Since the first decentralized blockchain-based cryptomoney (Bitcoin), there have been attempts to take over the network, which is called a “51% attack”.
51% attack refers to an attack on a blockchain – usually bitcoin’s, for which such an attack is still hypothetical – by a group of miners controlling more than 50% of the network’s mining hashrate, or computing power. The attackers would be able to prevent new transactions from gaining confirmations, allowing them to halt payments between some or all users. They would also be able to reverse transactions that were completed while they were in control of the network, meaning they could double-spend coins.
They would almost certainly not be able to create a create new coins or alter old blocks, so a 51% attack would probably not destroy bitcoin or another blockchain-based currency outright, even if it proved highly damaging.
By doing this, the attacker can make a double-spending attack, by which they send coins in the original chain of blocks until they are confirmed, and presumably have received their product or service. Once this has been achieved, the attacker could split the chain of blocks into a pretransaction point, essentially reversing and deleting it.
In addition to reviewing transaction history, such an attacker could also prevent new blocks from being confirmed, almost completely disrupting the network. They will not be able to generate coins out of thin air, change the reward on the block or gain access to other people’s coins, however, a 51% attack has limited use and is likely to be prohibitively expensive to carry out.
51% is just a name, less hash-power would be enough for an attack
Despite its name, the 51% attack scenario doesn’t actually require 51% of the hashing power. In fact, such an attack can be attempted with a smaller percentage of the hashing power. The 51% threshold is simply the level at which such an attack is almost guaranteed to succeed. Security research groups have used statistical modeling to claim that various types of consensus attacks are possible with as little as 30% of the hashing power [ref].
Examples of attacks
Because of the enormous amount of computing power required to successfully execute an attack on a well-established block chain, these types of attacks are often limited to smaller coins, with a limited number of miners involved in their hash network. Often, one or more test attacks against a similar crypto or testnet are carried out before efforts are finally directed at its primary target.
One of the first examples of a successful majority attack was carried out against CoiledCoin, a Bitcoin clone, with some additional features. They were attacked by Luke-Jr., using Eligius’ mining group. At the time, Luke-Jr stated that the attack was aimed at shutting down possible pyramid schemes that tarnished Bitcoin’s reputation, while indicating that future scams would be subject to the same fate.
In addition to CoiledCoin, projects such as Terracoin, Feathercoin, and many others have been the victims of a majority attack. One of the most prominent examples of this was against the Krypton network, which underwent a less common attack, using a new dual approach, combining majority hash power with distributed denial of service (DDoS) to existing nodes, to artificially increase the relative hash power of the attacking party.
During this attack, about 21,000 KR were stolen from the Krypton block chain, which was sent to Bittrex and exchanged for Bitcoin, after which the attackers reversed the transactions by rolling back the block chain, before escaping with the coins.
Most recent attack on Verge blockchain
Verge, a ”privacy coin” famed for the zealotry of its community, has fallen prey to a 51% attack. A malevolent miner gained majority control of the network hashrate, a feat that makes it possible for the controlling entity to modify transactions, calling the integrity of the entire blockchain into question. Around 250,000 verge were stolen by the attacker, forcing the project team to prepare a hard fork.
Is Bitcoin vulnerable?
Because running a successful 51% attack on a large block chain requires massive amounts of hash power, you might think it would be almost impossible to threaten the Bitcoin network, but it’s not.
In fact, many mining groups have come close to the power needed to successfully launch a 51% attack. In July 2014, GHash.io, then one of Bitcoin’s most popular mining groups, managed to exceed 51% of the total hashing power of the Bitcoin network.
This led many to believe that a majority attack was imminent. However, in response to this controversy, GHash.io issued a voluntary statement promising not to exceed 39.99% of total hash power in the future and asked other mining groups to commit to a 40% hash limit to protect the long-term safety of the block chain.
Today, there is a much larger selection of mining groups, ensuring that the hash power is more widely distributed. Bitcoin’s largest group is currently BTC.com, which accounts for 25.9% of the network, while AntPool ranks second with 16.9%.
Although both are controlled by Bitmain, even the combined number is certainly too low to consider an attack. The perspective is similar with Ethereum, where Ethermine, the largest group, represents about a quarter of the number of blocks extracted. It should be noted that with less than 50%, you can still mount an attack, but it is unlikely to succeed.
However, the 51% attacks are of little threat to well-established cryptocurrencies and are likely to continue to disappear in the dark as decentralization increases.
However, they continue to pose a significant threat to new currencies, especially if the attack continues for a significant period of time, where changes in the chain of blocks may become irreversible.
The tangle, a distributed ledger that is fundamentally distinct from a blockchain but designed to accomplish similar goals, could theoretically succumb to an attacker deploying over a third of the network’s hashrate, referred to as a 34% attack.
What about PoS
The Proof of Stake consensus mechanism is also less susceptible to this type of attack as purchasing over 50% of all the coins available on a network is generally much more expensive than trying to gain 51% of the hashing power. In addition, any individual with an immense stake in any network would essentially be risking their own holdings by attacking the network in order to cause it to critically malfunction.