Inside Qubics controversial 51% takeover of Monero Blockchain

Monero, the leading privacy -focused cryptocurrency, faces one of the most serious security challenges in its history.

QUBIC, a project led by IOTA co-founder Sergey Ivancheglo, says it now controls more than 51% of the network’s hash rate. In Blockchains secured with proof-of-work algorithms, it is the same method used by Bitcoin, this control level can allow an attacker to rewrite transaction history, block transactions or perform double-used attacks.

In a blog post, Quibic described the acquisition as an “experiment” that was a “strategic and sometimes combating, use of game theory.”

Developers, miners and security experts are now discussing whether the network’s decentralization is as robust as many thought.

What is an attack of 51%?

In a proof-of-work blockchain, miners are competing to add new blocks of transactions to the chain. If a group controls more than half of the total computing power, they can surpass any other participant.

This control level opens the door to a number of options that can undermine confidence in the network. These include the chain reorganizations that are often abbreviated to “Reorg”, which involves replacing previously confirmed blocks with new ones. It also covers double expenses which means sending the same token twice,

It is likely that the most effective part of an attack of 51% is censoring transactions – to prevent some payments from being confirmed – which is particularly relevant in the event of Monero considering his focus on privacy

These attacks are not theoretical. The Ethereum Classic was hit several times in 2020 and cost millions. Bitcoin Gold faced similar events in 2018 and 2020. Smaller symbols such as Verge have been targeted and destabilized.

Why Monero is still in danger

Monero uses the Randomx -Agorithm to deter mining using application -specific integrated circuit (Asics)that encourages CPU mining instead. This design was intended to keep the network decentralized. Therefore, Qubic’s rapid increase is so significant. From less than 2% of Monero’s hash rate in May, it grew to more than 25% at the end of July, and now claims to have crossed the 51% limit.

QUBIC runs a “useful proof-of-work” system that transforms Monero Mining Rewards into Usdt and then uses these funds to buy and burn its own Qubic tokens. The mechanism is unusual and combines a mining strategy with a token supply sink. And it has steadily increased Qubic’s control over Moneros Hashpower.

Ledger CTO Charles Guillemet said that “Maintaining this attack is estimated to cost $ 75 million per day,” before it is added that although it is potentially lucrative, “it threatens to destroy confidence in the network almost overnight. Other miners have no incentive to continue.”

Bitmex Research added: “Qubic says the final goal is to take over all the block pay from Monero, which essentially means full and lasting selfish mining. It is not clear if they can actually achieve it. If this can be achieved, the value of the coin can fall.”

It did. Moneros XMR is currently shopping for $ 252, down 6% over the past 24 hours to put together a decrease of 13.5% over the past seven days.

What does that mean for Monero?

In the blog post, Qubic said the acquisition was not about breaking Monero, but about proving that financial incentives and a coordinated mining strategy can provide a minor protocol effective control over a much larger one.

The experiment, says Qubic, was to test whether mining resources could advantageously be redirected from a target network to another protocol’s financial loop.

At his highest, Qubic claims that Monero mining was almost three times more lucrative than traditional Monero mining. A restructuring of its reward system, approved by its society, increased the payment to its validators and drew miners away from other Monero pools.

Qubic’s first push for majority control was met with sustained distributed denial of service (DDOS) Attacks that disturbed peripheral services for over a week but could not take down its core network.

These DDOS attacks continued on Tuesday, Ivancheglo revealed at X, in what he decibulates as “Monero Maxis, who returns the benefits.”

Qubic claims that it has so far stopped taking over fully consensus, with reference to concern for the potential impact on XMR’s price.

Are other blockchain’s vulnerable to attacks?

Bitcoin’s hashrate is so high that an attack of 51% would be insurmountedly expensive. But in the midst of level-proof-of-work coins are more vulnerable. The cost of getting a majority of hashpower at Monero, Ethereum Classic or Bitcoin Gold is far lower.

Privacy -focused coins face an extra challenge. Their censorship -resistant character means that if a party controls the network, it undermines the very privacy, they are designed to protect.