Indeed, everyone is familiar with the internal conflicts that arise while shopping. How many times have you coveted two objects, even though you could afford only one of them? How many times have you wistfully made a payment, wishing you could reuse the money?
Well, 51% of attackers are those among us who are living that dream. Here’s how they do it.
What is a 51 percent attack?
To add an unconfirmed block of transitions to a blockchain, miners need to solve a challenging mathematical problem. They do so by using a lot of computational power in a process known as hashing.
Cryptocurrency exists outside of most legislation, but the blockchain protocols themselves are a form of governance. They are decentralized and rely on democracy to keep the system running.
What this basically means is that the miners with majority of hashing power determine which version of the block is the truth.
By definition, a 51% attack is launched by anyone who controls more than 50% of the network’s mining hash rate.
This amount of computational power enables them to manipulate data on the blockchain. For example, they can halt or even reverse transactions to work in their favour.
How does 51 percent attack work?
It is imperative to understand this: According to the protocol, the most extended version of a blockchain is taken to be the truth. This is because the majority of miners add blocks faster than the rest of the network.
Usually, when a miner finds the solution, they broadcast it and the block to the rest of the network. Then, if the transactions on the modified blockchain match the existing records, the new version is verified.
The problem arises when a corrupt miner creates an offspring of the blockchain by not broadcasting the solutions of his blocks. As a result, there are now two versions of the blockchain.
The honest miners cannot detect the offspring chain as it has not been broadcasted yet. Therefore, the corrupt miner can spend all his cryptocurrency on the honest version without including them in the offspring.
He still picks up other blocks and verifies them so they can be added to the offspring chain.
When the offspring chain has more blocks than the honest chain, the corrupter miner will suddenly broadcast it to the network. Then, the protocol will force the network to accept the offspring chain as the truth.
This is advantageous to the corrupt miner as all his transactions are lost. They would have both the purchase and the money spent to buy — they can use the same money twice. Hence, this is called double-spending.
The offspring chain can grow longer than the honest one only if the miner more hashing power than everyone on the honest network.
If the corrupt miner has more computing power, he can verify blocks quicker than the honest miners, causing his chain to grow longer eventually.
He needs at least 51% of the hashing power to have a majority and enforce his chain on the network. This is why such attacks are known as 51% attacks.
How feasible is it?
51% attacks are sporadic. A malevolent miner will need more power than the rest of the network combined to pull off such an attack successfully.
There are anywhere between 5,000 and 100,000 miners on an average network. A corrupt miner would have to spend vast sums of money on mining hardware to match this power.
Not even a supercomputer can match the power of a network adequately. Regardless, 51% attacks have happened in the past.
In April 2018, the Verge (XVG) Blockchain suffered a 51% attack, losing 250,000 XVG. Some claim that as many as 3.9 million may have been taken.
Usually, small networks are the targets for such attacks. However, larger networks with more computational power have nothing to fear from malicious miners.
Akshaya is a voracious reader, and a bit of a know-it-all. She is usually found with a book in hand and considers herself a connoisseur of all things nerdy.