership announcements; the latest one came yesterday when blockchain startup Ultrain announced via a blog post that it "will officially integrate with the Chainlink oracle network."

Chainlink's highly impressive return on investment (ROI) figures for the past seven days, 30 days, three months, and one year are +16.04%, +52.82%, +15.71%, and +607.18% respectively.

 

Featured Image Credit: Photo via Pixabay.com