What Is a 51 Attack in Blockchain?

How Does a 51 Attack Work?

A 51 attack blockchain is when one party (a group of miners or a single miner) gains control of more than half of the network’s processing power on a blockchain, allowing it to disrupt the normal functioning of that network. This attack is most common in Proof-of-Work (51 attack proof of work) consensus blockchains, where miners solve complex math problems to validate new blocks and add them to the chain.

Here’s how it works:

1. Gaining the majority of computing power. Attackers need to get hold of more than 50% of the network’s hash rate. This can happen by pooling the resources of large mining pools or by creating a centralized group of miners.
2. Hashrate and block and transaction manipulation. With most of the hashrate, attackers can begin to build their own “alternative” version of the blockchain. This version will contain certain blocks and transactions that attackers want to hide or alter. For example, they can do a “double-spend” – conduct a transaction and then delete it by rewriting the blockchain.
3. Blockchain rewriting. A node is a node in the network that stores a copy of the entire blockchain and participates in its verification and synchronization. As the alternate chain grows, attackers can make it longer than the main chain and present it to the nodes of the network as the “true” chain. According to blockchain rules, nodes will usually recognize the longest chain as the master chain. As a result, the network will accept the manipulated version of the blockchain.
4. Double-spending and other threats. With the 51% attack, attackers can spend the same cryptocurrency twice, undermining trust in the system. They can also block other users’ transactions by interfering with the process of adding new blocks.
5. Limitations and risks of the attack. It is worth noting that while attackers can rewrite blocks and manipulate transactions, they cannot change the rules of the network, such as creating new coins or managing other people’s assets. In addition, conducting a 51% attack on large networks such as Bitcoin or Ethereum requires enormous resources and becomes almost uneconomical.

The High Cost of 51 Attack

A 51 crypto attack on large blockchains is almost unfeasible due to the enormous cost of its implementation. To capture more than half of the network’s power, an attacker would need millions of dollars in hardware and energy, making such attacks uneconomical. Moreover, a successful attack can collapse the value of cryptocurrency due to loss of user trust, devaluing the profits made. On top of that, attackers risk facing legal repercussions. As a result, a 51 percent attack is unlikely for large networks, but poses a threat to smaller blockchains with lower costs of execution.

Risks and Consequences of an Attack 51%

A 51% attack could have serious consequences for the blockchain and its users as it undermines key principles of security and decentralization. The main risk of the attack is the possibility of double-spending, where an attacker makes a transaction and then rewrites the history of the blockchain, removing it from the registry and transferring the funds back into their account. This results in financial losses for network participants, as users may receive unconfirmed, canceled transactions. In addition, the attacker can block or delay other users’ transactions, creating a kind of centralized control over the network, which goes against its decentralized nature.

In addition to financial losses, a 51% attack causes an erosion of trust in the network and can significantly reduce the value of the cryptocurrency. Once users and investors see that the network is vulnerable to such attacks, they may lose confidence in its reliability, leading to capital outflows and a drop in the market price of the asset. As a result, not only those directly involved in the attack suffer, but also all owners of the cryptocurrency whose value declines. In the long term, a 51% attack can undermine the reputation of the blockchain and its project, resulting in the loss of partnerships, support from developers, and, ultimately, a decrease in the practical value of the network.

51 Attack: Example

Let’s look at cases of 51% attacks on various blockchains.

Ethereum Classic

One of the most famous examples of a 51% attack is the Ethereum Classic (ETC) cryptocurrency incident in January 2019. In the attack, the attackers gained control of most of the network’s processing power, allowing them to conduct several double-spending transactions totaling about $1.1 million. They sent the transactions to multiple exchanges and then rewrote the blockchain history, canceling the original transactions and returning the funds to themselves.

This attack caused serious problems: exchanges suspended withdrawals for Ethereum Classic and users lost trust in the network, which affected the market price of ETC. The incident showed how vulnerable blockchains with a relatively small hash rate can be, and highlighted the importance of security and decentralization to prevent such threats.

Bitcoin Gold (BTG)

In May 2018, Bitcoin Gold suffered a 51% attack that resulted in a double-spend of approximately $18 million dollars. Attackers used powerful rented equipment to capture more than half of the network’s hashrate and sent transactions to exchanges and then rewrote the block history, canceling transfers and returning funds. This hack highlighted the vulnerability of blockchains with fewer miners.

Vertcoin (VTC)

Vertcoin was hit by 51% attacks several times in late 2018. Attackers were able to create a parallel chain and conduct double-spend transactions. The Vertcoin network had to survive several attack attempts in a short period, which negatively affected the project’s reputation and ecosystem.

Grin (GRIN)

In 2020, the Grin blockchain, which uses a Proof-of-Work algorithm based on the Mimblewimble protocol, was also attacked. The attackers gained control of more than 50% of the network’s power and used it to manipulate blocks and transactions. This incident again demonstrated that less secure, low hash rate networks are particularly vulnerable to attack.

How to Prevent 51 Attack in Blockchain?

Preventing a 51% attack requires a comprehensive approach that includes strengthening the security and resilience of the blockchain network. Let’s take a look at the main ways that can help reduce the risk of an attack.

Change of Consensus Algorithm

Switching to a consensus algorithm less vulnerable to 51 attack: Proof of Stake (PoS) or its modifications, can improve network security. PoS requires cryptocurrency assets rather than computing power to participate in the consensus, making attacks less likely and making it less cost-effective to seize control of the network.

Delaying Blockchain Confirmations

Introducing a delay in transaction confirmations can help reduce the risk of double-spending. The additional number of confirmations allows the network to detect and prevent attempts to manipulate transactions, which is especially relevant for smaller blockchains that are more vulnerable to attacks.

Penalty System

Implementing a penalty system can be an effective defense against attacks. In PoS networks, attackers who violate the rules of the network can lose a portion of their steaks, making the attack uneconomical and reducing the incentive for attackers.

Blockchain Protocol Audit

Regular protocol audits help identify vulnerabilities in the network before they are exploited by attackers. Technical analysis of the blockchain’s structure and processes allows you to address potential weaknesses in a timely manner.

Secure the Entire Architecture of Your Protocol with Blockchain Security Audit

Smart contracts are one of the key elements that are examined in a comprehensive security audit of the blockchain architecture. Conducting such an audit not only uncovers potential vulnerabilities, but also improves the overall resilience of the network to attacks. The audit covers all elements of the system, from smart contracts to consensus mechanisms, and helps minimize risks to the blockchain.

The Limitations of 51 Attack Crypto

While the 51% attack allows an attacker to cause significant damage, it does not give them the ability to undo other users’ transactions, create new coins, or steal other people’s funds. Additionally, the older a transaction is, the harder it is to tamper with it, as it would require mining more and more blocks. This is why securing transactions on the Bitcoin network usually requires a minimum of 6 confirmations before final processing.

Is a 51% Attack on Bitcoin Possible?

To know if a 51% attack on bitcoin is possible, you must first imagine what is bitcoin. Bitcoin has the largest and most decentralized blockchain in terms of security and processing power. A 51 bitcoin attack is theoretically possible, but in practice it is extremely unlikely due to the sheer cost and complexity. To capture more than half of the network’s hash rate, an attacker would need a colossal amount of computing resources and electricity, which is estimated to cost hundreds of millions of dollars. In addition, even if such an attack succeeds, its economic benefit is questionable: success could cause the price of bitcoin to collapse, depriving the attacker of the expected profits.

In addition, decentralization and mining have the effect of making the network less vulnerable to such attacks. The Bitcoin blockchain also utilizes confirmation delays (6 confirmations) to protect against manipulation of recently added blocks. Thus, while the possibility of a Bitcoin 51 attack theoretically exists, the costs, reputational and legal risks make a Bitcoin 51 blockchain attack practically infeasible for Bitcoin.

The Bottom Line

Attack 51 in simple terms is a serious vulnerability that undermines trust in blockchain networks, but it is not an imminent threat. Networks with a high degree of decentralization and a smart approach to security continue to protect their assets from attackers. That’s why it’s important for investors and users to choose blockchains carefully and understand the security measures in place for the networks they plan to operate.