51% Attack: What Is It and How Does It Work?
While blockchain technology is generally deemed safer than most traditional systems, it still has its risks. One of the biggest threats to the integrity of blockchain is the 51% attack, also known as the “majority attack.” It is an attack where a malicious actor takes control of more than half of the network’s total mining hashrate. Since blockchain is operated by independent nodes, the majority of 51% is all it takes to make any decision.
With that said, if a single entity takes hold of 51% of the blockchain network, it could disrupt its operation. That includes overriding the consensus mechanism, committing malicious acts like double spending, and more. This guide will explain what a 51% attack is, how it works, and how to prevent or mitigate the damage.
What Is a 51% Attack?
A 51% attack is a malicious attack where a third party takes control of the blockchain network. The consequences can often lead to major issues such as mining monopolization, network disruption, double spending, and more. An attack of this kind is possible because blockchains are run by a community effort.
As a result, any decision requires the majority of members to agree to it and reach a network consensus. That way, not one individual has more power than other participants, and everyone stands on equal ground. However, if someone takes control of more than 50% of devices that run the network, they would gain total control. They could prevent miners from mining, steal cryptocurrency and even cancel transactions, essentially ruining the network.
The blockchain would also lose crucial qualities, such as immutability and network security. That means that the attackers could also change historical blocks. Doing so is extremely difficult but technically not impossible. What is impossible, even during a 51% attack, is to change transactions before a checkpoint. A checkpoint is a point in blockchain’s history where transactions became permanent.
As a result, certain areas of the blockchain are safe even from this kind of attack. However, anything in recent history would be in danger of being changed, thus sending major shockwaves throughout the network.
How Does a 51% Attack Work?
The easiest way to describe how a 51% attack works would be to say that it overrules the existing network. Attackers manage to take over network security protocols, which may lead to significant damage. A major event isn’t guaranteed to occur, but there is the potential to cause a lot of damage. Ultimately, it all comes down to how powerful and how aggressive the attack is.
Attackers conduct their attacks by amassing mining hashrate power or computational power. The greater the percentage of computational power that they have, the easier it becomes to take over the network.
Of course, running a 51% attack is not a simple matter, thanks to decentralization. This means that the devices that run the network are not wired in or even in the same physical location.
They belong to network users from all over the world, which makes it difficult to take over an entire network. Therefore, the attackers only have one other method available, which is to out-hash the main network. However, if the networks only have a few nodes running them, targeting them is a lot easier.
Small networks have fewer nodes, which likely means a small amount of hashing power. As a result, the amount of power that hackers have to collect to outperform the network is not a large task. Of course, it isn’t particularly profitable to hit such networks, but that aside, small networks are easy targets.
Therefore, the bigger the network, and the more nodes it has, the more difficult it becomes to hijack it.
How To Prevent a 51% Attack?
There are several ways to ensure 51% attackprevention. The most effective one is not to use the Proof-of-Work consensus algorithm. This is beneficial for several reasons. Apart from making the network safer from a 51% attack, it also makes the network consume less energy, which in turn makes it safer, faster, and cheaper to use.
Another way to prevent an attack is to substantially grow the network. Usually, networks that seek to attract a large number of nodes tend to incentivize node operators. With a massive network like Bitcoin’s, for example, a malicious attack is almost impossible to conduct successfully.
Apart from that, it is also a good idea to constantly monitor entities involved in the mining/staking process. That way, systems can immediately detect if there is some sort of breach.
Another way to prevent a 51% attack is to ensure that mining cannot be done with consumer GPUs. For example, Bitcoin Gold (one of Bitcoin’s forks), was hacked several times because of this. It uses the Zhash algorithm, which allows users to mine cryptocurrency with a regular graphics card. That makes it easy for attackers to purchase the necessary hardware and conduct an attack. Bitcoin, on the other hand, relies on an algorithm that requires [ASIC miners](/learn/9-best-asic-miners).
ASIC miners are well known for being rather expensive, which automatically discourages hackers from attacking. Some estimates say that an attack on Bitcoin would cost $752,000 per hour. No matter what hackers wish to accomplish by hitting the network, this makes it too expensive to even try.
However, the best way to go about preventing the attacks would be real-time monitoring of the network. That way, the projects would not have to change their algorithm, and miners would not have to buy expensive gear.
We also need to take into consideration that there are services out there that allow people rent hashing power. This is meant to be used for speculative crypto mining. However, such services could easily be misused for illicit purposes. Being able to rent hashing power, significantly reduces the cost for hackers when they are targeting smaller chains.
With that in mind, hiring services that monitor PoW blockchains and cryptocurrencies is the best way to go. Such services could easily pick up on suspicious transactions and report them in real-time. That makes it easier to notice double-spending and similar activities within a blockchain.
How Centralization Affects the Risk of a 51% Attack?
One method of preventing a 51% attack that was not discussed so far is centralization. The first thing to note is that centralization is not in the spirit of the crypto industry. Crypto and blockchain were invented to be decentralized and run by the community. However, when it comes to preventing a 51% attack, centralization can be quite efficient.
It is not full-proof, of course, and it requires trust in the entity that runs the network. This sort of trust comes in limited supply; otherwise, decentralization would not be considered necessary. But, assuming that there is a trustworthy entity that gets the community’s support, how would it fare against a 51% attack?
Well, centralization eliminates the possibility of 51% attack entirely. In decentralized chains, anyone can join the mining network. That’s where the beauty of it all lies, but also the danger. If a chain is decentralized, it’s easy for malicious actors to join and attempt to carry out a 51% attack.
When it comes to centralized networks, they are closed — only a small group of select nodes can run the network. That means that malicious actors simply cannot join and become a node. It doesn’t matter how much hashing power they have, they simply cannot enter. But, as mentioned, that also means letting a minority rule the entire network, doing whatever they want.
It’s worth noting that even this system is not full-proof, as even centralized entities can fall to hacking attacks. Centralized entities hold all of their servers tucked together and connected to one another. Even a single security flaw can allow hackers to break in and take control of their personal network. Of course, this is not a great way of taking over a blockchain, as such attacks tend to get noticed. If a company is hacked, it would notice the attack, shut down its network, and cut the hackers off.
With all that said, centralization seems like the best method to prevent a 51% attack. However, centralization is what the crypto industry was created to oppose in the first place.
How To Reduce the Likelihood of a 51% Attack?
51% attack requires out-hashing the main network and command greater hashing power than half of the legitimate nodes. Therefore, the best way to reduce the likelihood of the attack is to ensure that no one has such power. The network has to ensure that no miner, group of miners or mining pool controls over 50% of computing power.
Other than that, growing the network of nodes is an effective method of preventing the success of such attacks. The method that requires the biggest amount of work, however, is to switch to the PoS algorithm. This is what Ethereum did. However, in Ethereum’s case, the project was less concerned about a 51% attack and more about solving scalability and other issues.
To summarize, the most efficient methods are to monitor network activity and make sure that power distribution is well-balanced. If anything suspicious starts happening, an alarm gets raised, and the network deals with the issue immediately.
FAQs
What Does a 51% Attack Do?
A 51% attack’s goal is to take over the blockchain. It does this by amassing more computing (hashing) power than what the rest of the network has. That allows the entity that commands it to take over by a “majority vote,” so to speak.
Is a 51% Attack Possible on Bitcoin?
In theory, yes, even Bitcoin could suffer from a 51% attack. However, in practice, Bitcoin’s network is too big for anyone to out-hash it. The cost alone doesn’t make it worth it, even if someone could collect that much computing power.
How Much Does It Cost To Run a 51% Attack on Bitcoin?
According to estimates, it would cost $752,000 to run a 51% attack against Bitcoin for 1 hour. That makes it far too expensive for anyone to even try. Furthermore, as Bitcoin’s network continues to grow, the cost will only increase.
How Likely Is a 51% Attack?
The likelihood of a 51% attack depends on the network in question. Against Bitcoin, it is nearly impossible to conduct it successfully. However, if the target is a smaller network, it is not only possible — it happened multiple times.
What Is Proof-of-Work 51%?
Proof-of-Work 51% is a type of attack that targets networks running the Proof-of-Work algorithm. These are standard mining networks where anyone can join to mine the network’s cryptocurrency. All that is required is for a miner to join and collect more power than the rest of the network.
