As you may already know, crypto mining pool ViaBTC has now captured over half of the hash rate on the Zcash (ZEC) network. This means that ViaBTC now has the power to control the network and potentially launch a double-spending attack.
In response, Coinbase has taken precautionary measures, including increasing the number of block confirmations required for ZEC deposits and moving Zcash trading pairs into “limit only” mode.
But what does this mean for Zcash users and the broader crypto community? Is Zcash under attack? And which other blockchains are at risk?
What is a double-spending attack?
A double-spending attack is a type of fraud in which an attacker spends the same cryptocurrency twice. This is possible because cryptocurrencies are digital assets that are not tied to any physical object.
To launch a double-spending attack, an attacker would need to control a majority of the hash rate on a proof-of-work blockchain. This would allow them to reverse transactions and steal funds from other users.
Is Zcash under attack?
It is difficult to say for certain whether Zcash is under attack. However, the fact that ViaBTC now controls a majority of the hash rate on the network is certainly concerning.
ViaBTC has a history of supporting contentious forks and promoting privacy coins. In 2018, ViaBTC supported the Bitcoin Cash fork, which was widely seen as a hostile attempt to take over the Bitcoin network.
ViaBTC is also a major mining pool for other blockchains, including Bitcoin Cash (BCH) and Litecoin (LTC). If ViaBTC were to launch a double-spending attack on Zcash, it could potentially harm users of these other blockchains as well.
Which other blockchains are at risk?
Any blockchain that is secured by a proof-of-work consensus mechanism is at risk of a double-spending attack. However, blockchains with a more decentralized hash rate are less vulnerable.
For example, Bitcoin (BTC) has a more decentralized hash rate, with no single mining pool controlling more than 30% of the network. This makes Bitcoin more difficult to attack than Zcash. However, as Foundry USA currently controls about 29% of BTC hash rate, it could also raise concerns in the future...
Other blockchains that are at risk of double-spending attacks from big mining pools like ViaBTC include Bitcoin Cash (BCH) and Litecoin (LTC):
In the specific case of Bitcoin Cash (BCH), the top 2 mining pools, including ViaBTC, already control a significant part of the hash rate:
What can you do to protect yourself?
The best way to protect yourself from double-spending attacks is to use blockchains with a decentralized hash rate.
What if ViaBTC does the same with other blockchains?
If ViaBTC were to launch a double-spending attack on another blockchain, such as Bitcoin Cash or Litecoin, it could have a significant impact on the crypto market.
A successful double-spending attack could lead to a loss of confidence in these blockchains and could cause their prices to drop. It could also lead to increased regulation of the crypto industry.
It is important to note that ViaBTC has not stated any intention to launch a double-spending attack on any blockchain. However, the fact that they now control a majority of the hash rate on the Zcash network is a reminder that any blockchain is vulnerable to attack if a single entity controls too much of the hash rate.
Conclusion: As crypto user, you should be aware of the risks involved in using any blockchain and should take steps to protect yourself from double-spending attacks by using blockchains with decentralized hash rate. Please note that it is not a financial advice. Do your own research.