Have you ever heard of a 51% attack? There are so many different types of attacks that blockchains and cryptocurrencies can face. However, in this article, we will go through a 51% attack, what it is, how people complete it, and what the implications of a 51% attack would be. Let’s get started!
Before talking about a 51% attack, it is necessary to understand blockchain. Blockchain is a digital distributed ledger that is used to record all cryptocurrency transactions in a secure and tamper-proof way.
What is a 51% Attack?
A 51% attack is a type of attack on a blockchain network that allows a malicious actor to take control of the blockchain. In a 51% attack, an attacker or group controls more than 50% of the network’s mining power, breaching its security. It allows them to double-spend coins, prevent new transactions from being confirmed, and reverse already confirmed transactions.
How does 51% Attack Work?
In 51% attacks, the attacker or group of attackers use their computing power (the computers ability to perform work) to control more than half of the network. The control of more than half of the network’s nodes enables the controlling parties to modify the blockchain. A node is any device connected to the blockchain, including a phone, laptop, PC, or server.
That would allow the attackers to mine faster, prevent certain transactions from being confirmed, and reverse transactions they send. While a 51% attack would be catastrophic for Bitcoin and other blockchains, it is essential to note that such an attack is complicated and very expensive.
51% Attack- Extremely Expensive Work
A 51% attack is expensive work. It would cost a lot of money to buy enough mining equipment to control more than half of the network. Additionally, the attacker would need a lot of money to pay for the electricity required to run all of the mining hardware.
To give you some examples of how expensive it can be, let’s first understand the most expensive and advanced miner that has a 255 (TH/s) hash rate- S19 XP Hyd by Bitmain. If you want to buy this, it will cost you around $19k.
If you want to perform this attack for any reason, you would need more than 400000 S19 XPs, costing you around 8 billion dollars. Yes, it’s a lot of money, but it does not end here. You will also need to consider the electricity required to make the attack successful, maintenance, labor, cooling cost, and much more.
Requires Accurate Timing
That is another factor the attackers must consider while doing the 51% attack. They need to time their attacks perfectly so they can control more than half of the network long enough to do the damage but not so long that it becomes too expensive.
For example, if an attacker controls 51% of the network for just a few hours, they may be able to double spend some coins. However, if they try to control the network for too long, it will become too expensive, and they will likely not be able to profit from the attack.
Despite having a majority of the network hashrate, It may not be possible for the attacker to match the block creation rate. Or insert their chain before the rest of the ‘honest’ blockchain network creates valid new blocks.
What if A 51% Attack Becomes Successful in Bitcoin?
If this happens, the attackers can double-spend their coins, reverse transactions, and prevent the latest transactions from being confirmed. That would lead to a loss of confidence in the network. And likely result in a decrease in the value of the coins.
Not only this, but if a 51% attack happens and becomes successful, it will have a terrible effect on the Bitcoin blockchain and the whole crypto network. It is because all of the altcoins are highly dependent on BTC. The investors will lose their trust and confidence, resulting in the fall in the prices of all digital assets.
It would also lead to a loss of confidence in blockchain technology and potentially to stricter regulations. That would be a significant setback for the blockchain industry as a whole.
Effects of 51% Attacks
There are many variables in 51% attacks and many different consequences. We will take a look through what some of those effects:
The transactions will be delayed
In a 51% majority attack, the malicious actors can prevent new transactions from being confirmed. That would cause a backlog of unconfirmed transactions, which would lead to delays in the network.
Not only can attackers prevent new transactions from being confirmed, but they can also reverse transactions that have already been confirmed. That means that the attackers could steal any coins that have been sent during the attack. This can cause double spending of coins.
Reduced miner rewards
The network will destabilize if an attacker successfully performs a 51% attack. That would likely lead to a reduction in other miners’ rewards as the attackers steal their share, the network would be less secure, and also as the result of double-spending.
How could a 51% Attack be Prevented in Bitcoin and Other Blockchains?
The best way to prevent such attacks is for the Bitcoin network to continue growing in both hash rate and overall network security. As the network gets more prominent and decentralized, it becomes more and more secure against attacks.
Also, the blockchain networks can use POS( Proof Of Stake) to discourage 51% attacks. It is a less power-intensive and more decentralized consensus mechanism, making it more difficult for an attacker to control most of the network.
Is 51% Attack Possible on Bitcoin and Ethereum?
As we said, it is not impossible but will be very expensive and need a lot of money. That is why we will not see such attacks on the Bitcoin blockchain and ETH. Who would spend more than $8 billion only on equipment for the attack without being 100% sure that it will be successful?
However, such attacks sometimes happen on small blockchains like bitcoin gold and other small cryptos.
51% attack is a severe issue and could have devastating consequences for any blockchain network. However, it has a meager chance of happening, especially on significant blockchain networks. Therefore, it is not a big threat to Bitcoin and Ethereum. I hope this article helped you understand the 51% attack better. Thank you for reading.