If You Own Bitcoin, Bitcoin Cash (Or Any Other Cryptocurrency) You Should Read This
I'm not a big fan of FUD, on the contrary, I try to keep a balanced perspective and make my decisions by taking into account as many factors as I can. So please don't take this article as FUD, because it isn't. It's a real possibility and, if you keep some cryptos in your portfolio, you will be affected.
Bitcoin Cash is a fork of Bitcoin. It has a bigger block size and that's all it has compared with Bitcoin. More importantly, it has the same hashing algorithm as Bitcoin. You'll see down the road why this is important.
Bitcoin is supported by a group of developers, called Bitcoin Core. Bitcoin Cash is supported by a group of miners (many from China) and a few public persons. I won't be talking about the moral compass of the BCash supporters, because this is not about that. I do have my opinions, though, but I won't make them public now, this is purely technical.
Because Bitcoin and Bitcoin Cash share the same hashing algorithm (and mining equipments), and because Bitcoin Cash has only 10% of the total hashing power, there is a real danger of a 51% attack.
What is a 51% attack?
In Proof of Work algorithms, transactions are validated after solving a difficult mathematical problem. The one with the most calculation (hashing) power wins. So just because there is at least 90% more hashing power outside the BCash ecosystem, ready to step in at any time, it means a single player can take control over the blockchain.
Now here's where it can get tricky.
The attacker will not control all transactions, openly and publicly. Instead, he will try to mine an alternative blockchain branch, while still making transactions on the main branch. Because it has more hashing power, his alternative branch will become in time, the longer one.
At some point, after he sold his coins in the main branch, he will switch the branches. Now the longest branch - the one he secretly mined - will be the public one. All past transactions will be vanished. It will look like he never spent his coins.
This is a very, very simple explanation, but I urge you to go through this article and read it a few times. It was the reason I decided to write this article.
This is not a political article and I'm not taking sides. I don't even own Bitcoin or Bitcoin Cash and I am, as you may know, long term bearish towards Bitcoin as a token, but bullish on the blockchain technology pioneered by Bitcoin. I'm all for appcoins like STEEM (obviously).
This is purely from a technical perspective.
If such an attack is conducted and if it succeeds, it will send poisonous ripples in the entire crypto market. It will be Mt. Gox again. Given the amount of money in the markets right now, it will probably be a few orders of magnitude bigger than Mt. Gox.
I just think this is something you should be aware of.
I'm a serial entrepreneur, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running. Here on Steemit you may stay updated by following me @dragosroua.
If you're new to Steemit, you may find these articles relevant (that's also part of my witness activity to support new members of the platform):