Japan’s Monacoin falls victim to malicious mining attack

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A Japanese developed cryptocurrency has become the latest to fall victim to a so-called selfish mining attack, resulting in an estimate $90,000 of damage across their network.

Monacoin announced they had gained control of the attack on May 18, which is thought to have run between May 13 and 15. The attack has been characterised as a selfish mining attack, an attack where a miner successfully uncovers a block, but keeps this hidden from the wider mining community.

This allows the attacker to continue pursuing new blocks, which allows them to create a new branch of the chain, before other miners discover the attack. The chain with the most number of blocks has the most “proof of work”, and is therefore deemed to be the ‘correct’ chain—a feature Monacoin shares with most other cryptocurrencies.

When the attack is revealed, any blocks uncovered by other miners during the intervening period are deemed to be invalid. Malicious actors use this to their advantage, either by allowing them to effectively transact in the knowledge that specific blocks are invalid, or simply as an act of vandalism against a particular cryptocurrency.

In the Monacoin attack, the stolen coins were moved through offshore exchanges including Livecoin, in an attempt to swap them out for other cryptocurrencies before the attack was discovered.

While the identity of the malicious miner remains unclear, it appears as though they were able to command as much as 57% of the hash rate at peak—a move which would require significant processing clout.

The attack is deemed to have been stopped since May 19, although Monacoin is yet to post any confirmed solutions to the problem. Monacoin deposits have now been frozen across most cryptocurrency exchanges pending resolution and improvements in their infrastructure to prevent similar attacks in future.

Monacoin balances are thought to be safe for the time being, but the attack raises further concerns about the possible vulnerability in other cryptocurrencies, like Bitcoin. Dr. Craig Wright, chief scientist of nChain, has already placed the matter to the grave, calling it a non-issue since it is more effective to attack or corrupt the Bitcoin network using the traditional mining method—which, in itself, is already quite difficult to instigate.

“I’ll say that again; the honest mining strategy is more effective than the selfish mining strategy even in attacking the bitcoin network,” Wright wrote. “The reality of the scenario is that there is no place for selfish mining. No sane individual or corporation would spend money for the sake of spending money when even given the direct goal of damaging the network; they could achieve this for far lower capital expense.”