Weekly Roundup: BTC Falters Below $4k, ETH Set For Hard Fork, ETC 51% Attacked
In this week’s edition, we recap the latest in all things bitcoin, cryptocurrency and blockchain for you. The price of BTC shrank somewhat but still sits above its most recent low, the bitcoin community celebrates two more 10 year anniversaries of historic “firsts,” Ethereum readies itself for a major upgrade, and Ethereum Classic suffers from the biggest 51% attack ever to be conducted.
BTC Fails to Maintain $4,000, Tron Surges on BitTorrent Token News
It was another rough week for bitcoin as prices fell precipitously, no longer able to hold on to the highly-symbolic $4,000 mark. As of early Monday morning, BTC was down close to 12%, hovering just about $3,600. Things were not completely bleak, however, as the price is still up 10% over the last 30 days, suggesting that the bottom for bitcoin may very well still be in. Though a long-awaited bull run may not have yet materialized, the good news is that things haven’t become particularly worse. That’s not stopping some traders to continue to prepare for worse, with one particular CNBC analyst claiming the price of BTC still has much farther to fall, cratering below the $3,000 level in weeks to come.
As is prone to happen, most other coins were down far more significantly, with Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC), and IOTA (MIOTA) all down over 20% for the last week. One top ten coin, Tron (TRX) seemed unphased by the downward pressure, ending the week on a slightly green note (up 0.37%). The would-be internet disruptor acquired the famous file sharing giant BitTorrent in August of last year, recently unveiling plans to relaunch the nework on its own under a new token (BTT). Tron had recently hired SEC supervisory attorney David Labhart as its new head of compliance, potentially envisioning a scenario where it would need someone with legal expertise to help guide its growth well into the future.
At the same time, an ex-executive of Tron has been very vocal about his beliefs that its network could not handle or support the entire BitTorrent user base, outlining some major criticisms he has for the idea of a BitTorrent token. Though highly successful and popular with many crypto enthusiasts, Tron and its founder Justin Sun have not been without controversy, from accusations of white paper plagiarism to adjusting competition statistics and rewards in an alleged attempt to avoid paying out promised sums to participants.
Why #TRON is better than #ETH: 1. 10000TPS vs. 25TPS 2. zero fee vs. high fee 3. consistent Coinburn vs. no coinburn 4. Java vs. Solidity 5. strong extensibility vs. no ex. 6. 1 billion USD developers rewards vs. no plan 7. 100 million users vs. small number #TRX $TRX pic.twitter.com/WvxH5EToa8
— Justin Sun (@justinsuntron) April 6, 2018
Bitcoin Celebrates First Tweet, Life of Hal Finney
It was another week of ten year anniversary of firsts for bitcoin last week, namely the first transaction and first tweet about bitcoin. Both items involve the celebrated developer Hal Finney, one of a few people to actually begin running Satoshi’s bitcoin software upon its initial release. Finney, who went on to become a strong proponent of bitcoin before slowly succombing to ALS (or Lou Gehrig’s Disease) in 2014, was a member of several cryptography mailing lists and online forums, allowing him to be aware of Satoshi’s bitcoin announcement shortly after it happened, downloading the client software within days of its release.
— halfin (@halfin) January 11, 2009
In the first recorded bitcoin transaction, of which Finney was the recipient of, Satoshi sent 10 bitcoins as part of a demonstration of how the Bitcoin Network and blockchain worked. Finney was also a member of Satoshi’s bitcointalk.org forum, contributing hundreds of posts on how to improve bitcoin’s design. In one of his final posts to the Bitcointalk forum, Finney described what being involved with bitcoin since the very beginning was like:
“After a few days, bitcoin was running pretty stably, so I left it running. Those were the days when difficulty was 1, and you could find blocks with a CPU, not even a GPU. I mined several blocks over the next days. But I turned it off because it made my computer run hot, and the fan noise bothered me. In retrospect, I wish I had kept it up longer, but on the other hand I was extraordinarily lucky to be there at the beginning. It’s one of those glass half full half empty things.”
At present, the Bitcoin Network now processes an average of 280,000 transactions a day, making it not only the biggest cryptocurrency by market cap but by total transaction value as well. Since Satoshi’s initial transaction to Finney, there have been over 372 million performed in the last 10 years, marking bitcoin as a particularly successful method of value transfer. In terms of total amount of transactions per day, only Ethereum exceeds bitcoin, with about 500,000 per 24 hours.
Ethereum to Undergo Network Upgrade
Much of the quiet in the usually turbulent crypto markets can be attributed to an upcoming upgrade to the Ethereum Network, expected to take place on or about January 16th. The Ethereum upgrade, named Constantinope, differs tremendously from the recent debacle seen with the Bitcoin Cash (BCH) hard fork, which was regarded as highly contentious and resulting in the fractioning off of a contingency of former BCH supporters. Unlike with BH, the Ethereum community is largely in agreement with the upcoming changes to the protocol.
While everyday Ethereum users do not need to do anything special in anticipation of the upgrade, miners and node operators must download the latest version of the Ethereum client, a list of which can be found here. If they do not make the switch before block 7,080,000, they will find themselves trapped on non-compatible chain that follows old rules, unable to send ETH or operate on the post-upgrade network. The core elements to be added or changed to the network include:
Bitwise shifting instructions in EVM (EIP145) – addition of functionality to the network protocol so that it is cheaper and easier to accomplish certain tasks on chain.
Skinny CREATE2 (EIP1014) – allows for interaction with Ethereum addresses that have not yet been created.
EXTCODEHASH opcode (EIP1052) – allows certain tasks to be accomplished for a smaller gas (transaction) fee.
Net gas metering for SSTORE without dirty maps (EIP1283) – cheapens the gas requirement for functions that are deemed to currently be “excessively expensive.”
Constantinople Difficulty Bomb Delay and Block Reward Adjustment (EIP1234) – perhaps the most ambitious and necessary of all the changes, this change serves to delay Ethereum’s “difficulty bomb” (increases in difficulty level) that is slowly increasing times between blocks added to the chain. This is being implemented to insure that the network does not “freeze” before the blockchain can eventually be shifted to a Proof of Stake model.
As of the writing of this article, only about 15.5% of all Ethereum nodes had already upgraded to the new version, though this number is expected to climb quite rapidly in the upcoming days.
Ethereum Classic Falls Victim to 51% Attack
From January 5th to January 8th, attackers used more than 51% of the Ethereum Classic (ETC) hash rate to perform a series of double spend attacks to net them with about $1.1 million in double-spent coins. Many of these coins have already been sold, with the attacker wallets currently still in possession of roughly 53,000 illicitly-obtained ETC. As the cost to run a 51% attack on the Ethereum Classic network is quite low, it was an easy target – less than half the cost such an attack would cost on a bigger coin like Bitcoin Cash. Some of the exchanges affected include Coinbase, Binance, Gate.io and Bitrue; the latter detecting the onset of the attack before the others and halting withdrawals of coins to addresses belonging to the attackers.
💔‼️Ethereum Classic (ETC) 51% Attack Detected On @BitrueOfficial
We've experienced an ETC 51% attack yesterday morning. The attacker tried to withdraw 13,000 ETC from our platform but got halted by our system. As demonstrated below: pic.twitter.com/V7YWzkldIv
— Bitrue (@BitrueOfficial) January 8, 2019
The first to notice the attack was Chinese blockchain security firm SlowMist, which led to analysts to discover that a private mining pool had managed to increase its hash power to 3,263 GH/s. This temporarily made it the most powerful mining pool for brief bursts at a time, giving the power it needed to conduct the series of attacks. The analysts concluded that the mining pool’s power at its maximum was around 63% of the total network hash rate, giving it more than enough sway to perform the attack. As a response to the attacks, Coinbase has paused all ETC transactions, detecting that a total of 219,500 ETC ($1.1 million) had been affected.
To be clear we are making no attempt to hide or downplay recent events.
Facts are facts and as the situation develops we'll soon get a full picture of what actually took place.
Linzhi is testing ASICS. Coinbase reported double spends; both may be true.
In time we will see. https://t.co/bbq6eqIoiS
— Ethereum Classic (@eth_classic) January 7, 2019
Though only existing as a theoretical problem for several years, both Bitcoin Gold (BTG) and VertCoin (VTC) were victims of 51% attacks in 2018, where a malicious party gains control of over 50% of a network’s hash rate in order to make changes to a blockchain in their favor (known as a “reorg”). Blockchains are usually thought of as immutable – or unchangeable – as the network relies on a majority consensus of correct address balances in order to operate. But, if the “majority” is actually owned by a single entity with bad intentions, they can make changes to the blockchain by excluding certain transactions to make it appear that they have more coins than they actually do.
Litecoin developer Charlie Lee decided to look on the bright side of things, acknowledging that the possibility of a 51% attack is a potential price to be paid for running a truly decentralized network:
This is a thought-provoking observation. 🤔
By definition, a decentralized cryptocurrency must be susceptible to 51% attacks whether by hashrate, stake, and/or other permissionlessly-acquirable resources.
If a crypto can't be 51% attacked, it is permissioned and centralized. https://t.co/LRCVj5F0O1
— Charlie Lee [LTC⚡] (@SatoshiLite) January 8, 2019
As of Monday morning, the attackers had returned at least $100,000 in ETC to one of the exchanges taken advantage of, probably deciding that the coins still in their possession would be very hard to spend as they have already been marked as “tainted” by Ethereum Classic developers and major exchanges. The attack serves as a stern reminder to crypto exchanges to be on the lookout for coins with weak hash rates that are particularly subject to 51% attacks.
Also in the News
- Facing sanctions by the U.S., Russia announced that it will dropping the U.S. dollar as its primary currency of trade in the near future and potentially replacing it with bitcoin. Recent comments from Russia’s Kremlin led many to speculate that the country would soon be making massive bitcoin (and possibly other cryptocurrency) investments. It is well-known that Russian President Vladimir Putin had met with Ethereum founder Vitalik Buterin in the past on occasion and as recently as 2018, though it is highly speculative as to what was actually discussed during the course of their conversations.
- “Wrapped Bitcoin” is coming to Ethereum, set to provide a new source of stability during the trading of Ethereum tokens. Wrapped Ethereum (wETH) already exists as a popular ERC20 trade pairing, as ETH itself is not actually a token but can be tokenized by setting aside a portion of ETH in a designated fund, using it to back wETH tokens denominated in terms of ETH. This stablecoin-like procedure is now being applied to bitcoin (wBTC), which has the benefit of not only making it easy to trade BTC against ERC20 tokens in DEXs but also removing a portion of BTC from circulation, thus potentially increasing its value. Plans for the introduction of a “Wrapped Bitcoin Cash” are also underway.
- Though first announced in October, crypto wallet masters blockchain.com are continuing to give away $25 in Stellar Lumens (XLM) to the first 3 million respondents of its wallet holders in an attempt to help increase adoption of the fast-rising coin. Blockchain.com recently integrated Stellar into its user wallets, making it the 4th coin it currently supports. Blockchain.com wallet owners can claim their free Stellar from the website here.
- In a first-of-its-kind story, the principle of a Chinese high school was fired for covertly using its computer resources to mine cryptocurrency. A school employee had attempted to inform the headmaster about the school’s heavy usage of electricity, which he quickly dismissed as due to the over-usage of heaters and air conditioners.