Notable alternative crypto-currency Whitecoin fell victim to a 51% attack by hackers at the end of last month, causing its developers to re-evaluate the coin’s programming and strategy within the marketplace. Several companies and individuals were reported to have lost a large number of Bitcoins, with generous exchange MintPal offering to cover some of the losses, something unprecedented in the crypto-currency community. According to head of the recently created Whitecoin foundation, Chris Salsman, “First, chunkypools [main mining pool for Whitecoin] was targeted by a DDOS attack, followed by a timewarp attack [sic] Major exchanges were targeted for the disbursement of these new coins.”, resulting in double spent currency.
The timewarp attack in question is prevalent in a large number of altcoin forks where the difficulty calculation is behind by one block. By hijacking the blockchain, manipulating the timestamp and network difficulty on low hashrate networks the attacker can mine hundreds of coins at incredible speed. Goldcoin lead developer, Amir Eslampanah, managed to partially solve this problem late last year by changing the coin’s algorithm to include 51% resistance. See this whitepaper for more details. Other notable crypto-currencies have also developed some resistance except market leader Bitcoin which is theoretically immune due to the massive hashing power that would be required to overtake the main block chain.
Far from beaten, Whitecoin developers have responded by finding new programmers and appointing a set of trusted individuals to salvage the coin from death. Following this, the announcement was made that Whitecoin will switch from a PoW to PoS algorithm, historically following in the steps of another currency, Blackcoin, which also changed to PoS from PoW after an uneasy start.
Traditionally most currencies, including major market leaders Bitcoin and Litecoin, used a Proof of Work system wherein the clients or miners provide proof that they have mined in order to create new coins. With a Proof of Stake system coins are generated more akin to interest, where simply holding coins in a wallet generates new coins. Despite everything, Whitecoin appears to be stabilizing one week later and perhaps is showing the biggest resilience of all is within its community, something which is worth far more than money.
What do you think of the Whitecoin attack and were you affected by it? Do you think the surplus of alt-coins has spread good developers too thinly leading many coins open to attack?
