What Is a 51% Attack?

Without a doubt, blockchain technology has completely changed the way transactions are carried out, making them faster and easier.

However, there is a significant threat to the security and integrity of blockchain — known as a 51% attack.

What Is It?

A 51% attack occurs when an attacker or group of attackers gains more than 50% of the network's mining power or hashrate.

At its core, blockchain relies on consensus to validate and record transactions. [read more on that here]

So, when an entity possesses over 50% of the network's mining power, it gains the ability to block new transactions, delete or modify the blockchain's existing record, and even 'double-spend' (spending the same coins in two conflicting transactions) ([read more on that here]

Fortunately, despite the power they wield, the attackers cannot alter the number of coins generated, create new coins, or spend others' coins.

It should also be noted, however, that it's not easy but hard and expensive to carry out a 51% attack, especially on large blockchains like Bitcoin and Ethereum.

Why?

Let's take Ethereum as an example.

Ethereum is a PoS (proof of stake network), and at the time of writing, Coinbase reports that there are '31.1M of Ethereum staked.'

So, to carry out an attack, you'd need to have 51% of the staked ETH, which is 15,550,000 ETH = approximately $53 billion (where are you going to get that kind of money from 😅?).

This article gives a better breakdown: [This is How Much You Would Need to Spend to Execute 51% Attacks on Bitcoin and Ethereum].

As seen above, the expense involved in carrying out such an attack acts as a safeguard for major blockchain networks.

However, smaller networks with limited hashrate or stake remain vulnerable, as illustrated by incidents involving Ethereum Classic and Bitcoin Gold.

In August 2020, Ethereum Classic fell victim to a 51% attack, allowing the attacker to double-spend $5.6 million worth of ETC.

Similarly, Bitcoin Gold experienced a 51% attack in May 2018, resulting in the double-spending of approximately $18 million worth of BTG.

Additionally, taking over the blockchain is one thing, keeping it under control is another.

What Do I Mean?

Well, the developers and community of that Blockchain are bound to notice unusual behaviors of the system.

This detection can lead to countermeasures, such as protocol changes (hard forks) or community-driven efforts to resist the attack.

Meaning the attackers might spend a lot of money to take over the blockchain but wouldn't be able to profit from it before control is taken back from them.

How Can It Be Prevented?

Since a 51% attack depends on attackers gaining 51% of the network's stake or hash power, then an approach to preventing it would be to grow the network. The more the hash power and stake, the more expensive it becomes for attackers to take over.

It's even riskier to do this on POS networks because validators are required to lock up a certain amount of crypto as collateral. If any validator is detected engaging in any malicious behavior, their stake could get slashed, resulting in them losing a part of their funds.

And it's a wrap. If you found this breakdown insightful, then you should definitely subscribe to my newsletter for more in-depth discussions on web3 topics.

Image Credit - CyberScope