What is a 51% attack and why does it matter?
Over the past few days, Coinbase has suspended any activity involving Ethereum Classic (ETC). It appears that Coinbase was one of the first to realize that the veteran Crypto was under a 51% attack. So, let’s get right to it, what the heck is a 51% attack?
WHAT IS IT?
A 51% attack is a malicious attack on a blockchain by miners controlling more than 50% of the networks mining hash rate, or computer mining power.
WHAT DOES IT DO?
The attacking entity can prevent new transactions from getting confirmed on the network, which would lead to incomplete and halted payments between users. This can also allow malicious users to reverse transactions and double-spend coins.
KEY TAKE AWAY
Basically, the malicious attackers who take over more than 50% of the mining power that can allow fraudulent transactions to be verified because they own the majority of the mining power. These fraudulent transactions would have otherwise been detected and rejected by the miners.
So has this 51% attack ever happened to the Bitcoin network? Yes, kind of. In 2014 a mining operation called Ghash.io exceeded 50% of the Bitcoin mining network, and the company decided to back off and reduce its position. We have come close over the past few years with other more extensive mining operations as well.
Smaller Blockchains with smaller market caps are more accessible to attack, we have seen this before with Verge, Krypton, Shift, Bitcoin Gold, and most recently with Ethereum Classic.