Monero Gains 7% Even as Reorg Raises Questions About Network Stability

Monero's privacy token, XMR, increased by more than 7% despite its blockchain experiencing an 18-block reorganization...

Quick overview

  • Monero's XMR token rose over 7% despite an 18-block reorganization that reversed around 117 transactions, raising concerns about the network's sustainability.
  • The reorganization, which lasted approximately 43 minutes, was linked to a security vulnerability exploited by the Qubic company, which controls a significant portion of Monero's hashrate.
  • Experts warn that the risk of double-spending has increased, suggesting that even transactions with ten confirmations may no longer be secure.
  • The Monero community is exploring new consensus methods to enhance network security, but no solutions have been successfully implemented yet.

Monero’s privacy token, XMR, increased by more than 7% despite its blockchain experiencing an 18-block reorganization that reversed approximately 117 transactions and raised community fears about the Monero ecosystem’s sustainability.

XMR is up 14% this week and 26% over the last 30 days. Over the last day, about $176,270 in liquidations were recorded, with traders betting against XMR accounting for more over $160,000 of the total.

The Monero blockchain has been under considerable attention following an unexpected 18-block reorganization. The rollback happened at block heights ranging from 3,499,659 to 3,499,676, erasing around 118 previously confirmed transactions and effectively invalidating about 36 minutes of chain activity.

The security vulnerability was committed by the company behind Qubic, a layer-1 AI-focused blockchain and mining pool that accumulated 51% Monero hashrate and reorganized six blocks last month.

According to entities that run Monero nodes and provide their command-line consoles on X, the reorganization began at block 3499659 on Sunday at 5:12 a.m. UTC and ended approximately 43 minutes later at block 3499676.

Monero’s most recent security flaw has been confirmed by cryptocurrency protocol expert Rucknium on GitHub.

CoinGecko statistics shows that the Monero XMR token rose 7.4% from $287.54 to $308.55 after a rather flat trading period during the reorg. XMR rose despite the overall market decreasing by almost 1% on Sunday.

Experts Warn of Rising Double-Spend Risks Amid Monero Block Reorganizations

Security experts warned that if the Monero community does not view block reorganizations as a major concern, the risk of double-spending would endure. They emphasized that the opportunity to exploit reorgs exists even without direct control over 51% of the network’s hashing power.

The rollback introduces double-spending, in which previously confirmed transactions are invalidated and the same coins are spent again. Historically, Monero transactions were considered finished after ten confirmations. However, following this reorganization, analysts suggested that this practice may no longer provide sufficient protection. The risk now exists that even transactions with 10 confirmations could later be invalidated by a deeper chain.

Besides, the repeated attacks shows how proof-of-work blockchains can be altered with when they are not sufficiently decentralized, limiting their utility as a monetary network.

Monero Community Explored New Consensus Methods to Enhance Network Security

Previously, the Monero community considered overhauling its proof-of-work consensus method to make it more resistant to 51% attacks.

Proposals included localizing mining gear and using a merge mining algorithm. Additonally, allowing XMR mining alongside Bitcoin and other cryptocurrencies, and implementing Dash’s ChainLocks solution were also proposed.

To yet, no solution has been successfully adopted, and Qubic retains major control over the privacy-focused network.

Despite the network vulnerabilities, XMR has been relatively stable since allegations of Qubic’s takeover surfaced on July 28, dropping only 5.85%.

ABOUT THE AUTHOR See More
Arslan Butt
Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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