What is 51% Attack in Cryptocurrency?
A 51% attack is when a person or entity gains control over the majority of a blockchain network’s hashing power. It is viewed as a mortal threat to the concept of decentralization. To launch a 51% attack, a person has to control the majority of a network’s mining power and use that power to alter recorded transactions. Large cryptocurrencies like Bitcoin are incredibly difficult to attack because of the resources and hardware it would take.
How do you detect 51% Attacks in Crypto?
The most obvious way to detect a 51% attack is by looking at the blockchain itself. If you see a lot of blocks being mined by a single entity or a small group of entities, then it’s likely that they are engaged in a 51% attack. You can also look at the hashrate distribution of a given cryptocurrency. If the hashrate is highly centralized, then that also raises the possibility of a 51% attack.
Are 51% Attacks Illegal?
Cryptocurrencies are not affiliated with any government. A 51% percent is technically legal and it is up to the coin community and development team to prevent such an outcome. News of a 51% can adversely affect the price of a cryptocurrency and its reputation. Therefore, it is in the interests of a crypto project’s development team to entrench decentralization and make 51% attacks as difficult as possible.
How Much Would It Cost To 51% Attack Ethereum?
It would cost a few million dollars each hour to launch a 51% attack on the network. This figure is a very conservative estimate that does not account for electricity and equipment costs. Launching such an attack is an immense logistical effort that would need state-level operatives to execute. Even if they attempt, it is unlikely that such an attack can be quiet without network participants noticing something is amiss.
How Does Proof Of Stake Prevent 51% Attacks?
In theory, Proof of Stake blockchains should be susceptible to attacks. After all, one only needs to accumulate enough tokens to take control of network validation. Staking involves locking up tokens without the ability to move them without instant rewards. Therefore, the security of Proof of Stake networks mostly stems from the cost and time it takes to acquire fifty one percent of tokens. Since the blockchain is a public ledger, such activity will already be visible to participants and any attempt to execute such an attack would result in the malicious agent losing their staked assets.
Has Bitcoin Ever Had A 51% Attack?
There has never been a successful 51% attack on Bitcoin. This is because Bitcoin is by far the most secure Proof-of-Work network boasting over 100 EH/s in hash rate. This is massive compared to other networks adopting the same consensus algorithm. As Bitcoin keeps gaining value and miners, it becomes more difficult to launch such an attack. Smaller coins like Bitcoin SV, a Bitcoin fork, and Ethereum Classic have taken the brunt of such attacks, calling into question their security which had a consequential effect on their price and reputation.
