Ethereum Classic (ETC) has rallied more than 6% after an alleged 51% attack that seems to have created a $500,000 double spending problem. The true nature of this attack, the motives behind it and the damage done is too early to be assessed yet. However, it is still beyond comprehension for most of us to see ETC/USD rally instead of crashing after such a ‘terrible’ blow to Ethereum Classic (ETC)’s reputation. Not to side with the teams working on Ethereum Classic (ETC) or to defend the failure on their part, I still cannot fathom how exactly this is such a ‘devastating’ attack. A lot of people in the crypto community are talking about Ethereum Classic (ETC) losing its immutability or decentralized nature.
The whole reason Ethereum Classic (ETC) exists and ranks in the top twenty is because of its immutable and decentralized blockchain. If those values had been compromised, the price would have tanked faster than you could sell. This is not about the small guy or the average investor at this stage. Those people are already out of the game waiting for the market to rise significantly before they buy again. The people who are holding Ethereum Classic (ETC) at this point have nerves of steel. They are not going to sell just because some media outlet is projecting the 51% attack as the end of Ethereum Classic (ETC). In fact, they are going to take this opportunity and accumulate more. As we have seen over the last 24 hours, this is exactly what has happened. Some would argue that a lot of exchanges have disabled deposits and withdrawals which is why people cannot sell.
This is a plausible argument but the large majority of people in the market who can be influenced to sell under pressure already have their coins on exchanges not wallets. So, to them it made no difference, they could have sold their coins for Bitcoin (BTC), Ethereum (ETH) or Ripple (XRP) and most of them did. There were just more strong hands than weak hands that were happy to pick the dumped coins. So, what does all of this mean for the future of Ethereum Classic (ETC)? Well, the people who call it a sh*tcoin, a scam or a useless coin are already out of the market by now.
Chart for ETC/BTC (1W)
It is too early to tell what the reasons behind this attack might be, but investigating every crime, the first question you ask is, “Cui bono?” Who benefits? If you read about the upcoming Ethereum (ETH) fork and the debate surrounding the PoW transition, you will get some clues. I’m not going to delve into it just yet because it is too early, but I promise you I will in the near future as the big picture becomes clearer. At a point in a market when altcoins have been through more than 90% correction, it is not surprising to see a move like this happen.
This could have happened to a large number of other coins. That being said, the teams behind Ethereum Classic (ETC) need to take responsibility for not taking adequate measures to prevent this. In their defense, Coinbase did not contact them for days even when Coinbase was going through the attack. There is definitely something sinister around all of this i.e. a deliberate move to malign the reputation of Ethereum Classic (ETC) but we cannot say why for sure yet. There might be multiple objectives and a number of beneficiaries behind this move. I am convinced that this was not about the money. However, we will have to wait and see how all of this unfolds in the weeks ahead.