The difficulty level in blockchain and cryptocurrencies represents one of the tools that developers have been using to keep hackers. It makes such hacks quite difficult but not impossible and the number of such hacks has recently been on the rise.
The 51 percent attack refers to a situation where hackers take over more than 51 percent of the hashing power in cryptocurrencies that leverage the proof of work (PoW) system. It was initially thought that such attacks cannot happen but as has now been proven, it is indeed possible. More than five 51 percent hacks have so far been reported against multiple cryptocurrencies.
Victims of the hack so far
Some of the cryptocurrencies that have so far fallen victim to 51 percent hacks include Vere (XVG), Bitcoin Gold (BTG), Monacoin (MONA) and Litecoin Cash (LCC). The latter is the latest coin to be hit by such a hack which reportedly took place on May 30. The hack was reported by a Russian exchange known as Yobit. Litecoin Cash was created through a fork on Litecoin in February but it has not managed to gain traction since then.
Litecoin Cash developers released a statement saying that they had launched an investigation on consensus-based tactics of enhancing protection against difficulty manipulation hacks. The statement revealed that PoS was one of the options that were under consideration include. They also stated that they would have to leverage a hard fork in order to come up with a long-term fix that would require users to wait at least 100 blocks before transaction reversal can occur to discourage reversals by malicious miners.
How the hackers take advantage of the system
Cryptocurrencies that use the Proof of Work system have network nodes usually identify the blockchain with the highest number of blocks and as a result, the highest hashing power and they treat it as the genuine history version. Attackers have managed to succeed with 51 percent hack by using software purchased on the web to gain more than 51 percent hashing power. Alternatively, they can rent out computing power.
Bitcoin Cash hackers managed to gain control of more than 51 percent hashing power and used it to create a double spend situation, then transferred about $1.86 million to an account under their control.