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PoW-based blockchain cryptocurrency Firo is the latest victim of a 51% security attack. The Firo.org team confirmed the attack yesterday and recommends its users to not make any transactions until the network returns to its normal state. To repair the security vulnerability, Firo urges its wallets and masternodes to upgrade to a hotfix wallet. According to Binance CEO, the attackers have rolled back 306 blocks back to 18th Jan 17:24:20 (UTC). As a result, in the last 24 hours, the cryptocurrency price has slashed by 17%. At the time of the announcement, the digital currency was listed at $4.80.
We are under 51% attack at the moment. We recommend not to make transactions during this time until the network returns to a normal state. We will post updates when we have them. Note this is not a coding error but a nature of PoW. $XZC $FIRO
— Firo (formerly Zcoin) (@firoorg) January 20, 2021
According to 2miners, a mining pool, payouts to its miners are stopped until the network stabilizes. To discourage any transactions, the amount of block confirmations has increased to 1000. Also, 2miners holds more than 60% mining hash rate in the Firo network.
Security Vulnerability in PoW Blockchains
FIRO team mentions that 51% attack is not due to a coding error in the FIRO protocol, but is a nature of any PoW blockchain. If a group of miners accumulates a majority of network mining power, they can perform any chain reorganizations. An unusually high rate of orphaned blocks can indicate an ongoing attack. Such attacks undermine the system followed by slashing in prices of the digital currency. This generally makes the efforts unprofitable for the malicious miners.
Responding to several tweets, team Firo emphasizes that this attack would not have been possible after the implementation of a secondary validation layer called Chainlocks, designed and implemented by another privacy-preserving cryptocurrency, Dash. In this protocol, a network of masternodes signs every block. If a malicious miner publishes a secret chain, it would be invalidated if a valid block with approval from the majority of masternodes is published before it. Chaincode prevents any reorganization of blockchain as the miners have more incentive to publish every block immediately. Tested on the Firo testnet, it was supposed to be rolled out on the Firo mainnet in a few weeks.
Firo has recently made waves by the implementation of a zk-proof technology called Lelantus on Jan 14, 2021. It provides financial confidentiality to its users by masking the transaction amount. Lelantus provides the fastest transaction verification times under 15-50 ms compared to other privacy-preserving protocols used in cryptocurrencies like Sigma, Zerocoin, Zerocash, and Monero.
Previous 51% Attacks on Other Cryptocurrencies:
With an increase in the launch of altcoins, such an attack gets easy to accomplish. In order to control 51% of an altcoin’s network hashrate, only a small proportion of miners from larger coins need to switch to a smaller coin. Grin, which is another privacy-preserving blockchain suffered a 51% attack on Nov, 7th, 2020. There were attacks on other networks like Cortex (CTXC) and Aeternity (AE).
Ethereum Classic (ETC), which is a hard fork of the Ethereum network, suffered three such attacks in a month. It is also implementing a 51% attack mitigation solution by making block reorgs expensive.