Bitcoin Cash: Threat To Network As Single Miner Controls 50% Hashrate
A single mining pool has gained control of over 50 percent of the hashrate on the Bitcoin Cash network, data from crypto site Coin.Dance shows.
According to the site, mining centralization on the BCH network reached such dangerous levels after statistics showed that Chinese-based mining pool BTC.TOP had taken over 50.2 percent of network’s mining muscle.
The BTC.TOP mining pool is shown to have contributed to the altcoin’s mining hashrate by about 679 Peta-Hashes per second. In contrast, its top competitors BTC.com, ViaBTC, AntPool, and Bitcoin.com all added a combined total of 961 PH/s.
Specifically, the four mining pools provided 257 PH/s, 215 PH/s, 125 PH/s, and 187 PH/s respectively.
BCH threatened by centralization of mining
It is possible that the increase in BTC.TOP’s hashrate could have been a result of variance. However, no matter the circumstance, it poses a threat to the Bitcoin Cash network. More specifically, acquiring such massive control of a network’s hash power could expose the network to a potential 51% attack.
The undesired scenario happens to occur at a time the BCH project is trying to steer from negativity. The Roger Ver-led chain of the recently acrimonious Bitcoin Cash split got widely criticized after it failed a “stress test.”
The test was conducted after an anonymous developer group called Bitpico requested for it. Results of the test have indicated that Bitcoin Cash’s network is highly centralized.
According to Bitpico, 98 percent of BCH nodes at the time ran on a single server rack. This in all likelihood was a precarious situation for the network, with potential for security breaches very high.
In 2018, an expert at Microsoft, Alex Simons, noted that decentralization in Bitcoin Cash was threatened more by its upgrades that increase block size, more than what scalability solutions like Lightning Network could do to Bitcoin (BTC) and others.
He said that such an approach (increasing block size) “generally degrades the decentralized state of the network,” and worse still, does not help the network “reach the millions of transactions per second the system would generate at world-scale.”
Centralization portends a massive threat to any cryptocurrency network. When allowed to take root, seizing central control can allow malicious miners to affect transactions by preventing any confirmations or reversing confirmed transactions.
In other cases, malicious entities can do what attackers did to Bitcoin Gold in 2018. The cryptocurrency was hit with a 51% attack, with the attackers engaging in double-spend transactions using BTG.
After several days, the BTG attackers stole $18 million in the cryptocurrency’s native token. Similar attacks occurred in 2016 when Ethereum-based Krypton and Shift, suffered 51% attacks.
Bitcoin Cash may not have to face this situation if BTC.TOP does what GHash.io did in 2014. Should its hashrate continue to grow, the firm can redistribute the excess computing power to other miners.
However, if they choose not to, then the remaining trust there is in Bitcoin Cash can be wiped off. That would be bad for a coin struggling to recover from the 2018 price collapse in the crypto market.
At the moment, XBT.net records BCH/USD as trading at $159, with the fourth-ranked crypto having a market capitalization of $2.8 billion.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.