What is 51% Attack
A 51% attack refers to a situation in which a single entity or group of colluding miners controls more than 50% of the total mining power (hash rate) of a blockchain network. This overwhelming control allows the entity to manipulate the blockchain, enabling them to reverse transactions, double-spend coins, and prevent other miners from confirming their transactions. The term originated from the theoretical implications of decentralized networks, highlighting vulnerabilities that can occur when power is concentrated.
The concept of a 51% attack is most commonly associated with proof-of-work (PoW) cryptocurrencies, such as Bitcoin and Ethereum. While such attacks are theoretically possible, they are extremely difficult and costly to execute in well-established networks due to the substantial computational power required to dominate the mining process.
What are the types of 51% attacks?
There are two primary types of 51% attacks:
Selfish Mining: In this variation, the controlling miner withholds newly mined blocks from the public chain to gain an advantage. They then release those blocks at a strategic moment, allowing them to surpass the competing miners and secure exclusive rewards.
Double Spending: This is the most notorious outcome of a 51% attack, where the controlling miner can spend their coins in one transaction and then reverse that transaction by mining an alternative chain that excludes the original transaction, effectively allowing them to spend the same coins again.
How does 51% Attack work?
To execute a 51% attack, an attacker must possess the computational power of more than half of the network's hash rate. In a PoW system, miners solve complex mathematical puzzles to validate transactions and create new blocks. If an entity can dominate the mining process, they can selectively choose which transactions to include and which to leave out.
Once the attacker has the majority of the hash rate, they can begin to create an alternate blockchain that diverges from the original. By controlling this new chain, they can invalidate transactions that have already been confirmed on the public blockchain. Furthermore, they can generate a scenario where they continue to mine blocks on their private chain while preventing others from doing so, leading to a loss of trust in the network and potential financial losses for users.
Where is 51% Attack used?
Example 1: In 2014, the cryptocurrency Dogecoin experienced a 51% attack, leading to the mining of over 100,000 blocks in a single hour, affecting the network's integrity and trust.
Example 2: In 2018, Bitcoin Gold suffered a 51% attack that resulted in the double spending of approximately $18 million worth of coins, highlighting vulnerabilities in smaller cryptocurrencies.
Example 3: In January 2020, Ethereum Classic faced a 51% attack that led to the double spending of over $1.1 million, prompting discussions about improving network security protocols for lesser-known cryptocurrencies.
