Charlie Lee announced that Litecoin controls 98 percent of the hash rate for its “Scrypt” mining algorithm. This dominance is critical for the security of LTC. Meanwhile, other coins which have minority control over their algorithm, such as Bitcoin Cash and Bitcoin SV, remain at high risk of malicious attack.
On Aug. 12, Litecoin creator Charlie Lee announced that his coin had over 98 percent of the market share of its unique ASIC-dominated mining algorithm ‘Scrypt.’
Here’s the current state of Scrypt mining after the Litecoin halving.
Litecoin still dominates the Scrypt mining scene with 98.57% of all Scrypt hashrate pointed at mining Litecoin. 👍
— Charlie Lee [LTC⚡] (@SatoshiLite) August 12, 2019
Hash rate majority over Scrypt, or any mining algorithm, plays an important role in maintaining the security of the network against hostile mining attacks meant to pillage a cryptocurrency.
Hostile mining attacks
Game theory plays an important role in well-designed cryptocurrencies. Unlike its technological predecessors, crypto leverages economic incentives to ensure participants are honest and that networks are salient against bad actors. When these incentives are misaligned the system breaks.
One poorly understood aspect of proof-of-work cryptocurrencies is the importance of hash rate dominance within a particular mining algorithm. If a miner is able to achieve majority hash power (51 percent hash rate) in a particular coin, then there are several hostile attacks that they could perform on a network.
One obvious attack is rejecting blocks from everyone else, allowing a miner to take every block reward.