Ethereum is one of the main cryptocurrencies having its name firmly in Top 3 for a long, long time. Recently, however, the crypto community is raising security questions in regard to the network’s declining hash rate and the safety of its (still) PoW-based blockchain. Ethereum marks a 42% decline in its hash rate from its last year’s highs and the main question is whether or not Ethereum is still as safe as it used to be?
Ethereum’s Increasing Vulnerability
In August of 2018, Ethereum and other cryptocurrencies saw their hash rate peaking. Since then, however, things have turned. Ethereum’s hash rate is down over 42% over the past 11 months.
To put things in perspective, Bitcoin’s hash rate has been constantly increasing. To be exact, it surged 40% within the same time frame, making Bitcoin’s network even more secure.
According to a website that calculates the cost of running a potential 51% attack on the various blockchain networks, in order to jeopardize Bitcoin’s network, one would have to spend approximately $750,000 per hour. In order to put Ethereum’s network in the same jeopardy, the price is significantly lower – around $100,000 per hour.
If Ethereum’s hash rate continues to go further south, however, this cost will only decrease, hence making it a lot more affordable to cause serious disruptions within its network.
Now, it’s worth noting that Ethereum has been making serious efforts to transition from the Proof of Work-based mechanism to one that’s governed by Proof of Stake consensus. However, until that happens, all possibilities should be taken into consideration.
The 51% Attack And Its Consequences
51% attacks can take place when a single organization or entity takes control over the majority of the hash rate (51%). That may lead to a disruption in the network. With such an attack, one can modify the ordering of transactions, reverse transactions while in control that leads to double-spending, preventing transactions from being confirmed or to even exclude miners.
For example, Cryptopotato reported earlier in January that such an attack was carried out over the network of Ethereum Classic. As a result, the attacker transferred a total of 54,200 ETC which were worth upwards of $250,000 at the time of the event. As you can imagine, however, this attack also caused massive damage to the reputation and the credibility of Ethereum Classic, shaking the public’s trust in it substantially.
Of course, whether or not an attack of the kind can and will happen to Ethereum’s main network is something we’ve yet to see. However, with the hash rate decreasing, it’s certainly something that deserves a thought or two.