Crime Once hailed as unhackable, blockchains are now getting hacked

[Cubo de Sangre]

There are some fundamental underlying designs patterns that they all share but no, there are dozens and dozens and dozens of different architectures. The technology has serious performance issues when it utilizes the best mechanisms for preventing malicious changes to the underlying transactions, so everyone is trying to engineer more efficient solutions.

You think JP Morgan entering the game will up the security standards?

 

[sakfjgadsyukgf]

I ‘m gonna approach cryptocurrency very cautiously. I’ll start by investing $3.50.

In the time it took you to write this comment, I already stole the $3.50. Sorry

 

[Otto!]

In the time it took you to write this comment, I already stole the $3.50. Sorry

No!!!! My precious tree fiddy!

 

[Falsedawn]

Lot of people wondering what the shit this means. Maybe I can help.

The 51% attack is basically a timing attack on the hash block. Let me try and illustrate it to make it easier.

This is our blockchain. It's a global ledger of transactions.

<Block 30 - Block 31 - Block 32 - Block 33 - Block 34>

Each block is a movement of bitcoin, plus or minus some indiscriminate amount.

When a transaction is verified, you add that transaction to the blockchain, and it becomes a new block. Let's spend 100 BTC in Block 35.

<Block 30 - Block 31 - Block 32 - Block 33 - Block 34 - Block 35 (-100 BTC)>

Without getting too much into the minutiae of Nakamoto Consensus, basically just assume that the computer that does the most work adds a block to the chain. This is the hash rate, or the speed that computers are working to solve the algorithm that governs bitcoin.

But say i'm in that hashing pool, and i'm unethical, so i've been following the chain privately since Block 30.

Here's what I have:

Public: <Block 30 - Block 31 - Block 32 - Block 33 - Block 34 - Block 35 (-100 BTC)>

Private: <Block 30 - Block 31 - Block 32 - Block 33 - Block 34 - Block 35 (-100 BTC)>

For Block 36, i'm going to spend some coin on the public chain, but keep my private one hidden.

Public: <Block 30 - Block 31 - Block 32 - Block 33 - Block 34 - Block 35 (-100 BTC) - Block 36 (-100 BTC)>

Private: <Block 30 - Block 31 - Block 32 - Block 33 - Block 34 - Block 35 (-100 BTC)- Block 36 (-0 BTC)>

We then validate both those transactions, publicly and privately.

Public: <Block 30 - Block 31 - Block 32 - Block 33 - Block 34 - Block 35 (-100 BTC) - Block 36 (-100 BTC) - Block 37>

Private: <Block 30 - Block 31 - Block 32 - Block 33 - Block 34 - Block 35 (-100 BTC) - Block 36 (-0 BTC) - Block 37>

Now, here's where the 51% comes in. By hashing more than the rest of the pool, we get to propose the next block. Only...we think we'll propose our private block. We propose our block to the chain, it's validated (because we did the most work and ours is the longest), and it's the new block in the chain.

Public: <Block 30 - Block 31 - Block 32 - Block 33 - Block 34 - Block 35 (-100 BTC) - Block 36 (-100 BTC) - Block 37>

Private [New Public]: <Block 30 - Block 31 - Block 32 - Block 33 - Block 34 - Block 35 (-100 BTC) - Block 36 (-0 BTC) - Block 37 - Block 38>

Seeing the issue? The money spent in Block 36 on the public chain isn't spent on Block 36 in the private chain. The difficulty lies in keeping pace with the rest of the network in hash rate, and then surpassing it (51%) to make your falsified blockchain the authentic one once the spend is made.

 

[JonesBones]

I didn't know just 51% was needed. I thought the whole blockchain had to verify. Guess not.

For simplicity's sake I think of the block chain as like a bunch of shipping containers being added and moved around.

 

[Patrick Carey]

The main thing ive noticed about 51% attacks is that so far they only happen to exchanges. Not only that, but exchanges with sketchy kyc rules because it's pretty traceable to see who who did it.

This is by nature of the 51% attack. It costs money to buy up hashing power to do this and it costs money based on the amount time it is mining in private.

Therefore the cost of any 51% incentivizes attackers to make it as short as possible for as much profit as they can.

Exchanges get attacked because they generally allow fast confirmations to a trade and they have a bunch of other digital assets for sale.

The process goes: have a bunch of a coin that Is exploitable -> private mine coin with cheap hash power available -> send the entire stack of coin to an exchange that will take a fast confirmation-> start private chain excluding the transfer to the exchange -> buy whatever you can that is fast moving, like litecoin, ethereum or Montero -> withdraw it

Now you release the private mined chain to the public -> you keep the original coins and whatever you bought on a different block chain

The incentives become all fucked up for coins like ETC because it is trading at like 5$ and ethereum is trading at 125$ or so. They share the same hashing algprothim therefore easy to attack the cheap coin.

 

[Sketch]

Good.

 

[tonni]

There are so many evil nerds