Bitcoin Cash and Bitcoin SV are among the top cryptocurrencies, with market caps of USD 4.3 billion and USD 3.2 billion respectively. However, both of these cryptocurrencies have a critical and easily exploitable vulnerability, as will be explained in this article.
The problem with Bitcoin Cash and Bitcoin SV stems from the fact that they are forks of Bitcoin, and that they have highly similar protocols to their original source. Essentially, the only reason Bitcoin Cash started in the first place was due to an argument over the implementation of Segregated Witness (SegWit), which is a Bitcoin add-on that reduces the size of blocks and transactions. Part of the Bitcoin community believed that SegWit fundamentally altered Bitcoin’s code, and they argued that Bitcoin’s block sizes should simply be increased instead.
After much fighting and drama, Bitcoin Cash forked from Bitcoin in 2017, and the only difference between them is that the former had larger block sizes, in order to allow more transactions into blocks, which increases the network’s scalability.
Likewise, Bitcoin SV forked from Bitcoin Cash in 2018 due to infighting in the Bitcoin Cash community, and the only difference was that it had even bigger block sizes.
Ultimately, the protocols of Bitcoin Cash and Bitcoin SV were the same as Bitcoin aside from the block sizes, including the mining algorithm, which is SHA-256. Since Bitcoin Cash and Bitcoin SV use the exact same mining algorithm as Bitcoin, this means that Bitcoin mining rigs can mine Bitcoin Cash and Bitcoin SV, and this is the critical vulnerability.
Basically, Bitcoin has a hash rate in excess of 100 EH/s, while Bitcoin Cash and Bitcoin SV have hash rates of just 2.4 EH/s and 2 EH/s respectively. In other words, Bitcoin Cash and Bitcoin SV have a hash rate of 2-3% of the Bitcoin hash rate.
Someone who wants to destroy Bitcoin Cash and Bitcoin SV would simply need to perform a 51% attack. Essentially, if someone controls more than 50% of a cryptocurrency’s hash rate, then they can rewrite the blockchain in order to double-send transactions. For example, if someone sends 1,000 Bitcoin Cash to Coinbase and deposits it, they can convert that them to Bitcoin and withdraw it from Coinbase, and then rewrite the blockchain so that the original deposit of the forked coin disappears. In the end, the attacker would still have the 1,000 Bitcoin Cash that they originally deposited, in addition to the Bitcoin that they withdrew from the exchange.
Zooming out beyond the possibility that an attacker could make quick money with a 51% attack double-spend, such an attack completely ruins the credibility and value of a cryptocurrency. Basically, if someone did a serious 51% attack on Bitcoin Cash or Bitcoin SV, almost all other traders in the world will dump their Bitcoin Cash and Bitcoin SV, crashing the markets.
Back to the original point of this article, since the Bitcoin hash rate is well over 100 EH/s, just 1-2% of the Bitcoin network’s hash rate is all it would take to 51% attack Bitcoin Cash or Bitcoin SV. This is because the latter two’s hash rates are 2.4 EH/s and 2 EH/s, so just 1.2 EH/s and 1 EH/s respectively would be needed to perform a 51% attack.
Another way to put it is just one medium to large Bitcoin mining farm is all it would take to 51% attack the forked coins.
Further, after the block halving in May the Bitcoin hash rate has dropped from its all-time high of 136 EH/s to roughly 100-120 EH/s currently. This means that there are scores of Bitcoin mining equipment with a sizable hash power that have been taken offline and likely being liquidated. Therefore, large amounts of Bitcoin mining equipment are available at discount prices, and an attacker could buy 1-2 EH/s of this equipment and 51% attack Bitcoin Cash or Bitcoin SV.
Thus, these two alternative cryptocurrencies are unacceptably insecure since any Bitcoin mining farm could go rogue and destroy them in just a day with a 51% attack. Indeed, Bitcoin Cash has already experienced a 51% attack in the past, and Bitcoin SV has been attacked as well, although these attacks were not conducted with the intent of stealing via double-spends.
Overall, this situation is a ticking time bomb, and it seems like a matter of time before an attacker with enough resources deals a fatal blow to Bitcoin Cash and Bitcoin SV. Therefore, traders and investors should be very wary of holding these poorly secured coins in their portfolio.
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