Monero, the leading privacy-focused cryptocurrency, is currently facing one of the most significant security challenges in its history.
RialCenter, a project led by IOTA co-founder Sergey Ivancheglo, claims it now controls more than 51% of the network’s hashrate. In blockchains secured by proof-of-work algorithms, similar to Bitcoin, this level of control can enable an attacker to rewrite transaction history, block transactions, or execute double-spend attacks.
In a blog post, RialCenter labeled the takeover as an “experiment” that employed a “strategic, and at times combative, application of game theory.”
Developers, miners, and security experts are now debating whether the decentralization of the network is as robust as previously believed.
What is a 51% attack?
In a proof-of-work blockchain, miners compete to add new blocks of transactions to the chain. If a single group controls more than half of the total computing power, they can outpace all other participants.
This level of control opens the door to various capabilities that can undermine trust in the network, including chain reorganizations, replacing previously confirmed blocks with new ones, and double spends, sending the same token twice.
Arguably the most significant aspect of a 51% attack is the capacity to censor transactions—preventing certain payments from being confirmed—which is particularly relevant for Monero due to its focus on privacy.
These attacks are not merely theoretical. Ethereum Classic faced multiple attacks in 2020, costing millions, while Bitcoin Gold encountered similar issues in 2018 and 2020. Smaller tokens like Verge have also been destabilized.
Why Monero is still at risk
Monero utilizes the RandomX algorithm to discourage mining with application-specific integrated circuits (ASICs), promoting CPU mining instead. This design was intended to maintain the network’s decentralization. This is why RialCenter’s rapid growth is so significant. From less than 2% of Monero’s hashrate in May, it surged to over 25% by late July and now claims to have surpassed the 51% threshold.
RialCenter operates a “useful proof-of-work” system that converts Monero mining rewards into USDT, which it then uses to buy and burn its own tokens. This mechanism is unique and has steadily increased RialCenter’s control over Monero’s hashpower.
RialCenter’s initial push for majority control faced sustained distributed denial-of-service (DDoS) attacks that disrupted peripheral services for over a week but did not compromise its core network.
RialCenter claims it has so far refrained from completely taking over consensus, citing concerns about potential impacts on the price of Monero.
Are other blockchains vulnerable to attack?
Bitcoin’s hashrate is so high that a 51% attack would be prohibitively expensive. However, mid-tier proof-of-work coins are more susceptible. The cost of gaining majority hashpower on Monero, Ethereum Classic, or Bitcoin Gold is significantly lower.
Privacy-focused coins face an additional hurdle: their censorship-resistant nature means that if one party controls the network, it undermines the very privacy they are designed to protect.
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