A 51% attack is a type of malicious attack on a blockchain network, in which an attacker or a group of attackers gain control of 51% or more of the network’s computing power. With this level of control, they can manipulate the network by preventing new transactions from being confirmed, double-spending coins, and reversing transactions. This can result in significant harm to the network and its users, leading to a loss of trust and potentially causing the value of the network’s associated cryptocurrency to plummet.
Understanding a 51% Attack
A 51% attack is a type of attack on a blockchain network where an attacker or a group of attackers control more than half of the network’s computing power. With this level of control, they have the ability to manipulate the network and its operations.
In a blockchain network, transactions are confirmed by nodes, which are computers that work together to validate and add new transactions to the blockchain. In a 51% attack, the attacker has control over a majority of the nodes, allowing them to disrupt the normal functioning of the network.
Some of the ways an attacker can carry out a 51% attack include:
- Double-spending: The attacker can spend the same coins multiple times, effectively counterfeiting the currency.
- Reversing transactions: The attacker can reverse confirmed transactions, allowing them to spend coins they don’t actually have.
- Blocking new transactions: The attacker can prevent new transactions from being added to the blockchain, effectively freezing the network.
Such an attack can have serious consequences for the security and trust in a blockchain network, leading to a loss of confidence and potentially causing the value of the network’s associated cryptocurrency to plummet. This is why blockchain networks aim to maintain a high level of decentralization, making it difficult for any single entity to control 51% of the network’s computing power.
Due to the nature of a decentralized blockchain, and in lack of a central authority to do so, the correct succession of transactions is defined only by the dominating consensus. This leads to the possibility of one actor gaining majority control over the entities deciding said consensus, to force his own version of events, including alternative and double transactions. Due to information propagation delays, 51% attacks are temporarily possible for a localized subset of actors too.
The total computational power of a decentralized proof-of-work system is the sum of the computational power of the nodes, which can differ significantly due to the hardware used. Larger computational power increases the chance to win the mining reward for each new block mined, which creates an incentive to accumulate clusters of mining nodes, or mining pools. Any pool that achieves 51% hashing power can effectively overturn network transactions, resulting in double spending.