Ethereum Classic Blockchain network is considered the second most popular cryptocurrency in the world and has come under a serious attack. Anonymous hackers conducted an attack named “51 percent attack” against the infrastructure of Ethereum Classic and succeeded in stealing more than $1.5 million (equal to €1.2 million). A couple of hours after the attack, the value of Ethereum had a falling trend.
The mechanism of decentralized Blockchain, like Bitcoin and Ethereum, relies on honest nodes which hold more than 51 percent of the computational power. Working together, honest nodes verify the transactions and keep their history; thus creating a history of what has been paid and what has not been paid that cannot be manipulated or changed.
However, when dishonest nodes take over the majority of the computational power, they can manipulate the history of transactions and get back what they have already paid. This is exactly what happened in this attack.
For example, consider the attacker receives 1 Ethereum from someone. After gaining 51 percent of the computational power, the attacker will go to that transaction block and change it from successful to unsuccessful. After this manipulation, 1 Ethereum will remain in the attacker’s account, but because of being unsuccessful the transaction, the victim must pay again. Hence, this attack is also called double spending.
Decentralization is the main idea behind Blockchain technology. When a node can take up most of the computational power and use it to its own advantage, this negates the very first idea of cryptocurrencies and damages the validity of that cryptocurrency. The 51 percent attack occurred during January 5, 13:27 UTC, until January 7, 05:30 UTC, and the computational power of the attacker increased up to 3263 GH/s.
The possibility of conducting 51 percent attacks in networks such as Bitcoin and Ethereum is almost impossible, due to their large size, but smaller networks are very vulnerable against this attack. In a similar attack last year, 388000 units of Bitcoins were stolen. Theoretically, any network in which the attacker owns most of the computational power is vulnerable against this attack. Last year, along with the decrease in the value of cryptocurrencies, some miners left the market because of not being profitable anymore. According to experts, eliminating competitors open up the arena for other miners to conduct such attacks.