Coinbase’s Blockchain Security Team recently identified a significant shift in the hash energy distribution of the Zcash network. A single mining pool, ViaBTC, was found to control more than 51% of the network’s computing power, raising concerns about potential security issues.
In Proof-of-Work (PoW) blockchain networks, miners compete to validate transactions by solving complex mathematical problems. However, if a single miner or mining pool obtains more than 51% of the network’s hashing power, it can pose risks such as launching double-spend attacks or censoring transactions. Such centralization could jeopardize user and monetary exchanges.
Coinbase, committed to ensuring security, decentralization, and compliance with digital asset listing standards, has taken several steps in response:
Increased confirmation requirement: Coinbase has increased the Zcash confirmation requirement to 110 blocks. This move aims to reduce the risk of double spending or fraudulent transactions, by increasing the deposit time from approximately 40 minutes to approximately 2.5 hours.
Limit-Only Trading Mode: To minimize the impact of potential volatility, Coinbase has transitioned its Zcash trading markets to a limit-only status.
Stakeholder Engagement: Coinbase has initiated discussions with the Electric Coin Company, the organization behind Zcash, and ViaBTC. The dialogue focuses on the risks associated with the centralization of mining. Coinbase has provided recommendations for strategies that can be implemented to reduce the risk of a 51% attack.
Coinbase’s Blockchain Security team conducts thorough security assessments before adding a blockchain to the exchange. A primary criterion is to ensure that no single entity has centralized control over the network. The team also continuously monitors existing blockchain networks for significant changes that could impact their security assessments. For PoW networks, specialized hashpower heuristics are used to detect notable shifts in mining power.
Coinbase remains hopeful for a decentralized Zcash mining future. While current measures are believed to be sufficient to protect users, the company emphasizes its continued collaboration with third-party partners to ensure the security of all participants in the crypto economy. Coinbase is committed to continuously monitoring the situation and adjusting risk mitigations as necessary to protect its customers.
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