It has been reported that 51% attacks on blockchain networks have become far more frequent events than once anticipated, with at least five cryptocurrencies being hit in the last month, reports Coindesk.
Monacoin, Bitcoin Gold, Zencash, Verge and now, Litecoin Cash have all recently been targeted and, in each case, networks have been severely compromised and transactions have been rearranged, resulting in heists of millions of dollars.
A 51% attack refers to an attack on a blockchain by a group of miners controlling more than 50% of the network’s mining hash rate, or computing power.
Such an attack doesn’t give you full power over the network. The farther back in the blockchain transactions are, the more secure they are against this kind of attack. Realistically, an attacker would only be able to modify transactions within the past few blocks. They would also not be able to make new coins out of thin air – except those received as block mining rewards as usual.
The odds of success are very low with networks secured with massive amounts of hashpower, such as Bitcoin’s, as it would require immense resources, making any attempt economically unfeasible. Less secured networks of alternative cryptocurrency, however, are more vulnerable.
In each case reported, the recent attacks have only been able to amass enough computing power to compromise smaller networks, but the frequency of such events is worrying for users of the blockchain. Until now, such attacks have been very rare to the extent that some experts once claimed they wouldn’t be possible.
NYU computer science researcher Joseph Bonneau recently calculated how much money such attacks would cost, as until recently this was thought by experts as the main deterrent against such activities. He made the assumption that such attacks were likely to increase over time. The university released research last year featuring estimates of how much money it would cost to execute these attacks on top blockchains by simply renting power, rather than buying all the equipment.
Hackers first need to accumulate hashing power, but once achieved they need to target thousands or even millions of dollars to make the process financially viable, given the initial power outlay.
“Generally, the community thought this was a distant threat. I thought it was much less distant and have been trying to warn of the risk,” Bonneau said, adding, “Even I didn’t think it would start happening this soon.”
There isn’t a single reason why hackers target smaller networks. Since they have attracted fewer miners, it’s easier to buy (or rent) the computing power needed to build up a majority share of the network. On the other hand, larger cryptocurrencies such as Bitcoin and Ethereum are harder to 51% attack because they’re much larger, requiring too much hashing power.
“Bitcoin is too big and there isn’t enough spare Bitcoin mining capacity sitting around to pull off the attack,” Bonneau told CoinDesk.
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