Chain Hopping Attack is a type of attack that allows miners to switch between various blockchains to maximize their profits by taking advantage of the difficulty adjustment algorithms of the chain. This attack is currently live on the Bitcoin Cash blockchain.
What is a Chain Hopping Attack?
When the bitcoin cash forked away from the bitcoin blockchain, the developers of bitcoin cash added a new difficulty adjustment algorithm to their chain known as Emergency Difficulty Adjustment(EDA). The EDA is triggered if the miners of the coin haven’t been successful in finding 6 blocks in 12 hours. Every time EDA is triggered, the difficulty of finding a block is decreased by 20%.
Due to this new difficulty adjustment algorithm, miners leave the bitcoin cash network for 1-2 days and goes back to mining bitcoin so that the difficulty on the bitcoin cash network drops substantially. After the difficulty has dropped to a certain point, they rejoin the bitcoin cash network and mine the chain at upto 10 times the original block time. After the 2016 blocks have been mined, the difficulty readjusts and they leave the network again for another 1-2 days.
This oscillation in the hash power leaves the network vulnerable to attacks and also increases the inflation rate as the 14 day difficulty period is achieved in 4-5 days. This switching back and forth of the hash power on a blockchain is known as a Chain Hopping Attack where miners hop from chain to chain just to maximize their profitability.
While the attack has been active on the bitcoin cash network for over 2 months now, the bitcoin cash team has done nothing to fix it. They have acknowledged that it is a problem and are trying to come up with something new but as the time goes, their supply will keep increasing and miners will keep exploiting their network.