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Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions

Last Updated March 4, 2021 5:07 PM
Josiah Wilmoth
Last Updated March 4, 2021 5:07 PM

A malicious miner successfully executed a double-spend attack on the Bitcoin Gold network last week, making BTG at least the third altcoin to succumb to a network attack during that timespan.

Bitcoin Gold director of communications Edward Iskra first warned  users about the attack on May 18, explaining that a malicious miner was using the exploit to steal funds from cryptocurrency exchanges.

To execute the attack, the miner acquired at least 51 per cent of the network’s total hash power, which provided them with temporary control of the blockchain. Obtaining this much hash power is incredibly expensive — even on a smaller network like bitcoin gold — but it can be monetized by using it in tandem with a double-spend 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 they had majority control of the network.

Consequently, they were able to deposit funds on exchanges and quickly withdraw them again, after which they reversed the initial transaction so that they could send the coins they had originally deposited to another wallet.

bitcoin gold
Source: BTG Explorer

A bitcoin gold address implicated in the attack has received more than 388,200 BTG since May 16 (mostly from transactions it sent to itself). Assuming all of those transactions were associated with the double spend exploit, the attacker could have stolen as much as $18.6 million worth of funds from exchanges.

The last transaction was sent on May 18, but the attacker could theoretically attempt to resume it if they still have access to enough hash power to gain control of the blockchain.

Bitcoin gold’s developers advised exchanges to address the attack by increasing the number of confirmations required before they credit deposits to customer accounts. Blockchain data indicates that the attacker successfully reversed transactions as far back as 22 blocks, leading developers to advise raising confirmation requirements to 50 blocks.

At present, bitcoin gold ranks as the 26th-largest cryptocurrency, with a circulating market cap of $827 million.

Bitcoin gold is at least the third cryptocurrency network hit with a major attack in the past week alone.

As CCN.com reported, a miner manipulated two of privacy coin verge’s five hashing algorithms to maliciously mine more than 35 million XVG — worth ~$1.75 million — in just a few hours. Previously, Japanese cryptocurrency monacoin was hit by an apparent block withholding attack after a miner gained as much as 57 per cent of the network’s hashrate.

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