A 51% attack on a blockchain-based network is a specific sort of attack that enables a malicious actor or organization to control more than 50% of the network’s total hashing power, possibly leading to network instability.
In this post, we will further discuss what a 51% attack in crypto is, its consequences, blockchains affected by it and how to prevent it.
What is a 51% Attack in crypto?
When an attacker successfully seizes control of more than half of a network’s total mining power, it is referred to as a 51% attack, also known as a majority attack.
This enables the attacker to control or interfere with the network. Although a 51% attack on any blockchain is theoretically feasible, the bigger and more decentralized the network, the safer it is.
Notwithstanding, a 51% attack may still happen on even the most secure blockchains. If a coin’s mining hash rate is higher than the network’s, it is often immune to a 51% attack.
How does a 51% Attack in crypto work?
A mining pool is a collection of individuals that collaborate to mine difficult-to-mine cryptocurrencies such as Bitcoin and Ethereum.
A mining pool typically has hashing power that ranges from 10% to 50% of the network’s total hashing power for a certain cryptocurrency. This indicates that they lack the hashing power necessary to launch a successful attack on a network.
Take Bitcoin, which has a mining hash rate of 11,000,000 TH/s, as an example. Let’s imagine you want to launch a 51% attack against Bitcoin as an attacker. A mining pool with more than 50% of the network’s total hashing power is what you should look for.
You will then need to acquire ownership of the mining pool’s servers in order to control the mining pool. Once you take possession of the servers, you will be in charge of more than 50% of the network’s hashing capacity.
When this situation occurs, it is referred to as a 51% attack on such a blockchain network.
Blockchains that have experienced a 51% attack
Some blockchain networks have experienced the phenomenon of a 51% attack including:
- Ethereum Classic
- Bitcoin Gold
Over the last several years, there have been many 51% attacks against Vertcoin. In the course of the attack, the attacker’s written blocks were substituted for the original Vertcoin blocks.
2020 saw three consecutive 51% attacks on the ETC blockchain in the same month. Like Bitcoin, Ethereum Classic employs the PoW consensus mechanism.
For the first time ever, a 51% attack on the BTG blockchain resulted in significant losses in 2018. BTG had yet another 51% attack in 2020.
A cryptocurrency blockchain called GRIN, which focuses on anonymity, was subject to an attack in which an unidentified miner amassed more than 57% of the entire hash power.
Other blockchain systems that saw a 51% attack included Hanacoin (HANA), Verge (XVG), Expanse (EXP), and Litecoin Cash, according to the MIT Media Lab’s Digital Currency Initiative (DCI).
Effects of a 51% Crypto Attack
Although advantageous to the hacker, a 51% attack has some disadvantages on the blockchain and cryptocurrency which may include:
- Double spending
- Blockchain reliability concerns
- Creating new coins
- Transaction errors
- No mining reward
- Fake transaction
Double spending is when a malicious actor tries to send the same coins to multiple people at the same time. This hurts the reputation of the coins being used as payment as they are not secure.
Blockchain reliability concerns
A 51% attack raises severe questions regarding a blockchain’s dependability, security, and trustworthiness.
Creating new coins
If a malicious actor were to control 51% of the total hash power of a network, they would be able to create new coins out of thin air. This hurts the value of the coins being mined because fewer people would be interested in purchasing them.
Typically, the malicious attack stops new transactions from being confirmed and reverses already-completed transactions.
No mining reward
A 51% attack robs other miners of the reward for mining a cryptocurrency. Genuine miners get less compensation for updating the blockchain during a 51% attack since the attackers grab their shares from them.
If a malicious actor were to gain control of 51% of the total hash power of a network, they would be able to create new blocks on the blockchain, including fake transactions. This could disrupt the ability of businesses to run.
How to detect a 51% Attack in crypto
If you suspect that a 51% attack is occurring against a crypto or blockchain network, You can detect the 51% attack is taking place in the following ways:
- The speed at which new blocks are being added to the blockchain has decreased.
- The difficulty of mining has increased, which is usually a result of new blocks being created on the blockchain.
- Large transactions are not being added to the blockchain, but smaller blocks of transactions are being added.
How to prevent a 51% Attack in crypto
There are a number of different ways to prevent a 51% attack from taking place, but keep in mind that if a malicious actor manages to gain control of more than 51% of the network’s hashing power, there is nothing that can be done to prevent the attack.
Some of the ways to prevent a 51% attack include:
- Make sure that the network you are mining on has more mining power than the network’s hashing power. This will help to prevent a 51% attack from taking place.
- Make sure to use a trustworthy mining pool. There are many mining pools that will not be able to prevent a 51% attack from taking place. –The best way to protect against a 51% attack is to keep your crypto in a safe place, like a hardware wallet, and to only transact with people you trust.
- Diversify your holdings across different exchanges and wallets, and monitor the hash rate of the network.
- Ascertain that no one organization, a team of miners, or even a mining pool has influence over more than 50% of the network’s hashrate or the entire quantity of staked tokens.
- Blockchains should use the Proof of Stake (PoS) technique instead of Proof of Work since it provides a more secure consensus (PoW).
Even while 51% attacks are relatively infrequent, they pose a major risk to the security of any blockchain, therefore all cryptocurrency users need to be aware of them.
You must ensure that the network you are mining on has greater mining power than the network’s hashing power in order to avoid a 51% attack.