In response to several 51% attacks on the Ethereum Classic blockchain, ETC Labs said it was time to regulate retail electricity rental markets, citing at least two attacks by leasing electricity through NiceHash – a requirement. This has been confirmed by NiceHash and ETC Labs.
Terry Culver, CEO of ETC Labs, also shared with Cointelegraph that according to information provided by CipherTrace, which was contracted to investigate the attacks, the attackers used the proceeds from the first attack to exploit the hash power of the second attack. The latest cryptocurrency exchange cost OKEx $ 5.6 million in compensation – the company had to compensate users.
The idea of using a hash power broker to implement a blockchain attack to prove that it is not new. For example, at a recent Unitize virtual conference, a board was devoted to this topic, and a previous attack on Bitcoin Gold was discussed.
To find out how NiceHash solves this problem, we interviewed Andrzej Skrab, marketing director of the company. He told us that while NiceHash cryptocurrency exchange is a regulated organization and as such follows all KYC, Anit-Money Laundering or AML procedures, the leasing business is not regulated and users are not required to provide their identity. We asked if the company would consider implementing such measures in response to attacks, Skrapa replied:
It will depend entirely on the EU, what it decides on this.
He also noted that a good NiceHash analogy is an ISP, or ISP, that simply delivers data packets:
NiceHash can offer mining data packages, and these data packages can be described as hash power. <...> So if we really want to build a truly decentralized world, we can not impose restrictions on this traffic.
He added that it is very difficult for a broker like NiceHash to detect such attacks when they occur. Preventing this is even more difficult. Scrapa acknowledged that implementing an appropriate KYC and AML system would help reduce the risk. But in his opinion, this will not solve the problem:
You can always use fake KYC. So it helps, but it does not stop. It will not stop at all.
At the moment, the hash speed of ETC is 1.4 k / s. In the meantime, NiceHash leases about 10,000 T / s, which is seven times the current amount of hash power that protects the network.
ETC hash. Source: BitcoinCarts.
Scraba said NiceHash introduced ETC Labs to the platform. Although not previously known, ETC Labs now intends to use its services in defense operations:
We introduced them to our service because they did not know how NiceHash works before. And they have also announced that they will use defensive mining.
The idea behind Defensive Mining is to use an intermediary like NiceHash to increase the hash speed of the network and increase the cost of potential attacks.
While an organization may reduce the likelihood of future attacks, this is a long-term plan. Not only does it take time for legislators and relevant regulators to come up with an appropriate structure, but when it comes to retail energy brokers, it has to be global to be effective. For example, NiceHash is headquartered in Slovenia. If local authorities or the EU adopt rules that affect the business, the company can easily move to an unregulated jurisdiction. Decentralized and virtual actions make physical location irrelevant.
Other solutions discussed by the ETC community include a checkpoint system (which manually prevents future attacks), switching to a different segmentation algorithm, and finally strategic measures such as creating a decentralized treasury fund.
Some believe that the latest attack was carried out by ETH miners. Since the two forks use the same DaggerHashimoto hashing algorithm, and ETH has a much higher hash rate, it will be very easy for ETH miners to attack a less successful fork. Tomorrow’s ETC developers will talk about IOHK’s proposed checkpoint system.