2018 seems to have been coined the year of the double spend attack. Attacks have occured left, right and centre and frankly, the threat of the double spend attack doesn’t seem to have let up just yet.
If you’re not au fait with how double spend attacks work, here’s a quick description by Jimi S on Medium.
“Let’s say I spend 10 Bitcoin on a luxurious car. The car gets delivered a few days later, and my Bitcoins are transferred from me to the car company. By performing a 51% attack on the Bitcoin blockchain, I can now try to reverse that Bitcoin transfer. If I succeed, I will possess both the luxurious car and my Bitcoins, allowing me to spend those Bitcoins again.”
So, according to CCN, a new study conducted by The Bank of Canada has assessed the real risk of double spend attacks on different types of cryptocurrencies, mainly focusing on the hashrate of such currencies. The conclusion is that high-hashrate networks such as Ethereum and Bitcoin are at a reduced risk of falling victim to a double spend attack, compared to cryptocurrencies that operate on low-hashrate networks.
The study was carried out by Jonathan Chiu and Thorsten V. Koeppel. In order to carry out the study, the pair theorised a hypothetical double spend attack in order to review how such attacks would impact different networks.
According to CCN, the research concludes:
“It is unrealistic that such attacks will occur, at least on large networks, since these attacks — which may or may not succeed — force would-be attackers to incur a large, irretrievable sunk cost. However, from an economic point of view, this requires that a dishonest miner has deep pockets and is risk neutral. These assumptions tend to be unrealistic and, in practice, users have little economic incentives to launch such an attack, especially when the computational investment by other miners is large.”
See the full article for yourself, here.
Of course, this research simply scratches the surface. Just because a network is less likely to fall victim to a double spend attack, it doesn’t mean it is totally immune. As time goes on and as regulations fall into place, we will see less and less of this sort of crime. Whilst it seems rife at the moment, we have to be confident that the crypto-community is working hard to make these sorts of incidents harder to execute and of course, regulation will make it harder for these people to hide too.
For now, let’s hope that The Bank of Canada continue to explore this area as ultimately, this sort of research is vital for securing the future for cryptocurrencies.