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 Traditional (ETC) have been topic to 51% assaults a number of instances prior to now. Whereas there are various mechanisms by which malicious entities can and have exploited blockchains, a 51% assault, or a majority assault as it’s also referred to 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 the vast majority of nodes.
Understanding a 51% assault
Earlier than delving into the method concerned in a 51% assault, it is very important perceive how blockchains file 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 among two forms of consensus mechanisms to validate each transaction via its community of nodes and file them completely.
Whereas nodes in a proof-of-work (PoW) blockchain want to unravel complicated mathematical puzzles in an effort 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 will be orchestrated by controlling the community’s mining hash price 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 unique model of the blockchain or execute a denial-of-service (DOS) assault. The latter is a sort of 51% assault by which 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performing their features whereas the attacking nodes go about including new transactions to the blockchain or erasing outdated ones.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 probably 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 the complete community and not directly trigger nice losses for buyers who maintain the native token. Though 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. Nevertheless, it’s unbelievable that older transactions past a sure cut-off will 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 price 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 is able to entail that attackers must 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’d 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 price 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 entire Ether (ETH) tokens which are locked up in staking contracts on the community. This is able to 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, all the staked tokens could possibly be confiscated or locked, dealing a hefty monetary blow to the entities concerned within the purported assault.
How you can detect and forestall a 51% assault on a blockchain?
The primary verify for any blockchain could 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 entire variety of staked tokens.
This requires blockchains to maintain a relentless 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 forestall this from occurring in Might 2018, with an analogous assault repeating in January 2020 that result in almost $70,000 value 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 a substitute 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 while not having to speculate closely within the dearer ASIC miners.
This 51% assault instance does spotlight the superior safety controls provided by ASIC miners as they want a better 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 probably management greater than 50% of the altcoin’s smaller community hashrate.
Furthermore, with service suppliers reminiscent of NiceHash permitting folks to lease hashing energy for speculative crypto mining, the prices of launching a 51% assault will be drastically lowered. This has drawn consideration to the necessity for real-time monitoring of chain reorganizations on blockchains to spotlight an ongoing 51% assault.
MIT Media Lab’s Digital Foreign money 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 reminiscent of Hanacoin (HANA), Vertcoin (VTC), Verge (XVG), Expanse (EXP), and Litecoin are only a few 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 traditional 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 value 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 engaging 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.
