In an attack earlier this year, the Bitcoin Gold (BTG) blockchain had two hours of transactions rolled back and altered, costing someone tens of millions of dollars. Mining BTG does not consume much power, so one entity was able to dominate the mining, and re-write the blockchain. They pretended to send some BTG to someone, got bitcoin in return, then re-wrote the BTG blockchain to send the same BTG back to themselves.
Performing this kind of “51% attack” on bitcoin would be far more di cult and expensive, primarily because mining bitcoin uses roughly 170x more power than BTG. It is bitcoin’s great power consumption that makes its blockchain so hard to mutate. As far as anyone I know knows, such an attack has never occurred on the bitcoin blockchain. (If you are transacting large amounts, you could wait 20 or 30 minutes for two or three con rmations to be sure.)
Blockchains are touted as panacea for the problems of online reputation, smart contracts, and even supply chain management. Block chain and supply chain—seems like a perfect match! In last volume of Business Edge, we read that, “Blockchain is a technology that permanently records transactions in a way that cannot be amended, altered, edited, or erased.” The BTG incident demonstrates that this is not always true.
Even the second most powerful blockchain, Ethereum, was altered after The DAO attack of June 2016, re-assigning $50 million worth of ETH. Ethereum, of course, is the blockchain most hyped to solve all the world’s problems. So far, however, the most useful applications to emerge from it are digital Beany Babies called Crypto Kitties, and digital Canadian Tire money issued in unsanctioned IPOs known as ICOs.
Blockchain sounds cool, but its only real use case right now is with boring old bitcoin: nerd money that tends to increase in value by 10x or so every few years. SO BORING!
If someone starts their own blockchain to make their own “immutable database” or ledger, that person is either scamming or ignorant. Their blockchain won’t be any less mutable than an Excel spreadsheet. Be careful out there.
Alex Millar is a Queen’s engineering physics grad. Alex first heard about bitcoin in 2011, bought his first in 2013, and has been studying cryptocurrency full time since 2014. He shares his research and thoughts on a YouTube channel, which features technical videos such as, “What Bitcoin Miners Actually Do” and “How To Do A Multisignature Transaction” as well as the hit pseudo- comedy: “Don’t Buy Bitcoin. It’s Gonna Crash.” Alex has had essays published on CoinDesk, including “Bitcoin and The Law of Conservation of Energy”.
In 2015, he ran for member of parliament in East Vancouver as an independent to raise awareness about bitcoin.
Alex is most active on twitter as @thealexgalaxy.