The first week of August did not go well for the Ethereum Classic (ETC) blockchain. A series of 51% attacks struck ETC, resulting in major losses at the OKEx cryptocurrency exchange. A 51% attack requires an entity to secure the majority of mining or hash power for a blockchain. At that point, they can manipulate incoming data and falsify transactions. The first attack came away with $5.6 million in ETC, while the second managed to steal $1.68 million. The events are a serious blow to Ethereum Classic’s public image – one that already struggled to differentiate itself from the original Ethereum blockchain. However, ETC’s trading price remains relatively stable in the short-term.
In the aftermath of the attack, OKEx announced that they would consider delisting Ethereum Classic from their exchange. While a single attack may have been a fluke, the quick one-two punch suggests deep security vulnerabilities in the ETC codebase. Without verifiable progress on the developer’s side, the risk of additional attacks remains too high compared against the potential profitability of Ethereum Classic.
The Spotty History of ETC
Worse yet, these are not the first 51% attacks carried out on Ethereum Classic. At the beginning of 2019, ETC suffered one of the first such attacks on a major blockchain. Although the loss amounted to less than half a million, it brought the concept of a 51% attack from the theoretical to the practical. As a direct response of that first attack, Coinbase suspended trading for ETC.
Now, in the wake of the OKEx losses, other major exchanges may be poised to delist as well. Ethereum Classic differentiates itself from Ethereum mostly through adhering to the Proof-of-Work (PoW) algorithm. In contrast, Ethereum has steadily moved towards a Proof-of-Stake (PoS) model. 51% attacks are almost exclusively a problem for PoW systems – making ETC a poster child for why the switch to PoS is necessary.
What Created Ethereum Classic?
The PoW or PoS argument may differentiate ETC from ETH now – but it is not the original reason for the schism. In the wake of the DAO Bailout, Ethereum chose to roll back a theft of $50 million USD through the hard fork mechanic. The new blockchain, with the DAO theft erased, became Ethereum. Those that remained on the old blockchain now became Ethereum Classic.
There may have once been an argument for continuing to use the original Ethereum blockchain. Yet, given the constant attacks, stubborn adherence to PoW and failure to branch out from Ethereum – that argument does not appear able to stand the test of time.
Article By: Adam Stone