Japanese Virtual Currency Monacoin Hit by Selfish Mining Attack

The coin suffered a selfish mining attack, causing losses of around USD 90 000.

by Nina Dimitrova
22 May • 2 mins
In News

Monacoin (MONA), a cryptocurrency developed in Japan, has suffered a selfish mining attack that caused losses of roughly USD 90 000.

According to Monacoin users, the attack was noticed between May 13 and 15. Monacoin officially reported the issue on May 18 via its Twitter account and the attack was halted on May 19. This Monday Monacoin sent an e-mail advising exchanges and developers to increase the network confirmation requirements to 100, as per publications on Reddit.

Some reports, however, claim that the selfish mining activity has been going on for over six months. At some point the still unknown miner had 57% of Monacoin’s hashrate, while executing the attack that exploited vulnerabilities in Monacoin’s mining algorithms.

Meanwhile, many exchanges, including Livecoin and Bittrex, have disabled deposits in Monacoin, until the issue is resolved and a fix is found. Client wallets with Monacoins are considered safe.

A selfish mining attack occurs when a miner secretly mines a block on the blockchain, but does not broadcast it publicly. If they manage to secretly mine another block, they create a new branch in the blockchain. When they make it public, it invalidates the blocks that other miners have been working on during the time when the new branch was hidden.

The selfish mining attack can be done for vandalism, or for profit. The latter can happen if the selfish miner makes transactions (eg. payments or purchases) on the blockchain that is to be destroyed, before the invalidation. If they manage to get their proceeds, they have in effect gotten something for free.

In the Monacoin case, the secret miner deposited the Monacoins to the Livecoin exchange and has swapped them for other cryptocurrencies, before destroying the chain with the initial transactions.