Monero, a privacy-oriented cryptocurrency that obfuscates its blockchain data, is in a consensus crisis. One of the chain’s biggest mining pools, MineXMR, has collected as much as 40% of the blockchain’s hashrate – putting it at risk of a “51% attack.”
In old-fashioned, “Proof-of-Work” blockchains like Bitcoin and Monero, transactions and blocks are confirmed by computing software. These contributions are measured in terms of hash rate, which refers to the total combined computational power being exploited by the network.. The miners, or people providing these computational resources, secure the network in exchange for kickbacks – namely fees and block rewards.
However, Proof-of-Work blockchains have a fickle problem – if anybody collects more than 51% of a blockchain, they could theoretically control what happens on it. That’s kind of scary if you’re talking about billions of dollars worth of wealth being controlled by an unknown player. And another fickle tendency of humans – the desire to collaborate – is at the center of this Monero-themed drama.
On Proof-of-Work blockchains, large collectives of miners often get together to increase their odds of success (and distribute their winnings.) These collectives, called pools, help miners get more consistent rewards. However, in Monero’s case, one particular pool controls 44% of the network’s hashrate.
A 51% attack would require malevolent actors – perhaps not like the people at MineXMR, but other political players – to abuse their footprint. They could then use it to double-spend transactions, deny transactions, and – ultimately – make Monero unreliable. However, the very idea of this hashrate inequality has angered the Monero community – which has responded in-kind by “distributing the (hashrate) wealth.”
One Monero user wrote: “We need to talk with MineXMR to take some action right now! Please send an email for support@minexmr.com to MineXMR admins to take action; a 51% pool is not in the best interest of the community or the pool.”
However, the most likely resolution will involve users moving their computational power away from that pool. That way, the entire system can continue to function without risks or concerns.
Investors avoided $XMR.X, the coin for the Monero network, which fluctuated in recent days on the news.