20 – 26/05/2019
Welcome to another edition of our Crypto Week In Review. We spent a great deal talking about a proposal to reorg the Bitcoin blockchain after a certain hack. A lot of people had some strong reactions when such a reorg was mentioned. Now this story goes further in another direction. There was a Bitcoin Cash “51% attack” organized by two mining pools which obviously had the majority of votes to carry out the attack. Let’s see what happened during this BCH 51% May attack.
BCH 51% May Attack
Clearly, there was a hack that forced two mining pools to make such a decision. The hack is tied to the fork which happened in the middle of this month. There was a bug in the system, and the attacker took advantage of it during the fork. The network split and miners were mining empty blocks for a brief period, while the hacker took advantage of the loop in the system. Immediately after the attack, BTC.top and BTC.com, two mining pools with the majority control of the network, decided to perform a BCH 51% May attack to stop the attacker from taking coins. The bug which the attacker took advantage of is already patched.
A Deeper Look
Let’s go deeper and see what actually happened that day. There wasn’t actually one problem, but three of them, which happened at the same time. First, the bug was exploited during the hard fork, which led to miners mining empty blocks. Second, after the miners realised they were actually producing empty blocks, those same miners expressed concern and went back to mining the original, non-forked chain. This caused a consensus chainsplit. And lastly, the third issue was that the consensus chainsplit prevented a certain system from functioning. This system was set up to recover funds which were accidentally sent to a SegWit address. The plan was to recover those funds during the fork.
If you want to take an even deeper look into the events that occurred that day, we suggest you take a look at the Bitmex blog post.
This raises a lot of questions. The first thing we are concerned about is that this wasn’t covered enough. We would expect some kind of reaction from the community, and from what we have seen, there were no big reactions. Second, a probably more important concern is the decentralization issue. If only two miners are able to reach enough hash power to reorg the blockchain, what kind of decentralization is there?
Other Noteworthy News
- Craig Wright decided to take another step in his battle and attempted to copyright Satoshi Bitcoin whitepaper. However, he didn’t achieve what he had hoped for. U.S. Copyright Office does not recognize him as Satoshi Nakamoto.
- Mozilla decided to protect its Firefox users from cryptojacking in the latest update. Now users have an option within Firefox which blocks crypto mining scripts.
- Circle let go of 10% of their workforce. They eliminated around 30 positions.
- A lot of people have been buzzing about the latest news from Binance exchange. Apparently, Binance will launch a margin trading service.
- We saw a lot of rumours about Facebook having its own cryptocurrency. It looks like they plan to launch their “GlobalCoin” in 2020.
Weekly Price Action
Bitcoin went on another great ride. The resistance outlined in our previous chart has been cleanly broken and now serves as support! 12% in a day fueled with a nice volume. We are of course still bullish until proven otherwise and if BTC manages to break above the next resistance, $10k zone is in danger. Let’s see what happens next.
Altcoins are in pretty good shape when you look at their USD pairs. BSV was among top gainers as Wright continues with his game. BNB continues to soar and looks very bullish. LTC is also looking good as the halvening approaches. How about ETH? It briefly dropped below first support zone, quickly found support at the second and retested resistance outlined in our previous report. That’s where it got rejected for now. Levels remain the same, next ETH move mostly depends on Bitcoin.
Don’t forget that we are not financial advisors, trade/invest at your own risk.
Ana & Petar