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Bitcoin Network Subjected to the Planned Attack

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According to the information from ViaBTC, a Chinese mining pool, Bitcoin Cash network was subjected to a planned attack last week, in which unknown hackers exploited the vulnerability of plasticity in transactions.

Plasticity in transactions is caused by a cryptographic trick, which changes the signature of the transaction, but without changing the signature meaning. This can be done even without the private key used to create the original signature. In the case of cryptocurrency, this means that anyone can take any transaction from the p2p network and replace the original signature with an equivalent one, which will remain valid. The new signature will still reflect the same data that was originally signed, and still be able to pass the verification with the original public key. This will not change the result of the transaction, but since everything looks different, it will completely change the txid, transaction identifier.

Plasticity in transactions leads to two main problems. First, it interferes with the software operation, which uses txid to verify the confirmed transactions.  More importantly, however, the plasticity in transactions limits the potential for using all types of extended use of Bitcoin created on unconfirmed transactions using txid, for example, the Lightning Network.

According to ViaBTC, such an attack was directed at the Bitcoin Cash network, and as a result, the withdrawal of funds was temporarily suspended.

Considering that some time after the attack, ViaBTC managed to cope and returned to normal service. However, these are not the only problems that Bitcoin Cash encountered in its first week of existence.

At the early stage of its existence, the creation of new blocks of the new cryptocurrency is still much slower than in the original network. Although the complexity of Bitcoin Cash has slightly decreased, in the past 24 hours this network has produced only 81 units compared to 146 blocks on the Bitcoin network. Taking into account, the noticeably decreased price actually negatively affects the profitability of mining. In addition, over 80% of the Bitcoin Cash network hash still belongs to some “unknown” pool.

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