Blockchain technology is known as a technology that has a high level of security. One of the key strengths that blockchain networks have that other networks don’t have is their decentralized nature. However, blockchain is apparently still subject to 51% attacks. So, what is 51% attack? Simply put, a 51% attack is an attack carried out by a miner or group of miners with the aim of taking as much profit as possible from the process of cryptocurrency transactions on blockchain technology.
The 51% attack not only attacks the bitcoin network, but also various other cryptocurrencies. What is the big picture of a 51% attack? Here we will give a little explanation for you.
What is a 51% Attack?
As briefly stated in the previous point, 51% attack is a term that often occurs on blockchain networks of all types of cryptocurrencies. In fact, a 51% attack can occur on the proof of work protocol which has been touted as a control system so that miners do not take deviant actions.
This apparently happened not without reason. This attack is caused by the agreement of the miners who control more than 50% of the mining hashrate.
By controlling more than 50% of the entire blockchain network, the miners have greater flexibility to manage transactions. Usually, the miners involved in a 51% attack will do some kind of malicious deal.
The working system of the blockchain network is similar to the voting system. When a miner has completed a certain transaction, the other miners must approve the transaction as a valid transaction.
In the case of this 51% attack, the miners who have agreed to commit malicious intent will jointly reject transactions submitted by other miners. Thus, they can manipulate existing transactions by taking various actions, one of which is double spending.
Double spending itself is the process of using crypto currency in two transactions at once. Usually, the miners who carry out a 51% attack, they will send a certain amount of cryptocurrency and will return it again.
Thus, they can be recorded as having made two transactions and twice the yield. The cryptocurrencies used are the same and only used twice.
Roughly, what is the motive for the miners to carry out the 51 percents attack? The answer, of course, has to do with money. Currently, miners will receive a reward of 12.5 BTC if they successfully mine a new block.
However, the amount of wages or returns earned by these miners will continue to decline over time. Typically, wages will decrease by half every four years. Thus, the wages or yields obtained by the miners can be close to zero someday.
The condition of the decrease in wages called halving is what motivates them to carry out the 51% attack. By carrying out a 51% attack, they will be able to monopolize Bitcoin mining. When doing this monopoly, they can get as much profit as possible.
51% Attack Cases in Real World
The 51 percent attack turned out to be not just a fairy tale that never happened in the blockchain world. In July 2014, a well-known mining pool, Ghash.IO, had reached the threshold with a figure of 51%. In fact, they dominate the hashrate of bitcoin mining.
This condition immediately made the bitcoin community around the world feel worried. Then, they plan to find the right solution to deal with the potential for a 51 percent attack on the blockchain network.
Even the news brought the price of bitcoin down from $633 to $600 at the time. Ghash.IO immediately clarified by calming the rowdy condition. Ghash.IO promises that they will never exceed 40%. In addition, Ghash.IO also urges all its miners not to do anything commendable.
In addition to these cases, there were also two other cases that occurred in 2016 and 2018, respectively. In August 2016, Ethereum-based tokens, Krypton and Shift, experienced a 51% attack. Meanwhile, in May 2018, Bitcoin Gold was hit by a 51 % attack.
This time, the perpetrators managed to control the majority of Bitcoin Gold’s computing power and made double spend transactions for several days. The actions they took made $18 million worth of Bitcoin Gold disappeared by the rogue miners.
Even though there is the potential for a 51% attack to occur, you don’t need to be afraid because carrying out a 51% attack requires very sophisticated equipment and a lot of money. In addition, with the price of cryptocurrencies, particularly bitcoin, soaring at the moment, many will prefer to mine legally.
Moreover, if certain parties control the majority of the hashrate, they will prefer to officially open a mining pool. So, you don’t have to worry about this 51% attack.