A 51% attack, which can infect and control more than 50% of the processing power in blockchains, particularly in Proof-of-Work (PoW) cryptocurrencies, is considered an alarming issue among the important blockchain vulnerabilities. While the transformation to Proof-of-Stake (PoS) has reduced the chances of 51% attacks, the likelihood of such events remains possible.
This article will guide you through the working mechanism of a 51% attack. We will delve into previous examples and check ways to prevent it. Let’s begin.
What Is A 51% Attack?
Since the launch of Bitcoin and Blockchain technology in 2009, proof-of-work (PoW) has been the consensus mechanism that secures the ecosystem without any central authority. PoW works by virtual miners solving a puzzle (hash algorithm) to verify transactions.
A PoW blockchain can only be manipulated by miners who alter the transactional hash power. If a miner controls more than 50% of the hashing power, he can prevent confirmation transactions or start double-spending. This is usually referred to as a 51% attack.
How Does a 51% Attack Impact the Blockchain?
51% of attackers can send the same coins to multiple addresses, resulting in double-spending. They can also secretly mine new blocks and validate them to aid fake transactions. Finally, they can overload the blockchain with new transactions, ultimately crashing it.
A common misconception is that 51% of attackers can get 100% control of the blockchain network. Beyond blocking confirmations and igniting double-spending, attackers cannot manipulate any further. They won’t be able to reverse the transactions or create fraudulent transactions. They cannot steal coins from other crypto wallets or create new ones.
Real Examples Of 51% Attacks
PoW’s security relies on the belief that attackers can’t gain 51% control in a decentralized system. However, there are various incidents where the attacks have happened. A 51% attack is 100% real when we consider low-cap tokens without a distributed mining system. Let’s check some examples.
Ethereum Classic (ETC)
During 2019 and 2020, there were around 5 attacks on the ETC blockchain. The attackers targeted exchanges that traded ETC, and millions of dollars were lost.
Bitcoin Gold (BTG)
Bitcoin Gold, the hard fork of Bitcoin, witnessed a 51% attack in 2018. The attackers looted more than 18 million dollars and those funds were never recovered. Again, an attack was organized in 2020 but was quickly blocked by the community.
Bitcoin SV (BSV)
In 2021, BSV, another hard fork of Bitcoin, suffered multiple 51% attacks. The perpetrators took control of the network and the network never recovered from it.
How to Prevent a 51% Attack?
To execute a 51% attack, a user should get power over more than 50% of the mining hash, transforming the decentralized ecosystem into a centralized one. The blockchain community should enhance decentralization and diversify the hashing power to prevent this. They should ensure that the mining power is distinctively distributed.
Another way to prevent a 51% attack is to upgrade the consensus mechanism into Proof-of-Stake. The attacker should HODL 51% of the tokens to organize an attack, which is nearly impossible in a decentralized PoS system. Also, blockchain devs should employ clever algorithms to block any sort of attack.
Final Thoughts: 51% Attack and the Future of Blockchain Technology
To become an industry that guarantees 100% security, the blockchain environment should get rid of all these vulnerabilities. Although these concerns have been lessened by the switch to more modern consensus techniques like PoS, maintaining the integrity of blockchain networks requires constant attention to detail and development by the developers.
We can hope that the blockchain realm achieves security and stability in the coming years, aiding it to spread its usage to serious and critical fields such as medicine and governmental affairs.
