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Bitcoin Gold’s Recent 51% Attacks Were Resisted by Counterattacks

Researchers say that "retaliation games" restored the blockchain. By enabling counterattacks, hashrate marketplaces could discourage attackers from attempting an attack in the first place.

MIT Media Lab’s Digital Currency Initiative has delved into a recent attack on Bitcoin Gold and discovered counterattacks in which miners put the blockchain back on its original course.

James Lovejoy, who publicized the attack earlier this year, published a Medium post on the topic today, co-authored by MIT DCI researchers Dan Moroz and Neha Narula.

Counterattacks on Bitcoin Gold

In January and February, attackers carried out a series of attacks on Bitcoin Gold.

Those attacks involved chain reorganizations (reorgs), double spending, and 51% attacks, all of which require the attacker to wield a considerable amount of mining hashpower.

The MIT DCI team, which has been monitoring attacks on several proof-of-work blockchains, reported those attacks publicly at the time. However, the group has since discovered “retaliation games” that were not apparent at the time.

The researchers explain:

“It started as a typical attack, as a transaction was reversed in a double-spent, but then that double-spend was itself reversed, with the original transaction valid again. On February 8th the attacker and counterattacker went back and forth four times over the course of 2.5 hours.”

Ultimately, the counterattacker won, invalidated the double spend, and restored the original chain.

The team additionally observed two shorter “one-shot” counterattacks on Feb. 9 and 11. Those counterattacks restored Bitcoin Gold’s original blockchain as well.

Alternate Explanations

At first glance, it appears that miners carried out counterattacks to maintain Bitcoin Gold’s original chain, but MIT DCI researchers speculate that this may not be the case.

Instead, a single actor may have been on both sides of the attack. For example, an exchange or merchant service may have been testing the strength of the blockchain. This hypothesis is supported by the fact that one counterattack had no double spends, suggesting that profit was not the motive.

Alternately, the counterattacker may not have been attempting to restore Bitcoin Gold to its original condition; instead, the counterattacker may have intended to steal the reward for themselves.

Finally, technical errors, such as a network partition, a software bug, or random chance could have caused reorgs to arise naturally—though researchers say that most of these cases are unlikely.

Of course, the counterattacks may be exactly what they seem to be.

NiceHash May Not Be to Blame

NiceHash is a service that allows users to rent hashpower, which is instrumental in 51% attacks. The service was responsible for the hashpower used in an recent attack on Vertcoin, for example.

MIT DCI researchers note that NiceHash and other hashrate marketplaces pose a threat to proof-of-work blockchains, and that NiceHash offers enough hashpower to attack Bitcoin Gold.

However, the research team says that they have not seen “conclusive evidence” that the hashpower used to attack Bitcoin Gold originated from NiceHash. That evidence is obscured due to the fact that Bitcoin Gold’s hashrate and price fluctuate regularly even when no attack is underway.

Researchers add that NiceHash and similar services may even be beneficial: by enabling counterattacks, hashrate marketplaces could discourage attackers from attempting an attack in the first place.

The researchers conclude, though, that high costs are “still the [most] important deterrent” when it comes to preventing attacks that aim to sabotage a blockchain.

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