Regardless of being underpinned by blockchain expertise that guarantees safety, immutability, and full transparency, many cryptocurrencies like Bitcoin SV (BSV), Litecoin Money (LCC) and Ethereum Basic (ETC) have been topic to 51% assaults a number of instances up to now. Whereas there are a lot of mechanisms by which malicious entities can and have exploited blockchains, a 51% assault, or a majority assault as additionally it is known as, happens when a bunch of miners or an entity controls greater than 50% of the blockchain’s hashing energy after which assumes management over it. 

Arguably the most costly and tedious methodology to compromise a blockchain, 51% of assaults have been largely profitable with smaller networks that require decrease hashing energy to beat nearly all of nodes.

Understanding a 51% assault 

Earlier than delving into the approach concerned in a 51% assault, you will need to perceive how blockchains document transactions, validate them and the totally different controls embedded of their structure to forestall any alteration. Using cryptographic strategies to attach subsequent blocks, which themselves are information of transactions which have taken place on the community, a blockchain adopts one in every of two kinds of consensus mechanisms to validate each transaction by way of its community of nodes and document them completely.

Whereas nodes in a proof-of-work (PoW) blockchain want to unravel complicated mathematical puzzles so as to confirm transactions and add them to the blockchain, a proof-of-stake (PoS) blockchain requires nodes to stake a certain quantity of the native token to earn validator standing. Both approach, a 51% assault might be orchestrated by controlling the community’s mining hash charge or by commanding greater than 50% of the staked tokens within the blockchain.

To know how a 51% assault works, think about if greater than 50% of all of the nodes that carry out these validating features conspire collectively to introduce a special model of the blockchain or execute a denial-of-service (DOS) assault. The latter is a sort of 51% assault wherein the remaining nodes are prevented from performing their features whereas the attacking nodes go about including new transactions to the blockchain or erasing outdated ones. In both case, the attackers may doubtlessly reverse transactions and even double-spend the native crypto token, which is akin to creating counterfeit foreign money.

Evidently, such a 51% assault can compromise your complete community and not directly trigger nice losses for buyers who maintain the native token. Although creating an altered model of the unique blockchain requires a phenomenally great amount of computing energy or staked cryptocurrency within the case of enormous blockchains like Bitcoin or Ethereum, it isn’t as far-fetched for smaller blockchains. 

Even a DOS assault is able to paralyzing the blockchain’s functioning and may negatively impression the underlying cryptocurrency’s value. Nevertheless, it’s unbelievable that older transactions past a sure cut-off might be reversed and thus places solely the latest or future transactions made on the community in danger.

Is a 51% assault on Bitcoin potential?

For a PoW blockchain, the likelihood of a 51% assault decreases because the hashing energy or the computational energy utilized per second for mining will increase. Within the case of the Bitcoin (BTC) community, perpetrators would want to regulate greater than half of the Bitcoin hash charge that at the moment stands at ~290 exahashes/s hashing energy, requiring them to realize entry to at the very least a 1.3 million of probably the most highly effective application-specific built-in circuit (ASIC) miners like Bitmain’s Antminer S19 Professional that retails for round $3,700 every. 

This may entail that attackers have to buy mining tools totaling round $10 billion simply to face an opportunity to execute a 51% assault on the Bitcoin community. Then there are different features like electrical energy prices and the truth that they might not be entitled to any of the mining rewards relevant for sincere nodes. 

Nevertheless, for smaller blockchains like Bitcoin SV, the situation is kind of totally different, because the community’s hash charge stands at round 590PH/s, making the Bitcoin community virtually 500 instances extra highly effective than Bitcoin SV.

Within the case of a PoS blockchain like Ethereum, although, malicious entities would want to have greater than half of the full Ether (ETH) tokens which can be locked up in staking contracts on the community. This may require billions of {dollars} solely when it comes to buying the requisite computing energy to even have some semblance of launching a profitable 51% assault. 

Furthermore, within the situation that the assault fails, the entire staked tokens could possibly be confiscated or locked, dealing a hefty monetary blow to the entities concerned within the purported assault.

The right way to detect and stop a 51% assault on a blockchain?

The primary examine for any blockchain can be to make sure that no single entity, group of miners or perhaps a mining pool controls greater than 50% of the community’s mining hashrate or the full variety of staked tokens. 

This requires blockchains to maintain a relentless examine on the entities concerned within the mining or staking course of and take remedial motion in case of a breach. Sadly, the Bitcoin Gold (BTG) blockchain couldn’t anticipate or stop this from taking place in Might 2018, with an analogous assault repeating in January 2020 that result in almost $70,000 price of BTG being double-spent by an unknown actor. 

In all these cases, the 51% assault was made potential by a single community attacker gaining management over greater than 50% of the hashing energy after which continuing to conduct deep reorganizations of the unique blockchain that reversed accomplished transactions.

The repeated assaults on Bitcoin Gold do level out the significance of counting on ASIC miners as a substitute of cheaper GPU-based mining. Since Bitcoin Gold makes use of the Zhash algorithm that makes mining potential even on client graphics playing cards, attackers can afford to launch a 51% assault on its community while not having to take a position closely within the dearer ASIC miners. 

This 51% assault instance does spotlight the superior safety controls supplied by ASIC miners as they want the next quantum of funding to obtain them and are constructed particularly for a specific blockchain, making them ineffective for mining or attacking different blockchains.

Nevertheless, within the occasion that miners of cryptocurrencies like BTC shift to smaller altcoins, even a small variety of them may doubtlessly management greater than 50% of the altcoin’s smaller community hashrate. 

Furthermore, with service suppliers similar to NiceHash permitting folks to hire hashing energy for speculative crypto mining, the prices of launching a 51% assault might be drastically lowered. This has drawn consideration to the necessity for real-time monitoring of chain reorganizations on blockchains to focus on an ongoing 51% assault. 

MIT Media Lab’s Digital Forex Initiative (DCI) is one such initiative that has constructed a system to actively monitor various PoW blockchains and their cryptocurrencies, reporting any suspicious transactions which will have double-spent the native token throughout a 51% assault.

Cryptocurrencies similar to Hanacoin (HANA), Vertcoin (VTC), Verge (XVG), Expanse (EXP), and Litecoin Money are only a few examples of blockchain platforms that confronted a 51% assault as reported by the DCI initiative. 

Of them, the Litecoin Money assault in July 2019 is a basic instance of a 51% assault on a proof-of-stake blockchain, regardless that the attackers didn’t mine any new blocks and double-spent Litecoin Money (LCC) tokens that had been price lower than $5,000 on the time of the assault. 

This does spotlight the decrease dangers of 51% assaults on PoS blockchains, deeming them much less enticing to community attackers, and is likely one of the many causes for an growing variety of networks switching over to the PoS consensus mechanism.