One of the main disturbing side effects of the downturn of the crypto market by the attacker is that it has made it simpler for malicious players to launch 51% attacks, doing that most fundamental of blockchain security breach more frequent.
Detecting profound chain reorganizations within ETC
However, just like all the successful events in the never-ending drama of cryptocurrency, the real-world disadvantages, in this case, are contributing a valuable lesson. After the ETH attacker, it is actually a lesson about the role that network effects play in building security, particularly for blockchains which have adopted the proof-of-work consensus model of Bitcoin.
Some crypto enthusiasts have debated ad nausea about the principles of that or this design of chain, and those debates are quite more important. However, if a permissionless blockchain does not have a large enough community of users, developers, as well as miners operating in a self-reinforcing manner of value creation and also protection, they are vulnerable.
In fact, that has been the takeaway this week when crypto exchange Coinbase has announced it had detected a series of profound chain reorganizations within Ethereum Classic or ETC. Someone had just accumulated a majority of the hashing power of ETC network and also had utilized that dominant position to alert past transactions, which resulted in double spends of 219,500 ETC, estimated by Coinbase to be worth $1.1 million at the time.
This has been arguably the most critical 51% attacker ever, more so than those that were seen on Bitcoin gold and Vertcoin.
ETH remained free from the 51% attacks
However, it has also been a particularly painful blow for the true believers of ETC. They actually belong to a minority community of Ethereum users, miners, as well as developers who 2016 chose to keep working on the old blockchain which was left when leading developers in the Ethereum community convinced a preponderance of users to run new software which is going to convert the transactions of the notorious DAO attacker.
The position of the Ethereum Classic community was usually represented as a principled stance: no matter of what wastes were incurred by investors in The DAO investment project. Not matter if you see them as theft or not, the ETH or Ethereum blockchain should be immutable, they would say. No cabal of leaders should have the ability to organize a software change which invalidates transactions which the network had previously accepted. Still, those principles proved of little value too, when an attacker has overwhelmed their entire network.
On the other hand, ETH which represents the forked version of the blockchain which most of the users moved to after The DAO, has, for now at least, remained free from the 51% attack.
However, this does not mean that ETH is immune from such risks shortly. With its price at 90% of its year-ago peak and still being volatile, the profitability of mining pools fell importantly, which probably makes it cheaper to rent enough hashing power to launch a 51% double-spend attack.
However, the numbers are still pointing to a much more secure foundation at ETH than ETC. According to Crypto51, which actually follows the estimated expense of launching such an attack on different proof-of-work blockchains, it would take $88,633 to start a one-hour attack on ETH, opposite to just $4,571 for ETC.
Ethereum is second just to the $281,060 of Bitcoin on that list as the most expensive to hit with a 51% attack.
Positive feedback loops encouraging developers to work on the blockchain code
The price and the existing network hashing power are definitely the key drivers of the cost, however, what is equally significant over time is that the broader idea or an extensive network of users which creates some positive feedback loops that encourage developers to work on the code of blockchain.
The security of a coin helped by ongoing development, not just because of the improvements, as well as tweaks which are made to the code, but also as of there are more eyes that watch the network.
As a result of all these interconnected reasons, the comparatively large global community of enthusiastic users of ETH makes it a more secure blockchain than ETC. A history of immutability, if that is what ETC honestly pictured, was of lesser importance from a security point of view than the strength of the computing community of the ETH chain.
This is actually borne out in the Crypto-Economics Explorer of CoinDesk, whose five metrics of value, such as price, exchange transactions, social activity, as well as network size and developer interest, all show markedly higher levels for ETH than ETC. The data captures a much healthier network impact, which is a possible feedback loop of interest, value, and activity too, which gives the former comparatively more security against such attacks.
Here, the lessons are entirely, and they are not that dissimilar from the teachings which are received in the battles between Bitcoin Core and the now multiple forks which happened after Bitcoin Cash was built from the first time, one year ago.
For all that noise which the peoples of Bitcoin Cash, Bitcoin SV, and Bitcoin ABC make, they have zero like the vast pool of society value which Bitcoin Core has indeed accumulated.