What is a 51% Attack?
What is a 51% attack?
From the Bitcoin.org website, a 51% or majority attack, is the ability of someone controlling a majority of network has rate to revise transaction history and prevent new transactions from confirming. Basically, an entity with 51% of the network power can confirm and reject transactions as they please. The Bitcoin Wiki states that
an attacker with majority power can:
- Reverse transactions that he sends while he’s in control. This has the potential to double-spend transactions that previously had already been seen in the block chain. (The attacker could spend a coin, then create a new fork in which those coins were never spent, allowing the attacker to spend the coins again).
- Prevent some or all transactions from gaining any confirmations
- Prevent some or all other miners from mining any valid blocks
The attacker can’t:
- Reverse other people’s transactions without their cooperation
- Prevent transactions from being sent at all (they’ll show as 0/unconfirmed)
- Change the number of coins generated per block
- Create coins out of thin air
- Send coins that never belonged to him
How easy is it to obtain 51% of the network?
For a big market cap coin like Bitcoin, it would be impossible for one person to acquire the majority power of its network. The majority of the network would require a hash rate of over 14 EH/S, which is thousands of times stronger than the world’s fastest super computers. However, mining pools could easily coordinate a pool stronger than half of the network’s power. In July 2014, a mining pool called GHash was close to obtaining 51% power but agreed to limit its power to 39.99% to preserve trust in the Bitcoin ecosystem.
Economics of a 51% attack
If a malicious miner acquires 51% of the network’s power and performs a 51% attack and double spends some coins, the value of that cryptocurrency will presumably drop in value. The result for the attacker would be:
Net value for the attacker = Number of coins double spent * (value of the coin – the coin’s drop in value)
In some instances the net value from that attack would be less than the value rewarded from mining the coin benevolently.
The monetary economics of a 51% do not always make sense from a profit standpoint, but could make sense if greater politics were at stake IE. a government or competing cryptocurrency that tampers with Bitcoin or another cryptocurrency to distill fear in its network.
Have there ever been 51% attacks?
Bitcoin has never been successfully attacked. However, there have been attacks on other smaller coins. Most recently Verge (XVG) was subject to an attack, but other coins such as Electroneum, CoiledCoin, Terracoin, Feathercoin, and Krypton have been attacked.