In recent days many different Altcoins have been under 51% attack, namely Verge (XVG) which has been exploited on more than one occasion. Charlie Lee has come out to dispel any fears that Litecoin could possibly come under the same attack.
Verge uses a consensus algorithm known as Scrypt, as well as a few others, but this is the algorithm that it’s miners chose to exploit for it’s attack. LItecoin also uses Scrypt which has brought up some concerns that Litecoin can be susceptible to the same type of attack.
Over the past few days Lee has tweeted his thoughts on the subject and assures that Litecoin is very secure against an attack like this.
On Tuesday he specifically noted three reasons why this is an unlikely situation:
- Litecoin Pools are well distributed, the largest being 22%
- The Hashrat is up 50x in one year
- High Capital loss if attacked
So, what does this mean? In order to get at a 51% attack you need control plus incentive to do so. Once an attack happens and it’s known which miners have done it they will have to move on to a different coin.
Litecoin makes up for about 90% of all POW coins, The next coin that comes close is still in a far off distance. The amount of resources needed to do so run in the mid to high 9 figures. Not impossible to do, but not all too practical.
By doing a good distribution of pools it allows for a second layer of safety. Several pools would have to come together and agree to an attack. If they choose to attack it, then that would be the end of their association to Litecoin, which would make them miss out on far greater future profits.
Cost, plus resources, plus loss of profit is what Charlie Lee argues. On Monday Lee tweeted “Don’t trust POW coins that are not the dominant coin of their respect proof of work algorithm.” Since Litecoin is the biggest whale in this algorithm it helps them with security.
If you choose to hold lower POW (Verge) and the miners decide to do a 51% attack, it wouldn’t take much effort to do so,and once they are done they can just move on to another lower level POW coin.
The big weakness lies in the use of Asics. When Asics are used in a situation where the algorithm is not easily compatible with Asic rigs you have the possibility to run into these problems.
Ethereum has decided to go around this by going to POS instead of POW, and others have just decided to hard fork. Which causes a whole new set of problems.
Lee thinks that Asics can actually help towards the innovation of the crypto space, which is why he’s confident in Litecoins future..