The Rising 51% Attacks Against Blockchain
With the rise in cryptocurrency transactions, hacking and other illegal activities are increasing too.
For the past few weeks, Bitcoin has witnessed a huge rally. As the pandemic induced uncertainty continues, people moved from stocks to gold and now, to cryptocurrencies. However, attacks against blockchain, which serves as the bedrock for cryptocurrencies, have become common as well.
According to a number of reports, in early November, the privacy-centric cryptocurrency network Grin (GRIM) became a victim of a 51% attack. It was alleged that an unknown entity gained control of more than 57% of the network hash rate.
So, what is this 51% attack and why should we be aware of it?
The 51% Attack
This is one of the most common attacks on blockchain and most of the cryptocurrencies are vulnerable to this attack. Here is a step-by-step procedure on how the 51% attack works.
Step 1 — Creating A Corrupt Blockchain
If a transaction has to be added in a blockchain, miners must solve a puzzle. Miners have to find solutions to complex mathematical puzzles by using computational power. Wait. Who is a miner?
When a transaction is made over a blockchain, the transaction information must be recorded and is put on a block. This block requires security and encryption and to encrypt this block, miners must solve a cryptographic puzzle to find the proper cryptographic hash for the block.
Once a miner secures the block, the block is then added to the blockchain and it must be verified by other nodes (computers) on the network. If a miner successfully verifies and secures the block, he broadcasts it to other miners.
However, corrupt miners don’t broadcast solutions to the others in the network and this leads to the creation of a new version of a blockchain. So, now there are two versions of a blockchain. The corrupt miner will go and spend his bitcoins in the original blockchain version, but he will continue to work on his own corrupt blockchain.
Step 2 — Make The Corrupt Blockchain The Longest Blockchain
We all know that blockchain is just blocks of data in a chain. So, the longest chain is considered to be the legitimate blockchain. So, if an attacker has enough computational power, he can add blocks to a chain much faster. Now, this chain created by the corrupt miner will look like the most legitimate one.
Once the corrupt miner’s blockchain becomes the longest time, he would broadcast it to the network. Then, the rest of the network will move to the corrupt miner’s blockchain, thinking it as the legitimate one.
Step 3 — Start Reversing The Transactions
Once the corrupted blockchain becomes the legitimate one, the protocol states that all the transactions which are not included in that chain should be reversed. So, all the bitcoins spent by the corrupt miner in his corrupt blockchain will be refunded back to him.
This is called ‘double spend’ attack or 51% attack. In short, this attack occurs when a miner, an organisation or a single entity gains over 50% majority control of the hash rate or computing power runs on the blockchain’s network.
Does this make blockchain unsafe for everyone? Of course, not. Hacking a blockchain is not that easy. One would require high computing power and lots of money to hack it. However, quantum computers can break through any kind of encryption. So, they do pose a threat to blockchain. But, we still have many more years before quantum computers take over the world, so you can just relax for now.
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