What is 51% Attack
A 51% attack refers to a situation where attackers control more than 50% of a blockchain network's computing power in PoW blockchains or share of stake in PoS blockchains. This majority control allows attackers to manipulate the consensus mechanism of the blockchain, which can lead to various forms of malicious activities, such as:
- Double spending: The attacker can spend the same cryptocurrency multiple times by reversing transactions. They can create a fork in the blockchain and then add blocks to their own version of the chain, while also spending the same coins on the original chain. Once their private chain becomes the longest chain, the network will consider it as the valid chain, and the transactions on the original chain will be invalidated, allowing the attacker to spend their coins again.
- Censorship: With majority control over the blockchain, the attacker can choose to exclude or delay specific transactions from being included in the blockchain. This can be used to manipulate the transaction history or block particular users from making transactions.
- Block reward manipulation: The attacker can potentially manipulate the process to award themselves a larger portion of the block rewards or even monopolize the rewards completely.
A successful 51% attack can undermine the integrity and security of a blockchain network, eroding trust in the cryptocurrency and potentially causing its value to plummet. However, launching such an attack is generally difficult and expensive, especially for large, well-established networks like Bitcoin and Ethereum. The resources required to execute a 51% attack on these networks would be immense, making it less likely for an attacker to attempt it. Smaller and less secure networks, however, may be more vulnerable to such attacks.
One notable example of a successful 51% attack is the Ethereum Classic (ETC) incident in January 2019. Ethereum Classic, a cryptocurrency that emerged as a result of a hard fork from the main Ethereum network, experienced a 51% attack. The attackers managed to double-spend approximately 219,500 ETC, which was worth around $1.1 million at the time. Major cryptocurrency exchanges, like Coinbase, temporarily halted trading and deposits of Ethereum Classic in response to the attack.
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