What is a 51% attack and how to detect it?

Regardless of being underpinned by blockchain technology that guarantees safety, immutability, and full transparency, many cryptocurrencies like Bitcoin SV (BSV), Litecoin Money (LCC) and Ethereum Basic (ETC) have been topic to 51% assaults a number of occasions prior to now. Whereas there are numerous mechanisms by which malicious entities can and have exploited blockchains, a 51% assault, or a majority assault as it’s also 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 costliest and tedious methodology 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 understand how blockchains record transactions, validate them and the totally different controls embedded of their structure to stop any alteration. Using cryptographic methods to attach subsequent blocks, which themselves are data of transactions which have taken place on the community, a blockchain adopts one of two types of consensus mechanisms to validate each transaction by its community of nodes and file them completely.

Whereas nodes in a proof-of-work (PoW) blockchain want to unravel complicated mathematical puzzles to be able 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 manner, a 51% assault could 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 capabilities 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 during 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 entire community and not directly trigger nice losses for traders who maintain the native token. Despite the fact that creating an altered model of the unique blockchain requires a phenomenally great amount of computing energy or staked cryptocurrency within the case of huge 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 impression the underlying cryptocurrency’s value. Nonetheless, it’s unbelievable that older transactions past a sure cut-off could be reversed and thus places solely the newest or future transactions made on the community in danger.

Is a 51% assault on Bitcoin potential?

For a PoW blockchain, the chance 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 wish to manage greater than half of the Bitcoin hash rate that presently stands at ~290 exahashes/s hashing energy, requiring them to achieve entry to not less than a 1.3 million of probably the most highly effective application-specific integrated circuit (ASIC) miners like Bitmain’s Antminer S19 Professional that retails for round $3,700 every. 

This could entail that attackers have to 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 facets like electrical energy prices and the truth that they’d not be entitled to any of the mining rewards relevant for sincere nodes. 

Nonetheless, for smaller blockchains like Bitcoin SV, the state of affairs is kind of totally different, because the community’s hash price stands at round 590PH/s, making the Bitcoin community virtually 500 occasions extra highly effective than Bitcoin SV.

Within the case of a PoS blockchain like Ethereum, although, malicious entities would wish to have greater than half of the entire Ether (ETH) tokens which can be locked up in staking contracts on the community. This could 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, the entire staked tokens might be confiscated or locked, dealing a hefty monetary blow to the entities concerned within the purported assault.

Tips on how to detect and stop 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 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 forestall this from taking place in Could 2018, with a similar attack 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 potential by a single community attacker gaining management over greater than 50% of the hashing energy after which continuing to conduct deep reorganizations of the original 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 potential even on shopper graphics playing cards, attackers can afford to launch a 51% assault on its community with no need 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 the next quantum of funding to acquire 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 corresponding to NiceHash permitting folks to lease hashing energy for speculative crypto mining, the prices of launching a 51% assault could 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 a lot of PoW blockchains and their cryptocurrencies, reporting any suspicious transactions which will have double-spent the native token throughout a 51% assault.

Cryptocurrencies corresponding to Hanacoin (HANA), Vertcoin (VTC), Verge (XVG), Expanse (EXP), and Litecoin Money are only a few examples of blockchain platforms that confronted a 51% assault as reported by the DCI initiative. 

Of them, the Litecoin Money 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 Litecoin Money (LCC) tokens that have been value lower than $5,000 on the time of the assault. 

This does highlight the lower risks 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 growing variety of networks switching over to the PoS consensus mechanism.