Gate.io Exchange To Cover Almost $200k Worth of Stolen ETC, After 51% Attack

Cryptoasset exchange Gate.io will cover $184,000 worth of stolen Ethereum Classic (40,000 ETC tokens), after a reported 51% attack on the ETC blockchain occurred days ago, the company said in a press release.

The US-based exchange, which has a daily trading volume of $94 million at the time of writing, said that it had detected seven “rollback” attacks on the chain. Gate have also identified three of the attackers’ addresses, and suggest other platforms should block transactions to and from the addresses.

The minimum number of confirmations to process ETC transactions on the exchange have been raised to 500 as a precaution. Gate also “[suggested to] the ETC dev team and the community build a new consensus mechanism ([Proof-of-Stake] for example).

The ETC community, however, is known to be definitively against adopting a PoS consensus algorithm, and consider a Proof-of-Work (PoW) algorithm one of their main selling points in contrast to Ethereum’s (ETH) planned switch to PoS.

The former business developer of now-defunct ETCDEV, Donald McIntyre, said as much only a couple of days ago in the wake of the attack, commenting that “I think ETC still has a unique positioning as a PoW + Turing-complete network with an active community with sound principles.”

Still a prominent player in the ETC community, he did however express interest in a change in ETC’s PoW algorithm:

With the above in mind I think the best path is to explore a mining algorithm change to put ETC in a unique, incompatible PoW niche. Even if that implies a tradeoff as miners will have less optionality to point their infrastructure to different chains depending on the profitability of the day.

ETC’s 51% Attack(?)

CryptoGlobe wrote this week that the widely reported attack may not, in fact, have been an attack - but rather, an operational test of new application-specific integrated-circuit (ASIC) miners built for ETC’s consensus algorithm. (ETC currently uses the Ethash algorithm, which is still used by Ethereum.)

Interestingly, however, a tweet by the @eth_classic Twitter account, which speculated on the nature of the “attack,” has since been deleted.

It seems now that the ETC community agrees that it was, in fact, an attack. The substance of a community conference call, a diagnosis of the attack and the community’s response, was posted only hours ago, again on McIntyre’s Medium blog - ominously entitled “Post Mortem Meeting.”

McIntyre claimed a total of 15 double spend attacks and “at least ETC 219,500 stolen.” His explanation of the attack was straightforward, saying there is no “root cause internally in the [ETC] system,” and by way of explanationa said that “ETC is still a relatively small PoW blockchain with a mining algorithm that is compatible with larger chains such as Ethereum so attackers can rent hash power on NiceHash to reorg the blockchain.”

He detailed a number of suggestions to strengthen ETC in the future against such attacks, including a change in the PoW algorithm, reorg protection, and higher confirmation times in general (between 2,500 and 5,000). He added finally that “we will not reorg the chain or revert the events on chain under any circumstance.”

Coinbase Commerce Now Lets Merchants Accept USD Coin (USDC)

On Monday (May 20), Coinbase announced that "Coinbase Commerce", which provides non-custodial cryptocurrency payment solutions, now allows businesses to accept fully dollar-collateralized stablecoin USDC.

History of USDC

As CryptoGlobe reported on 26 September 2018, "USDC Coin" (USDC for short) was launched on that day by Goldman-funded FinTech startup Circle Internet Financial (better known as "Circle"). This is a regulated fully-collateralized dollar-backed stablecoin that was originally announced on 16 May 2018. USDC is based on an open source fiat stablecoin framework developed and governed by the CENTRE project.

Circle said at the time that the problems with existing fiat-backed solutions (such as Tether's USDT) were that they "have lacked financial and operational transparency, have operated in unregulated jurisdictions with unknown banking and audit partners, and have been built as closed-loop ecosystems and closed proprietary technologies."

In contrast, Circle's USDC stablecoin deals with these issues by "providing detailed financial and operational transparency" and "operating within the regulated framework of US money transmission laws, reinforced by established banking partners and auditors." USDC tokens are ERC-20 compatible (meaning that they run on the Ethereum blockchain); they are minted, issued, and burnt/redeemed based on network rules defined by CENTRE. 

Coinbase's Previous Involvement With USDC

On 23 October 2018, Circle announced that Coinbase (another member of the CENTRE consortium) was making USDC available to its customers on Coinbase Consumer and Coinbase Pro, and that customers could "tokenize dollars into USDC and redeem USDC into dollars through both Circle and Coinbase."

Then, on May 14, Coinbase said via a blog post titled "Expanding USDC crypto trading globally" that:

  • It was making USDC trading available on Coinbase Consumer and Coinbase Pro in 85 countries.

  • It was doing this to help "accelerate the global adoption of crypto trading" and to provide wider access to "a stable store of value."

  • There are more than 300 million USDC tokens currently in circulation today, and that USDC is supported by 100+ ecosystem partners.

  • Stablecoins "have the potential to materially improve the lives of people in countries where inflation is eroding wealth." 

  • Coinbase serves customers in 103 jurisdictions.

Coinbase Commerce and USDC

Coinbase Commerce was launched on 14 February 2018. Coinbase described Coinbase Commerce as a new service that "enables merchants to accept multiple cryptocurrencies directly into a user-controlled wallet," and that in contrast to its previous merchant products, it was "not a hosted service, so merchants have full control of their own digital currency." Four cryptocurrencies were supported back then: Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH), and Litecoin (LTC).

Coinbase Commerce can be "directly integrated into a merchant’s checkout flow or added as a payment option on an e-commerce platform." Initially, the only e-commerce platform supported was Shopify, but on 6 August 2018, support for WooCommerce was added.

Yesterday's blog post said that now Coinbase Commerce has added support for stablecoin USDC, thereby allowing "businesses to accept payments online in the same way they’re able to accept cash in-store." 

Here are a few things to note about Coinbase Commerce:

  • "Coinbase Commerce doesn’t charge any fees to process payments."
  • "Coinbase Commerce accounts are completely separate from Coinbase accounts."
  • "You can use the withdraw functionality to send cryptocurrency to an address associated with your Coinbase account."

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