What is 51% Attack?

Decentralized cryptocurrencies can still be controlled by more than one person, but it is very expensive and nearly impossible to make money doing this.

What Does the 51% Attack Mean?

A 51 percent attack is an attack on the blockchain by miners who control more than 50 percent of the network’s hashrate or computing power.

After that, attackers can stop new transactions from being confirmed, which means they can stop payments between some or all blockchain users. They can also undo transactions that happened while they were in charge of the network. This means they could “double spend” the tokens (steal, pick them up in the middle of a transaction and use them again for another transaction).

Most likely, a 51 percent attack won’t give attackers the power to make new tokens or change old blocks. This means that a 51 percent attack probably won’t make Bitcoin or other blockchain-based currencies disappear on its own, even though it can do a lot of damage to the attacked cryptocurrency.

Also, getting control of 51% of a network doesn’t really mean that the network has been taken over. This is just the point where you are more likely to succeed. In fact, this kind of attack could be tried with much less control over the network, but it would be much harder to get rid of this effect.

The more transactions have been done on a blockchain in the past, the safer it is against these kinds of attacks. In a real situation, an attacker will only be able to change transactions in blocks that have already happened. It also wouldn’t be able to make new tokens out of thin air, except for the ones that are usually given out as block rewards.

51% Attack Examples

In the past few years, there have been a number of 51 percent attacks. Here are some of the most important ones:

Ghash.io

In July 2014, the Ghash.io mining pool used more than 50 percent of Bitcoin’s computing power for a short time. This led the pool to try to reduce its share of the network on its own. The statement said that it will not reach 40% of the total production in the future.

Shift and Krypton

In August 2016, 51 percent attacks were made on Krypton and Shift, which are both based on the Ethereum blockchain.

Verge

Verge is a “private token” whose community is known for being very active. It was hit by a 51 percent attack when a malicious miner took control of the network’s hashrate, which made it possible to control and change transactions. The attacker took about 250,000 tokens, which meant that the project team had to get ready for a hard fork.

Potential Solutions

A solid defense against a 51 percent chance of an attack can be built on a network with more individual miners that is more decentralized. ASIC-resistant algorithms can be used by large groups of miners. Cryptocurrencies that can be mined with a CPU also have ways to protect themselves from 51 percent attacks.

This type of attack is also less likely to work on the proof-of-stake system. This is because it usually costs a lot more to buy more than 50 percent of all coins on the network than to try to control 51 percent of the power.

Also, if you have a lot invested in a network, attacking it puts your own investments at risk.

Can It Happen to You?

This is an interesting idea because, in theory, an attack like this could happen. The blockchain network is free and open, so if someone has enough computing power (which would be very expensive on its own), there would be no way to stop them from taking over. If such an attack were to work, which is unlikely, it is likely that the currency’s credibility would be hurt and its value would drop quickly.

It is possible for a 51 percent attack to happen, especially with the growth of mining pools (groups of people who act together as a unit). But the actual damage that could be done would be very small, though it would be enough to cause a panic that would hurt bitcoin’s ability to work as a currency. At the current level of network development, even big governments would have a hard time attacking 51 percent without a lot of trouble.