Monero (XMR) Suffers 51% Attack, Kraken Halts Deposits

The blockchain focused on user privacy saw one of its mining pools take over the network’s hash rate.

No damage has been reported yet, but history suggests that extensive losses could occur once the harm has been done.

Taking Over Control

The cryptocurrency exchange Kraken has temporarily stopped Monero deposits to the platform due to the ongoing 51% attack against the privacy-focused blockchain.

This attack is made possible when a single mining entity controls over 50% of the network’s hash rate (the computational power needed to validate transactions), allowing them to double-spend (i.e., unauthorized production and spending of money) and reorder transactions on the blockchain ledger.

This was flagged by the exchange on Friday, and as of the time of writing, there has been a new update posted:

“Monero (XMR) deposits have been re-enabled and now require 720 confirmations before crediting. Given the current uncertainty around the security of the Monero network due to significant consolidation of hash rate under a single entity, Kraken may halt deposits at any time and delay crediting at its discretion.”

The mining pool responsible for the disruption is Qubic, a blockchain that hosts an AI model called AIGarth. According to a post on their blog, this was an experiment they conducted earlier last week, and they claimed this was possible via unique consensus models available on their chain. This was aimed at proving that Monero’s network is not secure enough and that Qubic’s validators should be responsible for securing it going forward.

They further stated that the “Monero network’s core functionality remains intact. Its privacy, speed, and usability have not been compromised.”

The team behind the blockchain network has not yet confirmed or denied any aftereffects of the attack. At press time, the native token, XMR, trades at around $276, even up 4% on the day, unaffected by the event.

Previous Examples Of Such Attacks

While it’s still early to determine if this controversial attack will have any effects on the blockchain, there have been past scenarios where the consequences have been quite detrimental.

Ethereum Classic (ETC), a split from the Ethereum (ETH) blockchain we know today, is the “classic” version of the chain that was initially launched in 2015. Between 2019 and 2020, the network suffered two 51% attacks involving double-spending, resulting in over $6 million in losses.

Another spin-off, Bitcoin Gold (BTG), the “user-friendly” alternative to Bitcoin (BTC), underwent a double-spend attack in 2018, resulting in a loss of around $18 million.

The majority of this type of attack has subsided in recent years, primarily due to technological advancements, blockchain upgrades, and improvements in consensus models. As noted above, we have yet to see the impact of this most recent network security breach.