Based on research conducted on January 5, Coinbase has found a flaw in the Ethereum Classic (ETC) blockchain. The flaw features a double spend loophole.
Via a tweet today, Coinbase warned customers of the double spend problem and have halted ETC blockchain transactions for customer protection.
On 1/5/2019, Coinbase detected a deep chain reorganization of the Ethereum Classic blockchain that included a double spend. In order to protect customer funds, we immediately paused movements of these funds on the ETC blockchain. Read more here: https://t.co/vCx89dz44m
— Coinbase (@coinbase) January 7, 2019
Coinbase revealed further details in its blog post on the subject. “Coinbase detected a deep chain reorganization of the Ethereum Classic blockchain that included a double spend,” the post noted.
“Subsequent to this event [detection and ETC fund movement pause], we detected 8 additional reorganizations that included double spends, totaling 88,500 ETC (~$460,000).”
Bitcoin and other Proof-of-Work assets’ security and effectiveness depends on mining honesty and power. If someone has sufficient resources, they potentially can throw off the network’s honesty through “chain reorganization”.
If a single miner has more resources than the entirety of the rest of the network, this miner could pick an arbitrary previous block from which to extend an alternative block history, eventually outpacing the block history produced by the rest of the network and defining a new canonical transaction history.”
Greater manipulation is possible if the miner also holds a sufficient amount of the associated coins, in addition to the above-mentioned mining power.
Coinbase will notify customers on ETC’s status and support after safety investigation has been completed.
In a recent Tweet, Ethereum Classic said it has not tried to “hide or downplay” the situation and is looking into the situation further.
To be clear we are making no attempt to hide or downplay recent events.
Facts are facts and as the situation develops we'll soon get a full picture of what actually took place.
Linzhi is testing ASICS. Coinbase reported double spends; both may be true.
In time we will see. https://t.co/bbq6eqIoiS
— Ethereum Classic (@eth_classic) January 7, 2019
It’s of little surprise that the XRP community chimed in on the situation, commenting on Coinbase’ post in what appeared to be frustrations against Coinbase not having added XRP to its platform as of yet.
Phew! Glad I'm all in XRP. Did I mention XRP is immune to double-spend attacks? No? XRP is immune to double-spend attacks. Awaiting wealth transfer..
— galgitron (no price predictions) (@galgitron) January 7, 2019
One enthusiastic Twitter member expressed an interesting counter-argument to XRP fans’ comments, describing XRP as a security.
Previous ETC action
Last month, Crypto Insider reported on Ethereum Classic and its associated drama as one of its development teams shut down.
According to Coinmarketcap data, ETC is currently priced at $5.02 at the time of writing, down from $5.48 yesterday.