If you are abreast of blockchain crypto news, then it is understood that you must be noticing the constant use of the word ‘decentralized’. And why not, this word seems to be a synonym to blockchain or cryptocurrency. The reason for this is the absence of any entity or a person in the verification of the transaction. The task to check the accuracy of the transaction in the blockchain network is performed by the network of computers. After the final agreement, the transaction becomes part of the new block. Although blockchain is not fully a decentralized system, because if the majority of the computer system in the blockchain network comes under the supervision of a group or individual, then it can function in a centralized way also. But this can lead to manipulation of records on the chain by any of those who are having command over it. This majority of controllers comprise around 51% minimum. These are termed as 51% attack which is known to be the biggest threat to the blockchain.
Understand The Concept Of 51% Attack
If you have never been so familiar with the 51% attack, then let us inform you that it is a very important term which you need to know. It is a situation when the majority of the network’s hashing power is controlled by a mining pool or a miner. It results in a disturbance in the operation of the network through a malicious manner by the particular miner. Creating false transactions is impossible for the 51% attackers until they know about the digital signature of a person. However, they are successful in preventing the confirmation of transactions and reversing their transactions. This means the activity of a 51% attack cannot lead to cryptocurrency theft. But it is possible to send someone your cryptocurrency, falsely.
Use Of 51% Attack In Double Spending
51% attack is closely related to double-spending. Want to know how? Then know it through an example. The coins sent to person X by the attacker, while sending the same to person Y. On the blockchain, when the coins sent to the person X are displayed publicly, the attacker having excess hashing power, mines privately mine the block for double-spending transactions to Y, by not letting it shown on the network. When the confirmation about transaction X comes valid on the public blockchain, the attacker plays smartly by presenting the mined blocks that are hidden to the network. Here the transaction Y is shown valid. But now being equipped with so much mining power, the attacker can validate his blocks and generate a larger blockchain than the real one. Because of this, the transaction sent to X is scrapped, as it does not show in the new blockchain. And at the end, X loses all the money, while the attacker gets away with the paid service.
When the majority of the hashing power is being controlled by someone, then the decision regarding the inclusion of transactions in the new block or creation of transaction-free empty blocks is all made by him. A 51% attack is worse for the digital currency being attacked. This results in the crumbling of trust in the network by the public. Besides this, people will dump their holdings when the price will collapse. In short, having large mining power leads to unreasonable authority and control on the blockchain.
How 51% Attack Can Be Prevented
Now if there is a problem, then there is always a solution for it or say prevention. If you want to keep away the 51% attack, then the best solution for this is the decentralization of miners. A network will remain safe when there will be no authority for the mining power of 50%. Note that a person having maximum mining power would earn much money using the power of mining accurately, instead of double-spending. This will substantially minimize the possible risk of a 51% attack.
Bitcoin Too Faced 51% Attack
Among the cases of 51% attack, lays an example of Bitcoin. It suffered this attack when in the year 2014, Gash.io, a mining pool became so big that it crossed total mining power about 51%. This resulted in much terror in the community of Bitcoin. However, it did not last long, as it was being solved in a very short time. It happened when to balance things out, miners thought of leaving the pool.
So this was all about a 51% attack. It is a big threat to the blockchain that have no solid change to the hashing power. If you do not follow the latest Bitcoin news, then you must have missed the fact about how the most prominent cryptocurrency, Bitcoin had faced this attack in the year 2014, January. However, it did not last long. This shows that Bitcoin is not much prone to 51% attack, and nether its closest competitor coin, Ethereum. The risk is however too crucial for the smaller altcoins, which can become prone to this attack. So one needs to be aware of it.