By Gabriel Negrin
Bitcoin SV, the Bitcoin Cash fork of the (in)famous Craig Wright and nChain, is back in the news. And not exactly for a good reason
On August 2nd, the security lights went on. There was a first attack — unsuccessful, but enough to raise eyebrows. And it didn’t take the attackers much longer to exact more damage for on August 3rd, Bitcoin SV experienced a 51% attack, compromising the integrity of its blockchain data.
What Is A 51% Attack?
A 51% attack is a raid against the blockchain of a cryptocurrency. It is also known as a double-spending reorganization attack. Here the attacker seeks to take control of most of the validation network to rewrite the chain. This allows them to make a payment and keep the coins.
These attacks are performed on proof-of-work (PoW) networks. Since these networks need miners and the miners need hashing powers, someone with a large amount of hash power can take control.
These attacks are indeed possible on a proof-of-stake (PoS) network. Yet, it is a lot more complex since the attacker would need to hold 51% of the coins.
So… how did BSV get attacked so heavily?
It all began on August 3rd at Noon with reports of a massive 51% attack resulting in three different versions of the network.
The famed blockchain analytics firm Coin Metrics confirmed it later that day. Lucas Nuzzi, a network data product manager at Coin Metrics, was one of the first to talk about it. Nuzzi, through his Twitter account, stated the following:
BSV is going through a massive 51% attack.
After an attempted attack yesterday, some serious hashing power was unleashed today at 11:46 AM and attackers are succeeding.
Over a dozen blocks are being reorgd & up to 3 versions of the chain are being mined simultaneously across pools.
The attack caused some uncertainty in the mining pools. Despite this, there was only a successful reorganization of 14 blocks by the attackers.
Experts For (But Mostly Against) Bitcoin SV
The truth is that this validates the suspicions of many experts, namely, that after its first halving, BSV lost 50% of its hash power. That is, miners simply stopped mining BSV in search of better opportunities.
And it is precisely this loss of hashing power that made this 51% attack possible. The lower the hash, the easier it is to manipulate and take control of a network.
Yet, Bitcoin SV does not seem to be alone. Bitcoin Association, an organization backing the project, made a recommendation on August 3rd asking node operators via Twitter to mark the fraudulent network as invalid. This would allow for a return to the real blockchain of honest miners and block the attacker’s parallel network.
This, however, does not cease to be a cause for concern. Between the end of June and the beginning of July, the SV bitcoin network was attacked four times.
This triggered a wave of delistings of the token on several exchanges.
The Price Impact for BSV
Despite the attack, Bitcoin SV has managed to stay in the $20 price range – without reaching $150, but without losing the $130 level.
Yet, BSV holders will not be happy with all this with the crypto having lost about 70% of its value in less than four months.
So far, there appear to be no reports of double spending in the network. Yet, things are looking pretty dark for Bitcoin SV. They are slowly losing ground, to the point where they are unlikely to be able to recover. And even worse, people no longer trust it.
Will Craig Wright and his team be able to reverse the situation? It is hard to say. But so far, it looks very bleak for this Bitcoin Cash fork.