Bitcoin Gold blockchain suffered two attacks of 51%

The Bitcoin Gold (BTG) blockchain suffered an attack of 51%, resulting in losses of over $ 70,000. According to a GitHub message from James Lovejoy, a researcher at the MIT Digital Currency Initiative, the Bitcoin hard-fork has been hit by two profound reorganizations of over 10 blocks on January 23 and 24.

A 51% attack is a situation where a single entity or group controls more than half of the hash power of a blockchain network. This allows the control over the confirmation of new transactions and the power to reverse the completed transactions. The attackers can thus achieve the so-called double spending of cryptocurrencies.

Two 51% attacks in six hours

In the first attack, just after 6pm GMT on January 23, 14 blocks were removed from the blockchain and 13 were then added. 1,900 BTG worth about $ 19,000 at the time were double spent on redirecting a transaction.

Six hours later, in the early hours of January 24, another attack cleared 15 blocks and added 16. 5,267 BTG ($ 53,000 at that time) were spent double on three transactions that were redirected.

The cost of the attack

Bitcoin Gold uses the Equihash algorithm known as Zhash and can be mined with graphics cards. Based on the prices on the Nicehash market for Zhash, the estimated cost of each blockchain reorganization attack was about $ 1,700.

The attacker would have recovered approximately the same value in block rewards, which means that the profits were equal to the expenses. If he managed to sell cryptocurrencies successfully, the attacks were profitable.

Following the attack, the price of Bitcoin Gold increased. On January 26, the currency went from $ 10.42 to $ 11.60 in a few hours. Currently, cryptocurrency is worth over $ 12.

Binance increases escrow periods

At the time of the attack, the Binance exchange allowed the trading of BTG deposits after six confirmations and the withdrawal after 12 confirmations. Therefore, a reorganization of 14 or 15 blocks would have escaped both escrow periods.

Since then, Binance has increased its withdrawal requirement to 20 blocks, although this still does not exclude the possibility that a 51% attack is financially viable.

The Bitcoin Gold blockchain was previously the subject of a 51% attack in May 2018. At that time, BTG worth $ 18 million was estimated to have been spent double. The situation prompted the Bittrex exchange to list Bitcoin Gold.