Image source: https://www.litecoinpool.org/pools
As the second largest cryptocurrency in terms of market cap and the second-highest valued virtual currency, it’s hardly surprising that Litecoin is known as the “silver to bitcoin’s gold.” As a result, almost every Scrypt-based miner has dabbled in Litecoin. Unfortunately, many of those who mine Litecoin have stuck to the same mining pool, and that’s becoming a real problem for the network.
The Coinotron mining pool is fast approaching 51 percent of the total Litecoin hash rate, which could all-too-easily result in a much-feared “51-percent attack.”
Virtually impossible with a widely distributed amount of hash power, such an attack would leave the entire network open to double-spend transactions, reverse transactions, blocked confirmations and complete network corruption.
In other words, it would be very bad news for Litecoin. Confidence in the network would falter, and prices would almost certainly tumble from today’s $10.55.
Miners have been relatively quick to respond to this call, dropping the hash power of the Coinotron pool from 48% this morning to a less-terrifying 43% at the moment. With 94 GH/s power, Coinotron still has more than four times the hashing power of its closest rival pool, WeMineLTC.
Although tempting to single out Coinotron as a problem pool, the problem is likely more complex. With a new range of high-powered Scrypt ASIC miners hitting the market, the network hashrate is rapidly expanding.
As one of the largest and most successful pools in the Litecoin community, it’s hardly surprising to see Coinotron’s total share of the network surge forward. With most miners having little interest in risking the value of their Litecoin holdings by threatening the overall network, expect to see other pools grow in size and power in coming months.
Written on 21 May 2014.