The 51% Attack: What Is It and How Can It Affect the Blockchain?

What Is the 51% Attack? 

The blockchain is represented as a chain of blocks that store information about crypto transactions. Each entry is verified by nodes (computers that keep a copy of the entire network and monitor each transaction). A new block is only added after most participants have confirmed its contents. 

A 51 percent attack occurs when hackers take control of more than half of the network’s total computing power (hash rate). This gives them the ability to monopolize processes, violating the blockchain’s key principle of decentralization. Although changing transactions confirmed before the attack is impossible, current transactions are vulnerable. 

Attack 51 does not destroy the network, but it significantly reduces user trust in it. 

How Does the 51% Attack Work? 

Hackers use powerful mining equipment or access to large pools of computing power to carry out the operation successfully. The more decentralized and large the blockchain, the more difficult it is to execute a 51% attack because such networks involve thousands of independent devices scattered around the world. This explains why for large blockchains like Ethereum and Bitcoin, 51% attack is unlikely.

In smaller networks with a limited number of nodes, where less computing power is concentrated, it is much easier to realize such a plot, so less popular blockchains are at greater risk. 

Historical Examples of the 51% Attack 

Attacks capturing more than half of the hash rate have been repeatedly observed in the crypto industry. Let’s take a look at the most prominent examples: 

Ethereum Classic (ETC) 

Attackers have attacked the blockchain twice: 

• January 2019. Fraudsters managed to reorganize the blockchain and spend $1.1 million worth of Ethereum twice.
• August 2020. A repeat attack affected more than 7,000 blocks. The result was a double coin debit of $5.6 million.

Bitcoin Gold (BTG) 

• May 2018. Hackers twice spent $18 million worth of BTG. The network’s low overall hash rate made it vulnerable to these attacks.
• January 2020. A similar incident occurred, resulting in $70,000 in damage, further eroding trust in the network.

How the 51% Attack Affects Users and Investors 

The 51% attack poses serious risks: 

1. Loss of funds as a result of double debits.
2. Blocked confirmation of transactions, which provokes their delays.
3. Fall in the value of cryptocurrency on the background of decreased confidence in it.
4. Risks in long-term investments: a network with vulnerabilities becomes less attractive for investment, especially for large players.
5. Reduced blockchain functionality because miners and validators cannot add new blocks.

How to Protect Against a 51% Attack? 

To reduce the risk of a 51% attack, blockchain networks are adopting the following strategies: 

Increase decentralization 

The more nodes in the network, the harder it is for attackers to concentrate a key amount of power in their hands. Bringing in new miners and node operators, as well as evenly distributing computing resources, increases the resilience of the blockchain. 

Monitor network activity 

Regular monitoring of the hash rate and behavior of network participants helps detect suspicious activity. 

Using modern consensus mechanisms 

The Proof of Stake (PoS) algorithm and its hybrid versions make attacks more costly and less profitable for attackers. 

Attracting additional resources 

Stable blockchains are often backed by large mining pools and active participants, making it difficult for one group to dominate.

Investors who want to protect themselves from such attacks must choose trustworthy cryptocurrencies based on blockchains with high decentralization. To reduce risks, it is better to favor cold storage instead of exchange wallets: hardware and mobile wallets. You should also monitor the news and postpone crypto transactions in case of a suspected attack. 

Prospects for Blockchain Technologies and 51% Attacks 

Despite the existing risks, blockchain has great potential and continues to develop. To make networks more secure, new mechanisms of operation are being developed to replace legacy systems, such as Proof of Work.

In parallel, new data protection technologies are being introduced to make transactions more secure. For example, zk-SNARK technology allows transactions to be verified without revealing their contents, and homomorphic encryption makes it possible to work with sensitive data without unprotecting it. 

Artificial intelligence and international collaboration play an important role. AI helps detect threats in real time, and globally harmonized security standards make blockchains more resilient. 

Conclusion 

The 51% attack is a serious threat that can disrupt the blockchain and reduce user trust. However, decentralization, advanced consensus algorithms, and continuous technology development help minimize the risks. 

Blockchain remains one of the most promising systems with the potential to change many industries, and its development continues. New solutions, an active community, and international collaboration make this technology even more resilient and reliable.

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