Understanding the “51% Attack”
A “51% attack” occurs when an individual or a coordinated group controls over 50% of a blockchain network’s total mining or hashing power, allowing it to disrupt its integrity.
In a blockchain system, consensus among participants is crucial for confirming and adding transactions.
A malicious actor with majority control can exploit this by manipulating the consensus mechanism, altering the transaction order, or even preventing transactions from being confirmed.
The risk of a 51% attack is higher for blockchains with lower hashing power, as it becomes easier for a malicious actor to acquire the necessary majority computing power.
The more miners and resources dedicated to mining a blockchain, the more secure it becomes.
With its substantial hashing power, Bitcoin is considered the most secure blockchain.
The Cost of a 51% Attack
The cost of executing a 51% attack varies depending on factors such as the blockchain type, the difficulty of the hashing algorithm, electricity costs, and available hash rate.
Generally, the cost of a 51% attack on a blockchain network can range from thousands to millions of dollars.
Possibility of a 51% Attack in Proof of Stake
While 51% of attacks are theoretically possible in proof-of-stake (PoS) networks, they are significantly less likely than in proof-of-work (PoW) networks.
In PoS, an attacker would need to control most of the network’s staked tokens to gain control, whereas in PoW, controlling most of the network’s hashing power is sufficient.
Examples of 51% Attacks in Cryptocurrency
Several notable examples of successful 51% attacks in altcoins include:
- Bitcoin Gold in 2018: An attacker gained over 51% of the network’s hash power, enabling them to double-spend coins and manipulate the blockchain for personal gain.
- Ethereum Classic in 2019: An attacker achieved a 51% majority in hash power, leading to a reorganization of the blockchain, reversal of transactions, and theft of funds.
- Verge in 2018: An attacker gained control of more than 51% of the network’s hash power, allowing them to manipulate transactions and create new blocks on the blockchain.