We have heard of many ways a blockchain and its network participants can be attacked: there are dusting attacks, DDoS attacks, and phishing attacks crypto investors and developers have to put up with, among others. 51% attack is one of the most prevalent attacks, especially proof-of-work blockchains take steps to guard against. What is a 51% attack, what is the risk of 51% attack, and how a 51% attack works? These may all be questions you are asking yourself, so without further ado, let’s delve into the answers to them!
What is a 51% Attack?
Starting at the basics: what is a 51% attack? A 51% attack happens when a malicious person or group working together controls more than 50% of the total mining power of a blockchain network and messes with its security.
Given the working of a blockchain, reaching a consensus is necessary before any transactions can be confirmed or added. With enough hashing or mining power, a malicious actor might “create the majority” in a proof-of-work blockchain, alter the transaction records, or even prevent transactions from being confirmed, wreaking havoc on the blockchain’s integrity.
Blockchains with lower hash rates are more vulnerable to 51% attacks because it is simpler for a bad actor to acquire the necessary majority processing power. A blockchain will be more secure if more miners and resources are used to create it. The Bitcoin network has a high hash rate at any given point in time, making it almost impossible to launch a 51% attack on the network.
How a 51% Attack Works
When a new crypto transaction occurs on a PoW chain, a network node must verify the newly mined block. The block is ready to be added to the chain after verification.
All transactions are recorded in the blockchain and available for inspection anytime. There is no central authority over this data aggregation mechanism, as it is decentralized. Since the mining process requires a network of computers or nodes, the hash rate for any given network is also distributed.
However, when one or more miners hold a majority of the hash rate, the crypto network becomes unstable. This is called a 51% attack, one that causes a major disruption. The perpetrators of a 51% attack could then:
• Exclude new transactions from being recorded;
• Alter the order of transactions;
• Prevent transactions from being approved or confirmed;
• Prevent other miners from mining coins or tokens within the network;
• Reverse transactions to double-spend funds.
The Impacts of 51% Attack in Blockchain
Crypto users lose control over their digital assets in the event of a 51% attack. This casts doubt on the blockchain’s security, veracity, and dependability. Beginners are easy targets for 51% attackers; once they invade the hashing power of a blockchain, they can delay new transactions, or cause the same coin to be spent over and over (double spending).
In addition, attackers may prevent confirmation of user transactions or even undo them. As a result, people start losing faith in the blockchain, and genuine miners have their share of the rewards taken away unfairly.
Ways to Prevent a 51% Attack
The following are measures to prevent a 51% attack:
50% Limit on a Single Miner
The blockchain should guarantee that no single miner or group of miners controls over 50% of the network’s hashing power. This way, to execute the attack, the attacker would need to possess strong hardware and expend enormous amounts of energy. In addition, an attacker would have to depend on luck due to the random nature of the mining process.
Using Proof of Stake
It is possible for a single miner to gain control of a small blockchain network. Proof-of-stake blockchains are safer than proof-of-work blockchains like Bitcoin in theory, since with them, one single participant can not virtually take control of the entire network by possessing a lot of computational power, even if the blockchain network is small.
Strong Network Community
In networks that employ PoS or DPoS, users with a certain threshold of stake are elected to serve as block validators. The community elects the validators. They are kicked off the network by the community if they are found to be conspiring to compromise the network.
It is also efficient at preventing duplicate spending because the rules for the throwing out of malicious validators are embedded in the blockchain itself.
Risk of 51% Attacks
Rewinding a little, now we know the answer to ‘what is a 51% attack?’ is that a 51% attack on a blockchain is when a single entity or group of entities gains control over 51% or more of the network’s computing power. This allows the attacker to rewrite transaction history, prevent new transactions from being confirmed, and potentially double-spend crypto.
So, what is the risk of 51% attacks? Let’s find out:
New Transactions are Delayed
An immediate risk of 51% attacks is that new transactions are delayed as the attacker controls the transaction confirmation process. This can cause inconvenience to users and businesses that rely on timely transactions.
As another risk of 51% attacks, it can cause network disruption, reducing confidence in the blockchain network and potentially damaging the reputation of the crypto associated with the network.
Reduced Miner Rewards
A 51% attack can also lead to reduced miner rewards as the attacker may exclude certain transactions or manipulate the network to their advantage, affecting the profitability of other miners.
The Platforms that Faced a 51% Attack
When compared to smaller projects, bigger blockchains like Bitcoin are less likely to be attacked by a 51% attack. Here are some blockchains that have dealt with the risk of 51% attacks:
The attack against Grin reportedly involved a single miner amassing 57% of the network’s hash rate. The motives of the assailant were still a mystery. GRIN, a crypto blockchain focused on privacy, had to halt rewards and tell miners to stop working until the problem was fixed.
Over the past few years, Vertcoin has been the target of multiple 51% attacks. This initiative is working to ensure that crypto mining remains decentralized. The attack resulted in the attacker’s fake Vertcoin blocks being used instead of the original ones.
Users lost substantial money due to multiple-spending brought on by the blockchain’s reorganization. Vertcoin upgraded to a more robust PoW algorithm to ensure the network’s safety. To preserve the strength and communal nature of its mining, it was necessary to prevent powerful mining chips from accessing the network.
In 2018, the BTG blockchain was the target of a 51% attack, which resulted in significant losses. In contrast to the SHA256 consensus algorithm used by Bitcoin, BTG employs a variant of the Equihash algorithm.
BTG blockchain developers aimed for decentralization by switching to GPU mining from ASICs. However, the attack on BTG occurred because a single miner controlled over 51% of the network’s hash rate.
Three separate 51% attacks occurred in a single month on the ETC blockchain in 2020. Ethereum Classic, like Bitcoin, had a PoW consensus algorithm. Performing a 51% assault on a large network, such as Bitcoin, is prohibitively expensive due to the massive amount of computational power needed. Due to its lower hash rate, ETC was more susceptible to 51% attacks, however.
What’s more, due to the decentralized nature of ETC, 51% of attacks are difficult to defend against or prevent. According to reports, the hacks did not significantly affect ETC pricing, but they did erode consumers’ trust.
Growing technologies like blockchain are never without their share of risks and flaws. This is precisely why it is important to know things like ‘what is a 51% attack?’, ‘what is the risk of 51% attacks?’, and ‘how a 51% attack works?’. As time goes on, we can expect better security measures to emerge to protect PoW networks against attacks similar to the 51% hacks, but in the meantime, it’s important to stay vigilant and be aware of the risks of the blockchain space!
Frequently Asked Questions
1. Can a 51% Attack Reoccur?
It’s possible that a 51% attack might happen multiple times. The attack can be repeated if the first attacker or another party can regain control of 51% of the network’s hash power. Several attacks are possible against a blockchain if measures are not taken to bolster its security.
2. What’s the Difference between a 51% Attack and a 34% Attack?
In a 51% attack, a group of miners seize control of over 50% of the network’s computing power. As a result, they can perform nefarious actions such as double-spending coins or blocking confirmation of other transactions. Alternatively, a 34% attack occurs when a group of miners takes over more than 34% of the network’s computing power. While this level of control does not provide complete blockchain domination, the attacker may still have the power to approve or disapprove transactions.
3. Who is at Risk of 51% Attacks?
The threat of a 51% attack is greater for smaller blockchain networks. Gaining control of 51% of a blockchain’s hashing power requires less time and resources for smaller chains.
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Last Updated on October 25, 2023