Alexander Lashkov


51% Attack vs Banking Cartel

It is clear that blockchain is the technology of the future. And now it’s not only about cryptocurrencies. Everyone can create any decentralized applications on the blockchain which will be not subordinate to any organization, whether it is commercial or state. Only computer algorithm that embedded in blockchain can control this technology.

Blockchain frameworks were invented to speed up and simplify the process of developing blockchain-based apps. A framework is a soft that provides generic functionality. Developers can make selective changes in it to get the desired app. So it turns out that framework is a kind of ‘dummy’ which helps ‘cut out’ any final product.

Now remember 2015 year when 42 largest banks joined to each other to create a blockchain framework called R3 Corda. Later several more banks joined to them and total number of firms entering the consortium became more than 200. The purpose of this project is the creation of a blockchain framework specifically for the banking, financial and insurance spheres.

It was conceived that this framework will create new non-existent earlier blockchains for business purposes. As you see any corporation can make its own blockchain with any properties for its needs. At first glance it sounds good, but in fact this banking cartel lost sight of key property of the blockchain — decentralization.

Due to its decentralization blockchain is very vulnerable to “51% Attack”, which means that some attacker who takes control over more than 50% of the processing capacity of the network will be able to change any information stored in the blockchain.

At the moment the bitcoin network hashrate is 35.8 million THash/s, high-end bitcoin miner from Bitmain has a computational speed of 14 THash/s at a price of $700 which makes the cost of hacking the bitcoin network about $ 1.8 billion. But actually you can not buy such number of miners anywhere. The maximum numbers that produce factories counted by thousands or more than tens thousands but you need 2.5 million devices.

In addition as popularity of bitcoin is increasing this amount may be up to 10x larger. All this count suggests that bitcoin is very strongly protected from 51% attack. And now a question — how will blockchain built on the Corda framework by R3 be protected?

The answer is — in no way. I doubt that Corporation X will invest $ 2 billion to protect its own blockchain. But progress doesn’t stand still and now the Hyperledger, Corda and others are replaced by Hashbon. This is a new generation blockchain framework. Instead of creating a new blockchain Hashbon works as a virtual blockchain using top of several already existing reliable blockchains — bitcoin, litecoin, dash, monero, zcash.

In addition to protection from 51% attack this approach offers the number of advantages. In particular Hashbon selects the necessary livechain with the least commission right now. It helps avoid the “Cryptokitties Effect”. Remember how such epidemic of Cryptokitties has blocked the work of Ethereum for a long time, which made impossible to upload new smart contracts to the network.

I want to wish a good luck to a small but strong startup “Hashbon” from the Eastern Europe in its struggle against the banking cartel.

More by Alexander Lashkov

Topics of interest

More Related Stories