Regardless of being underpinned by blockchain know-how that guarantees safety, immutability, and full transparency, many cryptocurrencies like Bitcoin SV (BSV), Litecoin (LTC) and Ethereum Basic (ETC) have been topic to 51% assaults a number of instances previously. Whereas there are various 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 gaggle 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 technique 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 file transactions, validate them and the completely different controls embedded of their structure to stop any alteration. Using cryptographic methods to attach subsequent blocks, which themselves are information of transactions which have taken place on the community, a blockchain adopts one in all two forms of consensus mechanisms to validate each transaction by way of its community of nodes and file them completely.
Whereas nodes in a proof-of-work (PoW) blockchain want to unravel advanced mathematical puzzles with the intention 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 method, a 51% assault may be orchestrated by controlling the community’s mining hash fee or by commanding greater than 50% of the staked tokens within the blockchain.
To grasp how a 51% assault works, think about if greater than 50% of all of the nodes that carry out these validating capabilities conspire collectively to introduce a unique model of the blockchain or execute a denial-of-service (DOS) assault. The latter is a kind of 51% assault through which the remaining nodes are prevented from performing their capabilities whereas the attacking nodes go about including new transactions to the blockchain or erasing previous ones. In both case, the attackers might doubtlessly reverse transactions and even double-spend the native crypto token, which is akin to creating counterfeit foreign money.
For sure, such a 51% assault can compromise your complete community and not directly trigger nice losses for traders who maintain the native token. Regardless that 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 might negatively affect the underlying cryptocurrency’s value. Nonetheless, it’s inconceivable that older transactions past a sure cut-off may be reversed and thus places solely the latest or future transactions made on the community in danger.
Is a 51% assault on Bitcoin doable?
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 fee that at present stands at ~290 exahashes/s hashing energy, requiring them to realize entry to no less than a 1.3 million of essentially 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 might entail that attackers must buy mining gear 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’d not be entitled to any of the mining rewards relevant for trustworthy nodes.
Nonetheless, for smaller blockchains like Bitcoin SV, the state of affairs is sort of completely different, because the community’s hash fee stands at round 590PH/s, making the Bitcoin community nearly 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 might 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 state of affairs that the assault fails, all the staked tokens might be confiscated or locked, dealing a hefty monetary blow to the entities concerned within the purported assault.
The way to detect and forestall a 51% assault on a blockchain?
The primary verify 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 continuing verify 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 occurring in Could 2018, with the same 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 doable 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 an alternative of cheaper GPU-based mining. Since Bitcoin Gold makes use of the Zhash algorithm that makes mining doable even on client graphics playing cards, attackers can afford to launch a 51% assault on its community without having to speculate 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 selected blockchain, making them ineffective for mining or attacking different blockchains.
Nonetheless, within the occasion that miners of cryptocurrencies like BTC shift to smaller altcoins, even a small variety of them might doubtlessly management greater than 50% of the altcoin’s smaller community hashrate.
Furthermore, with service suppliers reminiscent of NiceHash permitting individuals to lease hashing energy for speculative crypto mining, the prices of launching a 51% assault may be drastically decreased. 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 quite a lot of PoW blockchains and their cryptocurrencies, reporting any suspicious transactions that will have double-spent the native token throughout a 51% assault.
Cryptocurrencies reminiscent of Hanacoin (HANA), Vertcoin (VTC), Verge (XVG), Expanse (EXP), and Litecoin are just some examples of blockchain platforms that confronted a 51% assault as reported by the DCI initiative.
Of them, the Litecoin assault in July 2019 is a basic instance of a 51% assault on a proof-of-stake blockchain, despite the fact that the attackers didn’t mine any new blocks and double-spent LTC 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 without doubt one of the many causes for an rising variety of networks switching over to the PoS consensus mechanism.
