Is the 51% attack on Bitcoin Possible

Is the 51% attack on Bitcoin Possible


The cryptocurrency universe is based on several principles, including the principle of the existence of the blockchain. A cryptocurrency cannot exist without a blockchain. But the blockchain can become vulnerable and be captured by any person, group of people or organization. In all cases, for an attack to be effective and have real consequences, its initiators must have a mining power of more than 50%. So you need at least 51%.

When they have most of the computing power of the network, hackers can cancel transactions made by other users. They can also decide which transactions will be confirmed and which will not.

If, for example, you use Proof of Stake (PoS) or Delegated Proof of Stake (DPoS-consensus) tokens, such as DEL-Decimal, for staking on the SpaceBot wallet, then you should not be afraid. Why? Because, as a rule, the 51% attack is directed against Proof of Work (PoW) blockchains. In this type of decentralized management, transactions approved by the majority are recorded in the registry.

And so, the 51% attack is an attack vector in proof-of-work networks. The attacker combines more than half of the computing power (hash power) networks and, thus, can change the block chain at will.

You should be aware of the 51% attack definition. what:

  • An attack vector is a strategy for attacking a network.
  • The proof — of-work (PoW) network is Bitcoin.
  • This attack vector gets its name from the 51% hashrate required for the success of the attack.
  • The hashing speed of the network consists of the computing power of all computers for mining. In other words, computers are trying to solve the proof-of-work puzzle for the next block.
  • The 51% attack is also called the majority attack.
  • Double spending is a transaction through which the same money can be spent several times by the same person.

Potential attackers who control at least 51% of the hashrate will eventually produce more blocks than the rest of the network, and thus can determine the transaction history. At the moment when you send a new version of the blockchain to the network, some transactions may be canceled in the old version. Thus, attackers can purposefully spend double expenses.

The greater the relative advantage of the hashrate compared to the rest of the network, the safer the attack will be. In addition, successful attackers can censor transactions on the network.

How it works

In the case of such an attack, a miner or a group of miners takes more than 51% of the total computing power.

Let’s imagine this situation on a concrete example: Asya wants to buy goods from Tanya and “throw” Tanya for money. Next, Asya is the initiator of the 51% attack.

Tana is not a dream, not a spirit about what is waiting for her, and tells the Ace her address for receiving the PTS. Then Asya creates a transaction TX1 for Tanya, and sends it to the network. However, on the side, Asya built another transaction-TX2, with the same money for herself.

As soon as Asya sends TX1 to the Bitcoin network, she uses her own computer for mining and mines a block containing only TX2, instead of TX1. If she has more than half of the hashrate on her mining computers, she will most likely find the next block earlier than the rest of the Bitcoin network.

This means that only your constructed block is valid, as is the TX2 contained in it. The original block with TX1 is invalid for this. So, Tanya never received the money. And if she had already given the goods to Asa, then both the goods and her money were crying. Tanya is left empty-handed.

But Asya could be even more insidious if she left her miners working in the background. Tanya sees that TX1 has already been confirmed by two blocks, and sends the goods. Only now Asya is publishing her version of the blockchain.

If the Asi had a significantly larger hashrate than the rest of the network, it would most likely have produced a longer chain. Thus, a new valid transaction history appears. According to the agreement, the longest block chain is the current version.

Double waste

The main advantage of a majority attacker is the ability to make a double spend. However, it is doubtful whether such an attack is really worth it.

Let’s imagine a scenario in which Tanya Ace sells her house, and will notice as soon as Asya presents her version of the blockchain on the network, the version with TX2 instead of TX1. It would be strange if the transaction from Asi to Tanya was no longer in the blockchain. This is, in fact, a crime, and Tanya can accuse Asya of fraud.

Maybe double spending will bring profit on the Internet?

You transfer a large amount to the exchange and exchange it for another cryptocurrency as soon as it becomes available on the exchange. Then you send a new version of the blockchain, which you created in advance, and in which the transaction to the exchange never occurred. The exchange will also notice this fraud. The attacker should also know that he is registered with personal data on most exchanges. Thus, the exchange can also file a lawsuit.

Whether such an attack will be justified depends on the cryptocurrency. There have already been successful attacks of 51% against some altcoins. But with Bitcoin, such an attack is unlikely.

Blockchain Censorship

In addition to double spending, potential attackers can also censor the network with a sufficient hashrate. To do this, they will need a good hashrate power, and support it for a long time. Attackers can then decide which transactions are included in the block chain and which are not. Attackers can also exclude other miners from mining. This option is possible if some government decides to establish total control over some blockchain. By the way, CBDC, digital currencies of central banks work on this principle.

Attack limits are 51%

Despite this powerful stance against double spending and possible blockchain censorship, this kind of attack is not omnipotent. The network rules cannot be changed. In addition, such an attack is always associated with risk.

Even with 51 percent of the hashrate, Asya cannot create new Bitcoins out of thin air. She can’t decide that all of a sudden, out of the blue, she will receive a reward of 100 BTC per block. It cannot pack double-spending transactions into its own blocks. She also does not have access to the money of other network members.

Even if it can decide which transactions will eventually be in blocks, it will not be able to prevent other network participants from sending transactions.

If other participants decide to take active actions against the attack, the attacker will not be able to forcibly include them in his blockchain. Honest participants will notice the attack of 51% and therefore they will be able to neutralize it. To do this, the first block of the malicious block chain is declared false. As a result, all subsequent blocks also become invalid. The attacker would have paid in vain for his attack.

In general, a 51% attack allows an attacker to double the costs and censor transactions. It is not possible to change the set of rules arbitrarily. Attackers can make double expenses exactly once, but thanks to the transparency of the blockchain, they will be noticed later.

Who could carry out a 51% attack?

This brings us to the question of who is the potential attacker.

Bitcoin is the construction of game theory. BTC which are issued as a reward for checking blocks, are an incentive for miners to be honest. This economic incentive is also relevant for the 51% attack.

Anyone who conducts a 51% attack is at great risk. Attackers have to invest the hashrate in the wrong version of the blockchain. It definitely costs energy and therefore money. If the rest of the network is protected from an attack, these energy costs are wasted.

In addition, attackers do not receive a reward for the block. Instead of attacking the network and failing, they could mine honestly. The opportunity costs of mining coins are also included in the cost accounting.

Thus, self-serving miners have an incentive to act honestly. This applies, among other things, to Bitcoin innovations.

However, there may be irrational attackers who do not act out of economic interests. For example, it may be a competing crypto ecosystem trying to take control of an opponent. This means that certain transactions can be described, for example, as invalid and not integrated into the block chain.

Even in this case, the bitcoin community still has an emergency brake: a hard fork can get rid of an attacker and regain its independence.

Signs of an attack

The 51% attack is a noticeable and destructive event that you will not miss in any case. In the event of such an attack, the blockchain will be reorganized.

From time to time, with proof-of-work (PoW) systems such as Bitcoin, it may happen that two miners find a new block at the same time. Let’s call these blocks block A and block B. One half of the network first receives block A, the other half receives block B. The network is divided for a short time. If half of them with block B first finds a new block (block B + 1), they report this to the entire network. The half with block A recognizes that there is a new valid version of the block chain, and reorganizes itself. At the same time, it discards block A and adapts a new chain with block B and block B + 1. This event is also called the reorganization of the chain, or the reorganization of the blockchain.

This means that blockchains are two links in the chain, or blocks that are separate from each other. If the chain is reorganized now, it will be two blocks in size. The probability that this event will occur is very small.

The greater the reorganization of the chain, the less likely and noticeable it is. A chain reorganization will also occur with a 51% attack. All honest full node operators and miners will notice this. Thus, it will be disclosed, and the bitcoin community will be able to decide on the next actions.

How likely is a 51% attack?

So far, there has been no 51% attack on the Bitcoin network. Even if this is a known and possible attack vector, it is unlikely. It will not be profitable, and it will be very risky. The hashrate of the network in Bitcoins is so high that the network is resistant to attacks. The situation is different with many altcoins.

The probability of controlling the network with an attack of 51% increases with the relative hashrate of the attacker. This means that the same attack is also possible with less than 51%, but the probability of its success is very low. In the long run, a majority attack only makes sense if the attacker actually controls most of the hashrate.

Summing up

Now you know that there has been no attempts of a 51% attack on Bitcoin yet,and it is unlikely to be. The situation is different with some altcoins.

In mid-2018, the website gained popularity in the world of cryptocurrencies. With the help of his service, it was possible to rent a hashrate for conducting a 51% attack on any network.

The former ZenCash network (now HoriZon) also fell victim to a 51% attack. The blockchain was then reorganized several times. The largest of the reorganizations was 38 blocks. So the attacker managed to deceive the network for more than half a million US dollars. The estimated cost of the attack is $30,000. So here the attack was very profitable.

Bitcoin Gold and Verge have also already become victims and confirm that this attack vector is real and dangerous. Ethereum Classic suffered in 2019 and 2020, when attackers doubled their expenses with dramatic consequences. Several thousand blockchains were copied and more than $ 5 million was stolen.  Bitcoin SV became the latest victim when five attacks were carried out on this network in August.

Therefore, only weak cryptocurrency systems can be the target of this kind of attack, and this does not threaten Bitcoin.