Monero, a prominent player in the realm of privacy-centric cryptocurrencies, finds itself grappling with a substantial security conundrum.
Qubic, spearheaded by Sergey Ivancheglo, a co-founder of IOTA, asserts its dominance by controlling over 51% of Monero’s hashrate. This level of control in proof-of-work blockchains, akin to Bitcoin’s method, can empower a malicious actor to manipulate transaction history, obstruct transactions, or execute double-spend attacks.
In a bold move described as an “experiment” by Qubic in a recent blog post, the organization’s strategic and somewhat confrontational utilization of game theory has stirred up intense debates among developers, miners, and security experts regarding the network’s presumed decentralization.
Deciphering the 51% Attack Phenomenon
In the realm of proof-of-work blockchains, miners vie to append new transaction blocks to the chain. When a single entity commands more than half of the total computing power, it gains the ability to outpace all other participants.
Such control paves the way for a spectrum of capabilities that can erode trust in the network, including chain reorganizations, double spends, and notably, censoring transactions — a critical concern for Monero given its privacy-centric focus.
These attacks are not merely theoretical scenarios; Ethereum Classic, Bitcoin Gold, and even smaller tokens like Verge have fallen prey to similar exploits in recent years, incurring substantial financial losses.
The Lingering Vulnerability of Monero
Monero’s reliance on the RandomX algorithm discourages ASIC mining, promoting CPU mining to uphold network decentralization. Thus, Qubic’s rapid ascension from controlling less than 2% of Monero’s hashrate in May to surpassing the 51% threshold raises significant alarms.
Qubic’s unique “useful proof-of-work” approach converts Monero mining rewards into USDT, subsequently utilizing these funds to acquire and eliminate its own QUBIC tokens. This unconventional mechanism intertwining mining strategy with token supply reduction has steadily bolstered Qubic’s grip on Monero’s hashpower.
According to Ledger CTO Charles Guillemet, sustaining this attack could incur a daily cost of $75 million, potentially jeopardizing network confidence and disincentivizing other miners from participation.
BitMEX research points out that Qubic’s ambition to seize all Monero block rewards could lead to sustained selfish mining, potentially precipitating a decline in the coin’s value — a prophecy that has already come true as Monero’s XMR currently trades at $252, marking a decline amidst recent upheavals.
Redefining Monero’s Future
Contrary to intentions of breaking Monero, Qubic asserts that its network dominance aims to showcase the efficacy of economic incentives and coordinated mining strategies in bestowing control upon a smaller protocol over a larger one.
Qubic’s experiment, intended to redirect mining resources profitably, led to a surge in Monero mining profitability compared to traditional methods. A community-approved restructuring of reward systems augmented payouts to validators and attracted miners away from other Monero pools.
Qubic’s initial bid for majority control faced persistent distributed denial-of-service (DDOS) attacks, disrupting auxiliary services but failing to cripple the core network. The ongoing DDOS assaults, as revealed by Ivancheglo, are viewed as retaliatory actions by “Monero Maxis.”
Despite nearing consensus control, Qubic refrains from a complete takeover, citing concerns about potential repercussions on XMR’s valuation.
Assessing Vulnerabilities Across Blockchains
While Bitcoin’s immense hashrate acts as a deterrent against a 51% attack, mid-tier proof-of-work coins like Monero, Ethereum Classic, and Bitcoin Gold remain susceptible due to relatively lower costs associated with attaining majority hashpower.
Privacy-focused coins face an added layer of vulnerability, as a network control breach undermines the very privacy features they aim to safeguard, accentuating the critical need for robust security measures.
