Ethereum Classic Must Be Attackable to Be Secure
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How Do Blockchains Work?
A blockchain is an incredibly simple and rudimentary concept. It is a ledger with accounts and balances that accepts new transactions to move money from one account to the other. It’s as simple as that!
The only addition that a programmable network as Ethereum Classic (ETC) has is that the ledger also stores software programs that can move money around. This makes it suitable to deploy decentralized applications that are very convenient for many use cases.
However, the magic of a blockchain like ETC is that it replicates all the data of the ledger in all the machines that participate in it through a consensus mechanism. This is what makes it decentralized, and thus extremely secure.
Security in this case means two things, first that nobody can control the system, therefore it is immutable and there is no censorship or confiscation, and second, despite not having a central administrator controlling it, it is very difficult to reverse transactions and steal money through what are called double spends or 51% attacks.
The question then is, how does ETC achieve this secure decentralized consensus on a global scale?
How Does Nakamoto Consensus Work?
The challenge was how to get all participating machines in the system to achieve consensus every 13 seconds on what was the latest state of the ledger.
The way ETC does this is that users constantly send transactions to the network, these transactions are re-sent to all nodes in the system, and many of these nodes are miners. When miners receive the new transactions, they accumulate them in a block and stamp them with a cryptographic hash. This hash is extremely costly to create because it requires enormous amounts of computational power and electricity to calculate. This is what is called “proof of work”. Once they create the stamp, they put it in the block and send it to the rest of the network for verification.
The verification process is where the security point is revealed. All other nodes that are not miners, are verifiers and their role is to make sure that the transactions in the block are correct and that the work was done to create the cryptographic stamp. If the work was done, then they accept the block. If the work was not done, then they know it is an imposter trying to trick them, so they reject it. This is the key of the whole system!
It is only through large amounts of work that the network may achieve consensus in a decentralized manner.
What Is an Attack?
So, what does this kind of consensus mechanism achieve in terms of the two security types we described before?
True decentralization: This is the most important type of security. Nakamoto Consensus achieves true decentralization because any machine in the world may know the latest state of the ledger and enter and exit the network just by verifying the proofs of work of all the blocks. This is an incredible level of permissionlessness and censorship resistance, never achieved before in computer science. It is the most important type of security because the whole point of blockchains is to avoid centralized entities that can corrupt the system, introduce censorship, or be captured by special interests. Proof of work is an objective and neutral way of participating in the network.
Resistance against 51% attacks: 51% attacks are a secondary kind of security. They happen when someone has the computing power, usually 51% of mining power, to overwhelm the system so they can delete a previous transaction in the network and steal money from a victim. This is a kind of attack that is always possible in a blockchain as long as someone may accumulate 51% of computing power of the network. It is a secondary type of security because the double spend attack has a very limited scope and may be avoided by using more block confirmations. Additionally, it is not really a hack of the system, it is just a reorganization of transactions.
How Is Security in ETC Maximized?
So, now that we know how Ethereum Classic achieves consensus, that proof of work is the critical way of achieving this consensus in a truly decentralized way, and that decentralization is the most important security type in a blockchain, then we can figure out how security is maximized.
Security is maximized in ETC first, by keeping the proof of work based Nakamoto Consensus mechanism as its only way of updating the state every 13 seconds. Second, by having the greatest hash rate as possible.
The more demand there is for decentralized computing, the more demand for ETC there will be, the more the price will go up, the more miners will want to direct their hash power to Ethereum Classic to earn their mining rewards. This is the only way to secure the network.
Therefore, true blockchain security is achieved in a purely objective way.
A Purely Objective Form of Security Must Be Attackable
The two objective parameters that secure ETC are:
Proof of work as the chain selection point for nodes globally to know the latest state, and to freely enter and exit the system.
The most hashrate competition between miners to earn block rewards so the hashrate is as large as possible to minimize 51% attacks.
Paradoxically, though both objective parameters above are related as more hashrate produces a stronger proof of work focal point that assures more decentralization, the truth is that it is not possible to actually eliminate the risk that someone with 51% of the hashrate, however unlikely, may become malicious.
It is not possible because the only way to assure a purely objective and neutral way for thousands of machines around the world to agree on a single identical state every 13 seconds is to only follow the chain of blocks with the most work done.
This is the reason for the counterintuitive statement that Ethereum Classic must be attackable to be secure.
Thank you for reading this article!
To learn more about ETC please go to: https://ethereumclassic.org
