What does the 51% attack mean for POW cryptocurrencies?
The 51% attack is the main attack threat facing the POW cryptocurrency, ETC is one of the most tragic ones. It has the largest market capitalization among the cryptocurrencies that have been hit repeatedly by this type of attack. Previously we used to think that the 51% attack would severely undermine community confidence and cause the currency price to fall (as the value base was shaken), but the reality is that the few attacks that have occurred have been lightly digested in terms of market performance. Not even a big fluctuation, strange indeed, but the market is definitely right.
We all know that POW coins need enough computing power to support them, so miners are a very important group. For any miner to get better returns, in addition to choosing more efficient hardware equipment, cheaper power and some luck, they also make choices from time to time in their mining process.
A. Select transactions to package: transactions with fees higher than a minimum value would be selected by default .
B. Choose a certain height of block to mine: the longest active chain would be selected by default.
C. Choose between different blocks of the same height: the default choice of miner would be taking the first received block.
D. Choose a time to announce the new calculated block: the default action of the miner would be to announce it immediately.
Under normal circumstances, miners will follow the default strategy. However, in some special cases, miners will also choose other strategies for their own interests, such as the attack on ETC this time. The malicious miners did not announce the new blocks immediately after they were mined, but gave themselves enough time to do evil (double spend on the exchange) based on their continued mining (similar to selfish mining).
The 51% attack could not directly steal or spend other people’s money, it works by “changing the confirmed transactions”. For example, in the scenario of buying a product with cryptocurrency, when you receive the product, you can create a longer chain in which the spent coin is used elsewhere or even not traded at all, thus making a profit without spending money.
However, there are not many scenarios where large amounts of cryptocurrency are actually used for trading, and there is no realistic basis for such attacks, so the 51% attacks we see are all launched against exchanges. Almost all realistic 51% attacks have the same operations: deposit coins on an exchange -> change those coins to other currencies/USDT -> make 51% attack to override the original transaction. During this process, if the attacker does not acquire assets large enough to create a large selling pressure on the market, the average user usually does not feel anything. Moreover, the 51% attack cannot be detected beforehand, and more often than not, the victim exchange will have to accept the loss, as the transaction fee will be more important than the loss of the one-time attack.
