A 51% attack is the term for the only possible way to ‘hack’ a cryptocurrency blockchain. If you don't know what blockchain is and how it works, we recommend reading our other material available here. Without understanding the basics, it will be hard to understand what is written below.
In this article, we explore the 51 percent attack - what it is, how it is carried out, and how likely it is to commit such an attack on the Bitcoin blockchain.
Bitcoin's most important advantage lies in the blockchain, the technology that ensures the functioning of its network. It is distributed and decentralized. No organization or individual user can control the network and the transactions that are carried out.
It is not possible to perform changes to blocks already added to the chain. The point is that block data is stored on all computers connected to the network. Therefore, if you tamper with a block on one or more computers, it will make the entire chain incorrect, resulting in it being rejected by other miners. The only way to make changes is a 51% attack, but more on that below.
It is also impossible to fake the formation of a new block. If other miners do not confirm its correctness, it will not enter the main chain.
Each mining participant has a certain hash rate. In simple words, hash rate is a measure of the computational power of a particular user's equipment. The total blockchain hash rate is made up of the hash rate of all the miners. Since there are many users from different countries involved in the network, the blockchain hash rate is not concentrated in a single pair of hands.
However, if one organization can deploy so much computing power that its hash rate exceeds 50% of the blockchain's total hash rate, this will provide it with the opportunity to perform a 51% attack, also known as ‘majority attack’.
A 51% attack is a potential attack on the Bitcoin blockchain or another cryptocurrency operating on similar principles. If one organization owns 51% of the hash rate of the entire network, it will be able to influence the block formation process. As a result, it will be able to:
- purposefully exclude specific transactions from the blockchain;
- change the order in which transactions are conducted;
- control the confirmation of blocks, preventing other miners from influencing the blockchain, or even limiting their ability to participate in mining altogether.
Thus, a 51 % attack on cryptocurrency can cause serious disruption and damage the blockchain. The main opportunity open to users conducting the attack is called double spending. Its principle is that the same Bitcoins can be sent two or more times. For example:
- an attacker pays with Bitcoins for the purchase of some service and receives it;
- after that, he excludes the transaction data from the blockchain;
- as a result, the coins disappear from the seller's wallet and end up back in the attacker's wallet.
However, a 51% blockchain attack does not make the attacker omnipotent. The organization that carries it out will not be able to:
- create new Bitcoins ‘out of thin air’;
- steal Bitcoins from other users' wallets;
- undo transactions made before the start of the attack.
Therefore, the average user should not worry that a 51% blockchain attack will result in his or her cryptocurrency disappearing from his or her wallet - this is simply impossible.
As mentioned above, an attack requires control of more than 50% of the network's hash rate. Since there are many miners, and they use impressive computing power, concentrating such a large hash rate in one hand is possible, but very difficult. For example, directing a 51% attack on Bitcoin would be expensive even for the government of a large country.
Altcoins, other cryptocurrencies with small hash rates, are a different matter because there is little computing power to keep the network running. Such attacks have occurred about a dozen times before, and not always by attackers - there have been cases where miners have teamed up to affect the blockchain together with good intentions.
But back to Bitcoin. Experts agree that the threat of a 51% attack is exaggerated. It is so complicated and expensive to organize that it makes almost no sense. The network's hash rate is too high. And that is why Bitcoin is considered the most secure cryptocurrency - it is almost impossible to attack its blockchain.
Is it possible to destroy Bitcoin with a 51% attack?
The Bitcoin network is protected from being completely destroyed and blocked from working. Suppose some organization was able to carry out a 51% attack and tried to stop the functioning of the blockchain. In this case, the other miners will adopt changes that allow the network to be split into two - one controlled by the attacker and one controlled by everyone else.
To do so, they would need to reach an agreement and ‘vote’ with their power to make changes to the blockchain protocol. We can assume that in the event of an emergency, this will happen very quickly, and the Bitcoin network will be restored.
In reality, a 51% attack is highly unlikely. And even if it happens, ordinary users storing digital assets will not be harmed.
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