Charlie Lee: 51% attack does not threaten Dogecoin

Since so many people have asked me if this is an issue, I figure I should respond to this and clear up any misunderstanding of how merged mining works and how it affects 51% attack.

Let me start off by saying that this network security concern is totally unfounded.

Thread… 👇 pic.twitter.com/3Zc3vdmE4o

— Charlie Lee [LTC⚡] (@SatoshiLite) February 14, 2021

Lee’s comments come in response to allegations by Coin Metrics analyst Lucas Nuzzi. He claims that the Dogecoin network is not at all immune to 51% attacks due to its link to Litecoin.

Due to its dependence on litecoin miners, the Dogecoin network can be an easy target for attackers. Merged mining called Auxiliary Proof-of-Work, on which Dogecoin and Litecoin are deployed, “significantly reduces the cost” of an attack on both networks at once, approves Nucci.

However, Li believes that although the attack is possible in theory, it does not make any sense in practice.

Litecoin stands for DOGE

Nuzzi believes the attack makes sense if you buy a lot of LTC and DOGE. After depositing on the exchanges, both cryptocurrencies should be exchanged for bitcoin, and then withdrawn to a wallet in BTC.

With a successful 51% attack on the Litecoin network, exchanges will not be able to confirm the presence of deposits in LTC and DOGE. Thus, according to Nuzzi, the attacker will be able to get free tokens.

However, the founder of Litecoin considers such an attack possible only from a theoretical point of view. As Lee wrote, any miner planning such an attack should take into account the costs not only for the operation itself but also for the purchase of the required number of ASICs.

Hopeless attack

At the time of this writing, the cost of an hourly 51% attack on the Litecoin network is almost $ 30,000, according to crypto51.app. In addition to the costs of the attack itself, the attacker must fork out for the purchase of ASICs in order to achieve the required network hashrate. According to preliminary estimates, for this it is necessary to purchase ASIC devices in the amount of $ 132 to $ 151 million.

However, even if an attacker succeeds in doing it, he potentially destroys the value of the Scrypt algorithm, devaluing all his costs, Lee said.

In addition, the attacker will need “Tens if not hundreds of millions of US dollars” in LTC to double-spend coins. The very fact of the attack, according to Lee, will not go unnoticed and will immediately affect the price of the asset, negating any payback.