What is a 51% attack in blockchain?

Although the chances of a successful 51% attack against Bitcoin are very low, small proof-of-work blockchains can be targeted by this type of attack.

Blockchain is considered a secure technology due to its decentralized nature, reducing the risk of single points of failure. However, a 51% attack can compromise the integrity of a blockchain network.

Learn what a 51% attack is, how it works, and notable examples of such attacks.

What is a 51% attack?

A 51% attack is when a single attacker gains control over half or more of the total hashing power of a blockchain network, potentially leading to network disruption.

Proof-of-work (PoW) blockchain networks run on the principle that miners provide hashing or computing power to solve different hashing algorithms and mine new blocks. Mined blocks are approved by a majority of miners through a mechanism called distributed consensus. In this way, no single person or group has a monopoly over the operation of the network.

However, once a single attacker controls more than 50% of a blockchain’s total network hash rate, it can sideline network consensus and perform malicious actions.

Attackers can prevent miners from providing the hashing and computational power needed to mine blocks, creating a mining monopoly. It is also possible for transactions to be reordered, leading to double spending of new coins.

A successful 51% attack can have a severe impact on a blockchain, as it loses useful properties such as immutability and network security.

How does a 51% attack work?

A 51% attack can be planned by controlling more than half of the mining hash rate of the network. An attack occurs when a single entity controls her 51% of the network’s hashing power and uses it to introduce another version of the blockchain.

An attacker selects a current block on a public blockchain and secretly mines a new block on a “fork chain.” Competing chains run parallel to the original chain but do not broadcast blocks to the public blockchain.

Attackers can also collude to prevent miners from seeing new blocks as they add new transactions to the blockchain or remove old ones. In this scenario, there is a possibility of reversing transactions or double spending of cryptocurrencies.

On a large blockchain like Bitcoin, a 51% attack is impossible because it would require a huge amount of computing power to carry out a 51% attack. However, for small blockchain networks with low hash rates, 51% attacks are a potential threat.

Impact of 51% attack on blockchain

A 51% attack could be devastating to a blockchain network and result in significant losses to users who hold its cryptocurrencies. The effects of such an attack are:

• double spending – Malicious attackers can modify transactions or reverse their own transactions, leading to double spending of funds.
• mining monopoly – Prevents other miners from validating blocks and earning cryptocurrency.
• reputational risk – Investors may lose trust in the compromised blockchain, resulting in a sharp drop in the value of the cryptocurrency.
• Transaction delay – An attacker may be able to prevent transaction confirmation.
• Blockchain integrity – DOS attacks can impair blockchain functionality.

Historical examples of 51% attacks

Now let’s look at the most notable example of a successful 51% attack.

bitcoin gold

Bitcoin Gold (BTG) suffered two 51% attacks in 2018 and 2020. In both attacks, the perpetrator modified the original blockchain and hashed over 50% of his power to undo completed transactions. In the first attack he lost his BTG worth $18 million, and in the second attack his BTG worth $70,000 was double spent.

ethereum classic

Ethereum Classic (ETC) suffered a 51% attack in 2019 and Coinbase suspended all ETC transactions. The network suffered three more attacks in 2020, resulting in the loss of more than $5 million worth of his ETC.

final thoughts

Blockchain technology is not without risks. A 51% attack requires a single entity to control more hashing power than all legitimate nodes. Therefore, one way to prevent these attacks is to increase the number of participants in the blockchain network.

The more hashing power a network participant provides, the harder and more expensive it becomes for a malicious attacker to take control of the network. Blockchain networks can also switch to proof-of-stake (PoS) mechanisms, which are considered less susceptible to such attacks.