Important Insights

• Qubic’s Announcement: Qubic claims it has taken control of over 51% of Monero’s hashrate, potentially allowing the project to reorganize blocks, silence transactions, and execute double-spending.
• Economic Mechanism: The project employs a unique proof-of-work model that converts Monero mining rewards into USDT, aimed at purchasing and burning QUBIC tokens. The share of the network increased from under 2% in May to over 25% by late July.
• Industry Concerns: Key industry figures, including Ledger’s CTO, have raised alarms over a potential active 51% attack, while questioning the validity of Qubic’s claims and its economic framework. Meanwhile, the price of Monero has recently dropped by 6.65% within 24 hours and 16% over the last week.

Context of the 51% Attack

A 51% attack signifies when an individual or a group achieves control over the majority of a proof-of-work network’s hashrate. Historical incidents involving Ethereum Classic and Bitcoin Gold indicate severe vulnerabilities associated with such attacks. Monero’s unique algorithm and its focus on resisting ASIC centralization have been core to its identity until now.

• Implications: The implications of Qubic’s control spark essential discussions on network security and sustainability in the cryptocurrency sector. Is Qubic’s maneuver a genuine stress test or a takeover? Several insiders, including Ledger’s CTO, indicate signs of a critical chain reorganization.

• Injecting further doubt: Whether portraying a hostile takeover or just a stress test, Monero’s recent fluctuations are concerning for its users and investors alike.