Kraken Halts Monero Deposits Amid Security Concerns
In a significant move reflecting concerns over network security, the cryptocurrency exchange Kraken has put a hold on deposits for Monero, a well-recognized privacy coin. This decision follows alarming reports regarding a 51% attack on Monero’s blockchain, which threatens to undermine the security framework of the network.
Understanding the 51% Attack
A 51% attack is classified as a situation where a single mining entity gains control over more than half of a blockchain’s total computational power. This high level of control allows for potential double-spending and the manipulation of transaction order on the blockchain ledger.
The exchange issued a statement on Friday addressing these concerns: “As a security measure, we have halted Monero deposits after discovering that one mining pool has amassed over 50% of the total hashing power on the network. Such a concentration of mining capabilities represents a potential threat to the blockchain’s integrity.”
Escalation of the Situation
The situation escalated when Qubic, a layer-1 blockchain focused on artificial intelligence, announced on Monday that it had seized the majority control of Monero’s hashrate, prompting a security alert within the Monero ecosystem. Reports revealed that Qubic had managed to reorganize six blocks, a move that sparked controversy and positioned it at the center of the token’s current turmoil, despite the community’s pushback against the legitimacy of the attack.
Monero stands as a prominent privacy-focused protocol, ranking as the 29th largest cryptocurrency by market value, according to CoinMarketCap. The disturbing events triggered a wave of responses from stakeholders within the Monero community, advocating for the integrity of the protocol amid these developments.
Qubic’s Control and Its Implications
Furthermore, after a prolonged dispute over control in the weeks leading up to the incident, Qubic finally achieved its dominion over Monero’s hashrate. Following an initial thwarting of its takeover attempt, the pool faced a denial-of-service (DDoS) attack on August 4, which temporarily crippled its capabilities, dropping its hashrate from 2.6 GH/s to 0.8 GH/s.
Sergey Ivancheglo, who claimed responsibility for the subsequent 51% takeover, noted that despite the setbacks, Qubic managed to regain its necessary hashing power, culminating in a pivotal shift where a $300 million AI-oriented project took control of a $6 billion privacy-focused protocol. This incident is deemed a watershed moment in the cryptocurrency realm, highlighting the risks associated with mining centralization and the importance of robust security measures for blockchain networks.
