At Monero (XMR), the mining pool MineXMR recently took over well over 40 percent of the computing capacity in the entire network. Is a dreaded 51 percent attack looming?
51 percent attacks are the nightmare par excellence for cryptocurrencies. This is because it allows the attacker to manipulate transactions in the blockchain of the attacked cryptocurrency. Currently, news is making the rounds at the leading privacy coin Monero (XMR), which leads in the direction of a potential 51 percent attack. On Reddit, for example, the topic is being discussed hotly and with concern. The basis for this is the data on how the computer capacities are distributed in the Monero network. These show that the mining pool MineXMR has temporarily taken over shares close to the 50 percent mark. The data provided by MineXMR itself also show that a healthy balance between several mining pools was recently no longer always guaranteed at Monero.
In the verbatim reports on this troubling situation, there is widespread agreement on the call to deliberately participate in mining pools for Monero other than MineXMR in order to diminish its dominance. These calls seem to be bearing fruit; currently, MineXMR’s share of the hashrate in Monero has fallen back below 40 percent. Previously, highs of almost 50 percent had been reported. A typical scenario in a 51 percent attack is double spending. In this case, the attacker first carries out transactions, for example on a crypto exchange, in order to dip XMR into other cryptocurrencies there. But while this process is running, he uses the majority in the network to write the blockchain in such a way that the transactions in question no longer occur at all. In doing so, the attacker has then effectively doubled his coins.
In the case of Monero and MineXMR, however, doubts are warranted as to whether the mining pool was even aiming for a 51 percent attack or rather accidentally got into the near majority position, which is rightly considered critical. For one thing, a mining pool would immediately lose all trust if it abused its computer capacities, which are mostly co-financed by customers, and thus destroy its business model. In addition, MineXMR is registered in England, where a 51 percent attack would probably have criminal consequences. And last but not least, a 51 percent attack would predictably result in massive price losses for the affected cryptocurrency, which puts gains from double spending into perspective.
Conclusion: All-clear before 51 percent attack on Monero for the time being
By all appearances, self-cleaning forces have taken hold at XMR, returning MineXMR’s share of capacity in Monero’s blockchain to unsuspicious levels. But the events are a stark reminder of how insufficiently decentralized blockchains could be relatively easily manipulated by 51 percent attacks, resulting in financial losses. The very large cryptocurrencies such as Bitcoin (BTC) or Ethereum (ETH) are hardly at risk here. This is because computing capacities initially cost money. An attacker with criminal intentions would therefore rather choose a second-tier altcoin for a 51 percent attack, where less computer capacity is gathered in the network and the system is therefore more easily vulnerable.