Vertcoin (VTC) 51% Attacks Reveals Danger of Smaller Blockchains

The Vertcoin blockchain demonstrated a significant deep reorg, showing that for smaller chains, immutability is not guaranteed.

The Vertcoin (VTC) blockchain underwent a 51% attack, with an attempt to also scam the Bittrex exchange and sell double-spent coins.

The Vertcoin hashrate is suitable for an attack. But this time, the size of the attack was surprising, as the hacker overwrote blockchain history. The Vertcoin chain saw 600 blocks deleted and replaced.

The reorg suggests that proof-of-work is vulnerable, as more than a handful of blocks can be edited. Vertcoin uses Scrypt-N hashing algorithm, claiming to be ASIC and multi-pool resistant. However, with a hashrate of around 694 GH/s, the coin is attackable even for a dedicated GPU miner.

The Vertcoin network is also attackable through Nicehash, through hired mining power. This means an attack is always in the works, potentially.

James Lovejoy, the lead developer for Vertcoin, corroborated the fact that the hashing power was hired. The attack was noted through observing the servers of Nicehash.

“There is strong evidence this attack was performed using rented hashrate from Nicehash. The attack was originally discovered by inspecting the work being sent from Nicehash's stratum servers, which were sending work for non-public blocks,” he explained.

Smaller altcoins, such as Einsteinium, or Pigeoncoin, can be attacked even more cheaply, but still fall under the radar, as their trading is highly illiquid.

VTC is currently trading at $0.23, on rather slim volumes of 65 BTC per day. Bittrex still carries around 23% of all VTC trading, and around 32% are traded on CoinEgg. But Bittrex was singled out for the operation to attempt to sell VTC balances that were overwritten on the blockchain.

The attack against Vertcoin raised fears that coins such as Litecoin can be next. The Litecoin hashrate fell by 70%, making it cheaper to attack the coin. Additionally, Litecoin only requires 3-6 confirmations on most exchanges, requiring a much smaller reorg to double-spend coins.

Reading now