A 51% attack refers to an individual or entity taking over more than half of a network's mining hashrate, or computing power. Controlling more than 51% of a blockchain network gives the controlling party the power to alter incoming transaction data. This type of attack is referred to as a 51% attack.
A 51% attack can prevent other miners from completing their respective blocks. Attackers can redirect new transactions, spend coins twice, and manipulate transactions in various ways. However, a 51% attack is not able to reverse older transactions that have already been completed or drain funds from users' wallets.
Understanding the 51% attack
Each blockchain has a sequence of blocks for recording transactions, known as the distributed ledger. These blocks are cryptographically linked. In proof-of-work (PoW) systems, miners solve complex problems and add new blocks of transactions to the blockchain network. If an individual or group of individuals secure more than 50% of the network's hashrate, or computing power, the blockchain system can be voluntarily influenced or attacked.
For large and established blockchains, such as the Bitcoin network, controlling more than 50% of the network can be extremely difficult and presents a significant financial and technical barrier. A 51% attack is also possible in Proof of Stake (PoS) systems, where malicious attackers would need to control more than half of the circulating blockchain currency. For Ethereum, this equates to approximately $205 billion at the time of writing. This is because larger, more established and decentralised networks have a high level of security, making it infeasible for most malicious actors.
Preventing a 51% attack
There are several strategies that can be employed to prevent a blockchain network from being vulnerable to this type of attack. First, it is crucial to ensure that no single entity controls the majority of the network. Keeping miners decentralised reduces the risk of a 51% attack and, in general, of being controlled by a centralised entity. Secondly, miners can opt for ASIC mining equipment, which provides a high security threshold due to it's high mining hash. Finally, Proof-of-Stake (POS) and other alternative consensus protocols allow the user with a large stake to become a validator. These more recently developed consensus protocols have algorithmic mechanisms to quickly identify and stop attackers, resulting in penalties (slashing) and exclusion of the bad actors.
The high value stored in certain cryptocurrencies provides a strong economic incentive to exploit the system. Therefore, the decentralised nature of cryptocurrencies is a common ethos in the blockchain community and mandates constant vigilance and self-sovereignty to protect against bad actors and work towards a decentralised and sectoral system.
