Be it Blockchain, Bitcoin or Crypto Currencies, they all go hand in hand. This decentralized technology has transformed people’s perception about assets and precious data. A continuous growing list of digital transactions records is known as blocks. With the help of cryptography, each of these blocks are linked and secured together which are then known as a Blockchain.
While, Blockchain is un-tamperable and unique, there is one sword that hangs above its head, 51% attack! In it, majority holding miners can prevent other miners from mining valid blocks and earn its rewards. It would corrupt the blockchain and render the whole system unsafe. To protect one’s wallet, one needs to keep a keen eye on the board.
What is 51% attack?
We have been putting all our eggs in one basket which we don’t even have control over! As Blockchains are a visible ledger, you and others on the network self-govern and manage them. This is supposed to reduce the potential cyber risk of unauthorized transactions when a vector crosses the halfway mark of the board at 51%. It’s a common term to explain that most of the board is now in one person’s power who can unethically manipulate the board and ‘double spend’.
A double spend is where a set of coins are spent in more than one transaction. The main ways to perform a double spend: Send two conflicting transactions in rapid succession into the Bitcoin network. This is called a race attack. The second way is to own 51% of the total computing power of the Bitcoin network to reverse any transaction you feel like and have total control of transactions which would appear in blocks. This is the 51% attack. Ideally a miner may need up to 65% of the network mining power (hashrate) or more. But, that’s too ambitious a number to be allowed to be acquired by an individual.
How To Prevent or Protect Yourself?
Mining Rewards come to the rescue. With bitcoins in their respective wallets, all those mining in a block shall be on the lookout to protect it. When an account holds the majority in the board, they may profit from a double spend by going to exchange quickly. This is achieved by, selling it before the double spend is noticed by others and transaction is reversed to the original. The other miners usually spot if there are any transgressions as that makes a blockchain unreliable. This may result in a fork and lead to the drop of the overall value of their currency in the market.
There have been a few close calls in this regard, but so far, none managed to cross the line. The Ghash.io board achieved 42% of mining power in one day. This happened in July 2014, after which they committed to keep a close eye on their board and its division.
Crew 51 on the other hand, had a different story altogether. In 2016, they specifically targeted smaller Ethereum based blockchains and held it for ransom. They claimed to have in possession 7000-8000 blocks which they would fork, if their demands weren’t met. As no deals were struck, they gained money by double-spending the coins in their possession. They also, hijacked the blockchain leading to losses.
Ethics makes a man. On a decentralized platform, where you can earn big bucks for minimum physical labor, fraud and cheating is unfair and uncalled for. Though 51% attack is a hypothetical scenario, industry pundits have taken note and studied the effects of these attacks to learn from them and strengthen their own networks.
Next Read: A Layman’s Guide To Blockchain