ETHEREUM’S DECLINING HASH RATE INCREASES THE CHANCE OF A 51% ATTACK

Ethereum is one of the few cryptocurrencies to have been among the Top 3 for a long, long time. Recently, however, the crypto community has raised security questions in regards to the network’s declining hash rate and the safety of its (still) PoW-based blockchain. Ethereum’s hash rate has marked a 42% decline from last year’s high, and the main question is whether or not Ethereum is still as safe as it used to be.

Ethereum’s Increasing Vulnerability

In August of 2018, Ethereum and other cryptocurrencies saw their hash rates peak. Since then, however, things have changed. Ethereum’s hash rate is down more than 42% over the past 11 months.

To put things into perspective, Bitcoin’s hash rate has been constantly increasing. To be exact, it surged 40% within the same time frame, making Bitcoin’s network even more secure.

According to a website that calculates the cost of running a potential 51% attack on the various blockchain networks, in order to jeopardize Bitcoin’s network, one would have to spend approximately $750,000 per hour. In order to put Ethereum’s network in the same jeopardy, the price would be significantly lower – around $100,000 per hour.

If Ethereum’s hash rate continues to go south, however, this cost will only decrease, making it a lot more affordable to cause serious disruption.

Now, it’s worth noting that Ethereum has been making serious efforts to transition from the Proof of Work-based mechanism to one that’s governed by Proof of Stake consensus. However, until that happens, all possibilities should be taken into consideration.

The 51% Attack and Its Consequences

51% attacks can take place when a single organization or entity takes control over the majority of the hash rate, leading to a disruption in the network. With such an attack, one can modify the ordering of transactions, reverse transactions and facilitate double-spending, prevent transactions from being confirmed, or even exclude miners.

For example, Tech Tic Technologies Mining Group reported in January that such an attack had been carried out on Ethereum Classic’s network. As a result, the attacker transferred a total of 54,200 ETC which were worth upwards of $250,000 at the time of the event. As you can imagine, this attack also caused massive damage to the reputation and the credibility of Ethereum Classic, shaking the public’s trust in it substantially.

Of course, whether or not an attack of the kind can and will happen to Ethereum’s main network is unknown. However, considering the decreasing hash rate, it’s certainly something that deserves a thought or two.

Comments

Bitcoin Hash Rate Hits All-Time High: Here’s How It Works And How It Affects The Price

Bitcoin intelligence, data, and analytics firm Glassnode found the Bitcoin hash rate hit a new all-time high over the weekend, ten days before the Bitcoin halving event. In other words, miners are putting more computational power into maintaining the Bitcoin network. Because miners must venture electricity and capital intensive computer processors to mine Bitcoin, the increase in hash rate is a bullish sign. It means miners are after the Bitcoin rewards they get from maintaining the network. And they’re venturing the resources to go after those rewards. Is The Bitcoin Hash Rate Correlated With The Price? In general, the Bitcoin price and the hash rate are not correlated. The price is what buyers and sellers agree to pay for one Bitcoin, and there are many factors – external and internal – affecting the price. However, there is a relation between the two. While the price goes up, it’s more profitable to mine, which likely to cause more miners to turn on their mining equ...

IN THE NEW DECADE, CRYPTO WILL BECOME ESSENTIAL LIKE EMAIL: SAYS TYLER WINKLEVOSS

It’s the start of a new decade, and industry famous twin Tyler Winklevoss, the co-founder, and CEO of cryptocurrency exchange and custodian company Gemini Trust, has shared his views on what the next ten years hold for crypto. According to Winklevoss, crypto is already becoming more than a niche technology and a form of money, and it will play an essential role in our daily life in the foreseeable future. “Today, crypto is still a niche technology and a form of money. It is not crucial to your everyday life the way email and other web applications are, but our thesis is that this will change — it’s already changing if you look close enough,” Winklevoss wrote. Winklevoss added that the decentralized nature of cryptocurrencies, which empowers individuals, will be the driving force within the new decade. Crypto will not only redesign the internet but will also redesign the financial and monetary systems to protect the rights and dignity of users, he said. The Winklevos...

Qatar Blocks Cryptocurrency Services Throughout The Gulf

As the new year begins, Qatar’s Financial Center, the nation’s regulatory authority, has issued a blanket ban on cryptocurrency-related services in the Gulf nation. The prohibition covers not only cryptocurrencies but “anything of value” that could substitute fiat currencies. Qatar Bans Cryptocurrencies The Qatari Financial Center, which is also the nation’s regulatory authority, has issued a statewide ban on cryptocurrencies and other digital assets that might substitute traditional fiat. Per the report , the authority stated that: “Virtual Asset Services may not be conducted in or from the QFC at this time.” It also reads that this goes for “Anything of value that acts as a substitute for currency, that can be digitally traded or transferred and can be used for payment or investment purposes.” However, it’s also worth noting that the ban doesn’t cover digital forms of securities or other financial instruments that are thoroughly regulated by the Regulatory Authority, ...

Tech Tic Technologies

Search This Blog