Tanahub.com — Blockchain is known as a secure technology that is difficult to manipulate. It is designed to operate in a decentralized manner, meaning no single entity has full control over the network. However, despite its robust security, blockchain still has vulnerabilities. One of the most significant threats is the 51% attack, which is considered one of the most serious security issues in the blockchain ecosystem.
What is a 51% Attack?
A 51% attack occurs when an individual or group gains control of more than 50% of the total computational power (hashing power) in a blockchain network that uses Proof of Work (PoW) as its consensus mechanism.
In a PoW blockchain, transaction validation and block addition are carried out through mining, which utilizes computational power. If a single party holds the majority of the hashing power, they can manipulate the network and tamper with the data on the blockchain.
This attack allows the perpetrator to dominate the mining process, manipulate transactions, and even reverse confirmed transactions.
With majority control, attackers can falsify data on the blockchain, creating an “alternative version” of the network, often referred to as a fork. This undermines the integrity and trust in the targeted blockchain.
How Does a 51% Attack Work?
To understand how a 51% attack works, it’s essential to first grasp how PoW-based blockchains operate. In a PoW network, miners validate transactions and add new blocks to the blockchain by solving complex cryptographic puzzles.
Miners compete independently to solve the puzzle, and the first to succeed earns the right to add a new block to the chain.
Under normal conditions, miners compete fairly. However, if one entity or group gains control of more than 50% of the network’s computational power, they can change the rules.
With majority computational power, attackers can create an alternative blockchain that is longer than the original chain. Since blockchains treat the longest chain as the valid one, the fake chain replaces the original.
By controlling the majority, attackers can reverse transactions by creating a new chain that omits those transactions. This enables them to spend the same cryptocurrency twice, a phenomenon known as double-spending.
Additionally, attackers can block specific transactions, halt network activity, or monopolize mining rewards by ensuring they are the only ones adding new blocks.
Example of a 51% Attack
Imagine a small blockchain called CryptoChain, used by a local community for transactions with a digital currency named CCoin. Sentot wants to buy a refrigerator from Bangbang for 20 CCoin. After they agree, Sentot sends Bangbang 20 CCoin as payment.
Once this transaction is confirmed by miners and added to a new block, Bangbang sees his wallet balance increase by 20 CCoin. Confident that payment has been received, Bangbang delivers the refrigerator to Sentot.
However, Sentot is part of a group of attackers controlling the majority of CryptoChain’s computational power. He immediately starts creating an alternative blockchain to conduct a double-spending attack.
The attackers copy all the blocks up to the block before the transaction with Bangbang. In their fake chain, they exclude the 20 CCoin transaction. Using their superior computational power, the attackers mine blocks faster, making their fake chain longer than the original.
As the longest chain, the fake chain becomes the valid one, erasing Sentot’s payment to Bangbang from the blockchain’s record.
In the fake chain, Sentot’s wallet retains the 20 CCoin, while Bangbang loses the coins. Bangbang is left with neither the money nor the refrigerator. This is a classic example of double-spending.
Attackers can also manipulate other aspects, such as systematically blocking certain transactions. For instance, they could prevent Bangbang from sending CCoin to anyone, effectively freezing his activity on the network.
Impact of a 51% Attack on Blockchain
A 51% attack severely impacts the integrity and trustworthiness of a blockchain. Users lose confidence that their transactions are secure and immutable.
Double-spending, a primary consequence of such attacks, can result in significant losses for users and businesses that accept cryptocurrency payments.
Blockchains targeted by these attacks may suffer reputational damage within the crypto community. The value of assets within the network typically plummets as investors lose trust in the network’s security and stability.
This is especially true for smaller or newer blockchains with limited miners and computational power. In contrast, large blockchains like Bitcoin or Ethereum are more resistant to such attacks due to the immense computational power and resources required to control their networks.
How Do Blockchains Prevent 51% Attacks?
To mitigate the risk of 51% attacks, blockchains employ several strategies to enhance network security:
- Increased Decentralization: The more miners participating in the network, the harder it is for any single entity to gain majority control.
- High Hash Rate: Large blockchains like Bitcoin rely on extremely high hash rates, which make 51% attacks prohibitively expensive and resource-intensive.
- Transition to Proof of Stake (PoS): Some blockchains are moving away from PoW to PoS or its variants. In PoS, network control is determined by the amount of cryptocurrency staked by validators, making 51% attacks far more challenging, as attackers must own the majority of the network’s assets.