Blockchains are considered a secure technology due to their decentralized nature, mitigating the risk of a single point of failure. However, the integrity of a blockchain network can be compromised by a 51% attack. 

Read on to learn what a 51% attack is, how it works, and learn about prominent cases of such attacks. 

What Is a 51% Attack?

A 51% attack is when a single actor manages to control over half 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 contribute hashing or computational power to solve different hashing algorithms and mine new blocks. The mined blocks are approved by a majority of the miners through a mechanism called a distributed consensus. This way, a single individual or group has no monopoly on running the network. 

However, should a single actor control more than 50% of a blockchain’s total network hashing rate, they can set aside the network consensus and carry out malicious actions. 

Attackers can prevent miners from contributing hashing or computational power required to mine blocks, creating a mining monopoly. They can also alter the sequence of transactions and lead to double spend of new coins.

A successful 51% attack could have serious repercussions for a blockchain as it will lose useful properties like immutability and network security.

How Does a 51% Attack Work?

A 51% attack can be arranged by controlling over half of the network’s mining hash rate. An attack would occur if a single entity controls 51% of a network’s hashing power and uses it to introduce a different version of the blockchain. 

The attackers would select the current block on a public blockchain and secretly mine new blocks on the ‘forked chain.’ The competing chain will be running parallel to the original chain but will not broadcast any blocks to the public blockchain. 

Attackers can also conspire to prevent miners from confirming new blocks while they go about adding new transactions to the blockchain and deleting old ones. In this scenario, they can reverse transactions or double-spend the cryptocurrency. 

A 51% attack is improbable for large blockchains like Bitcoin due to the sheer amount of computing power needed to pull it off. However, for small blockchain networks with a lower hash rate, a 51% attack is a potential threat. 

Implications of a 51% Attack on a Blockchain

A 51% attack can be devastating for a blockchain network and lead to serious losses for users who hold its cryptocurrency. Here are the implications of such an attack.

  • Double spending – Malicious actors can modify transactions or even reverse their own transactions, leading to double spending funds.
  • Mining monopoly – Prevent other miners from validating blocks to earn cryptocurrency.
  • Reputational risk – Investors may lose confidence in a compromised blockchain, resulting in its cryptocurrency plummeting in value.
  • Transaction delays – Attackers can prevent transactions from being confirmed.
  • Blockchain integrity – A DOS attack can cripple a blockchain’s functionality.

Historical Cases of 51% Attacks

Now, let’s take a look at the most of the most notable examples of successful 51% attacks. 

Bitcoin Gold 

Bitcoin Gold (BTG) experienced two 51% attacks, one in 2018 and another in 2020. In both attacks, the perpetrators gained more than 50% of the hashing power to modify the original blockchain and reverse completed transactions. In the first attack, $18 million worth of BTG was lost, and the second led to $70,000 worth of BTG being double spent.

Ethereum Classic

Ethereum Classic (ETC) suffered a 51% attack in 2019 that led to Coinbase halting all ETC transactions. The network would experience three more attacks in 2020 and lose over $5 million worth of ETC. 

Final Thoughts

Blockchain technology isn’t without its share of risks. A 51% attack requires a single entity to command greater hashing power than all the legitimate nodes. Therefore, one way of preventing these attacks is to encourage more participants in a blockchain network. 

The more the participants in a network contribute their hashing power, the more difficult and costly it becomes for a malicious actor to dominate the network. Blockchain networks can also switch to proof-of-stake (PoS) mechanisms that are deemed less susceptible to such attacks.