Is Monero (XMR) Under 51% Attack from Qubic? Here’s What We Know

Layer-1 blockchain Qubic has taken over the majority of the network hashrate of the privacy-focused cryptocurrency Monero (XMR). This gives Qubic the power to potentially reorganize blocks, censor transactions, and attempt double-spends in what is called the 51% attack.

According to an official blog post by the Qubic team, the majority control over Monero’s network hashrate was achieved after a month of “high-stakes technical confrontation.” Following the update, Monero’s XMR saw a price decline.

The incident has sparked intense discussions among crypto enthusiasts, developers, and security experts about implications for Monero’s security, decentralization, and trust.

What is a 51% Attack?

A 51% attack occurs when an entity or group gains control of over 50% of a blockchain’s mining hashrate or validating power. This level of control allows the attacker to manipulate the blockchain by reorganizing blocks to undo recent transactions.

It also enables censoring transactions by excluding them from the blockchain. Anyone or group holding 51% of a network’s hashrate can execute double-spend attacks. They do this by spending the digital assets and then rewriting the blockchain to remove evidence of the spend. Blockchain projects like Bitcoin Gold and Ethereum Classic have fallen prey to these attacks.

Qubic’s 51% Control of Monero

Qubic’s founder, Sergey Ivancheglo, is the mastermind behind the 51% control of Monero’s hashrate.

Qubic runs a Useful Proof of Work (uPoW) consensus mechanism. Unlike the traditional PoW model, the uPoW algorithm allows for eco-friendly usage and adoption of real-world activities, such as training an AI model and mining digital assets.

In Qubic’s case, it leaned towards training a “decentralized AI model” called AIGarth and mining XMR.

Through a “pay-to-switch” mining campaign, the L1 blockchain offered more profitable payouts to miners switching from regular Monero mining pools to mine via Qubic’s setup. The setup entails that Qubic miners swap all mined XMR to USDT. Then, these tokens are used to purchase and burn the QUBIC cryptocurrency.

This incident indicates that economic incentives can override network security.

Mixed Reactions from Community

Ivancheglo justified his actions, stating that the move is a “stress test” to help Monero prepare for future security threats. However, many in the crypto community argue that this action raises questions about the ethics and motivations behind such an attack on another blockchain protocol.

The crypto community’s reaction to the attack is a mix of concern and debate. Experts point out that a 51% attack compromises the security assumptions of Monero’s decentralized blockchain.

According to the Ledger CTO, Charles Guillemet, Qubic has been boosting its hashrate on Monero for months. He added that the L1 blockchain will likely spend around $75 million daily to maintain its dominance. With this move, Qubic, a platform with $300 million in market capitalization, can decide the fate of Monero, a platform with a market cap of $6 billion.

Zhong Chenming, founder of the blockchain security platform SlowMist, viewed it as a significant threat. Chenming added that “it’s unclear what the economic benefits of doing this are in the end.”

The 51% takeover has had minimal effect on XMR’s price. Although the privacy-focused crypto saw a 13% decline after Qubic’s mining hashrate boost, it has now rebalanced at $254, representing a 7.5% decline. Monero’s market cap is currently around $4.67 billion.

On the other hand, QUBIC has seen a 14% price increase, bringing its trading price to $0.0₅2626 at the time of writing.

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