Key Takeaways
- A 51% attack occurs when an entity gains control of more than 50% of the mining power in a blockchain network.
- The attacker can censor transactions, conduct denial of service attacks, or engage in selfish mining to maximize their rewards.
- The strength of blockchain networks lies in their communities’ collective trust and participation.
You have probably heard people in the crypto space mention the 51% attack. This concept is fundamental to the security of the blockchain. With fiat currencies, you can spend your money once and only once. When you hand someone your cash, you can never spend it or get it again. However, with cryptocurrencies, you may hear that some attackers can spend their coins twice, known as the “double spending” problem.
Is it possible for someone to do this? And if it is, then how can it be done? In this article, you will learn what a 51% attack is and how it happens. We will also explain what the attacker can and cannot do with this attack. Finally, we will discuss why this attack is almost impossible on big networks like Bitcoin.
What Is A 51% Attack?
A 51% attack occurs when an attacker owns or gains control of 51% or more of all the mining power on the network. This means that he/she has to have more mining power than all the other miners on the network combined.
For example, if the total hash rate of all honest miners on the Bitcoin network is 300 EH/S (Exahash per second), then the attacker needs miners with a combined hash rate of approximately 315 EH/S, which makes the total 615 EH/S, with the attacker controlling approximately 51% percent.
Remember that it does not have to be precisely 51%; the attacker just needs to control the majority of the mining power, as this will guarantee that he/she will be faster than the rest of the network in finding the correct hashes. That is why it is sometimes called a “majority attack.”
How It Actually Happens
Now, every blockchain needs most members to agree that transactions are valid. The word “majority” basically means “anything over half” or anything over 50%.
To take control of a blockchain, you have to control half, or 51%, of its members. Once you have that, you could become a dictator and multiply your crypto holdings with each new block, and no one could stop you.
What The Attacker Can Do
One thing the attacker can do here is prevent the confirmation of transactions from specific addresses. When the attacker produces blocks, he/she gets to choose which transactions he/she wants to include in the block, so he/she can easily censor transactions.
The attacker can also prevent all transactions on the network from being confirmed. To do this, he/she can mine empty blocks with no transactions. This is known as a Denial of Service (DoS) attack, and it may be used to break trust in a network, not to profit from it.
The third is if the attacker wants to profit without attacking the network, he/she can do this by “selfish mining.” What happens is that the attacker will mine blocks normally, but he/she will not announce them to the network and will leave the other miners thinking that they are getting their block rewards.
Because the attacker is faster, he/she has a higher chance of finding the correct hashes for the following blocks faster than all the other miners combined. So he/she can build his/her private chain faster. Once it is longer than the public chain, he/she announces it to the network to collect all the mining rewards for all these blocks so it will be accepted. As for the other miners, their work is wasted, and any block rewards they receive will be reversed in the new blockchain as they will go to the attacker.
What The Attacker Cannot Do
First, the attacker cannot withdraw new coins anywhere; he/she can only double-spend his/her coins or earn the block rewards.
Also, the attacker cannot steal coins from other users. For example, he/she cannot transact from your account to the attacker’s account to steal your coin. Any transactions included in the block need to be legitimate, and for a transaction to be legitimate, it must be signed with your private key.
Finally, the attacker cannot reverse other users’ transactions in very old blocks as these transactions have already been confirmed, and it is virtually impossible to reverse them. The only transactions that may get reversed are those in the blocks mined by other miners while the attacker was building his/her private chain.
Costs
At the time of writing, it is estimated that a 51% attack on Bitcoin would cost over $90 billion. This number is calculated by determining the network’s computing power and then dividing that by the cost of each computer.
The math is even more straightforward for Proof of Stake (PoS) chains like Ethereum and Solana. All you have to do is look at how much ETH or SOL is currently staked and assume you need more than that to control the network.
Can Governments And Corporations Control The Bitcoin Network?
Although these are vast amounts of money, you are probably thinking that governments or even some corporations like Apple or Microsoft could probably afford this. But why have they yet to attack Bitcoin?
It turns out that controlling a coin has a very negative impact on its price. Realistically speaking, why would anyone ever use Bitcoin again if the US government or some central entity controlled it?
Once the community is gone, the currency’s value will fade to nothing, and all the money spent on attacking it will be wasted.
Keeping the blockchains running smoothly is generally more profitable than destroying them. That idea of mutual prosperity is the best defense against the 51% attack.
Final Thoughts
We hope you learned what you need to know about the 51% attack. As the biggest blockchain network, Bitcoin is considered resilient to attacks and the most secure and reliable cryptocurrency. An attack would still be possible on Bitcoin, although nobody has ever succeeded in taking over the cryptocurrency.
