Bitcoin Gold network fell victim to 51% attack

Last week, an unidentified hacker successfully executed a combination of double spend and 51% attacks on the Bitcoin Gold network last week. As a result, he managed to get away with about 388 000 BTG (roughly worth $18 200 000 as per current exchange rate).

BTG holders first got to know about the attack on May 18 from Bitcoin Gold director of communications Edward Iskra. He warned the users of the network that the intruder was skillful at using the exploit to steal funds from cryptocurrency exchanges.

In order to execute the attack, the intruder acquired at least 51 percent of the network’s total hashpower, which provided him with temporary control of the blockchain (this scheme is also known as 51% attack). After gaining control of the network, the attacker began depositing BTG at cryptocurrency exchanges while also attempting to send those same coins to a wallet under their control. Ordinarily, the blockchain would resolve this by including only the first transaction in the block, but the attacker was able to reverse transactions since he had majority control of the network.

Put simply, he was depositing funds at the exchanges, then withdrawing them and cancelling the original transaction. As a result, the cybercriminal managed to accumulate 388 000 stolen coins in a separate wallet.

After getting aware of the attack, Bitcoin Gold’s developers advised exchanges to address the attack by increasing the number of confirmations required before they credit deposits to customer accounts.

At present, Bitcoin Gold ranks as the 26th-largest cryptocurrency, with a circulating market cap of $827 000 000.