$72 000 USD

JANUARY 2020

MALTA

BINANCE

DESCRIPTION OF EVENTS

“Malicious cryptocurrency miners took control of Bitcoin Gold‘s blockchain recently to double-spend $72,000 worth of BTG. Bad actors assumed a majority of the network‘s processing power (hash rate) to re-organize the blockchain twice between Thursday and Friday last week: the first netted attackers 1,900 BTG ($19,000), and the second roughly 5,267 BTG ($53,000).” “Cryptocurrency developer James Lovejoy estimates the miners spent just $1,200 to perform each of the attacks, based on prices from hash rate marketplace NiceHash.”

51% attacks are one attack that exchanges can hardly avoid - the only way is to have a slower withdrawal or insure against the losses. By adjusting their escrow period from 12 blocks to 20 blocks, Binance has increased the expense to repeat the attack from $1,200 to ~$2,000. Still, they are lucky at the minimal scale of the attack at this stage.

HOW COULD THIS HAVE BEEN PREVENTED?

Exchanges need to plan for a continency of the full hot wallet going missing. 51% attacks generally play out quickly and can be fully mitigated by delays on larger withdrawals. This is a trade-off for the exchange, but it shouldn't be one that customers have to worry about.

 

Check Our Framework For Safe Secure Exchange Platforms

Sources And Further Reading

 For questions or enquiries, email info@quadrigainitiative.com.

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