What is a 51% attack?

51% attack poses a potential vulnerability to the decentralized and secure design of blockchains. A 51% attack is when miners with more than 50% of the network's crypto mining hash rate try to change the blockchain.

This enables them to halt the confirmation of new transactions and reverse completed ones, potentially resulting in the double spending of coins, a scenario that consensus mechanisms aim to prevent.

Join us in this blog as we explore what a 51% attack is, how it works, examples that have occurred, and potential solutions to prevent them. Let’s start!

How does a 51% attack work?

To better understand how an attack like 51 attack can happen, it is better to look at how blockchains function under normal conditions. Multiple miners compete to be the first to solve complex cryptographic puzzles and add new blocks.

A successful miner propagates their validated block across the network to achieve consensus. An attacker seeking to gain 51% control would need to amass an enormous amount of hashing power, likely through renting hashing power from multiple sources.

Once in majority control, they can then produce their own alternative chain with altered transactions faster than the original network can create a valid chain. Despite manipulation, other nodes in the blockchain accept this invalid chain due to its provenance and length.

What is a 51% attack example?

Some notable cryptocurrencies that have fallen victim to 51% attacks include Bitcoin Gold, Ethereum Classic, and Bitcoin SV. In 2018, Bitcoin Gold lost over $18 million in a 51% double spending attack where an unknown hacker reorganized the chain and stole crypto coins.

Ethereum Classic saw over $1 million stolen in a January 2021 attack. Attackers have also targeted numerous small altcoins. Smaller networks become easier targets due to their lower overall hashing rates.

Gaining majority control requires enormous computing resources, which is one reason attacks on larger networks like Bitcoin have so far been unsuccessful. Bitcoin's estimated cost for such an endeavor is over $5 billion. This highlights the importance of scale for security.

Can a 51% attack reverse transactions?

A 51% attacker can censor transactions and commit double-spending, but they are unlikely to be able to undo past transactions that have already become deeply ingrained in the main blockchain.

The further back in the chain a transaction is, the more work (hashing power over time) has gone into including it. So it would be computationally unrealistic for an attacker to generate an alternative blockchain by rebuilding from that older transaction and mining it ahead of the main chain.

51 Attacks are generally limited to delaying or invalidating unconfirmed transactions that have not yet been cemented in multiple subsequent blocks.

What is the effect of the 51% attack?

A successful 51% attack on a blockchain can undermine confidence in that network's integrity and decentralization. It calls into question the immutability and censorship-resistance properties that cryptocurrencies aim to provide.

While blockchains may be resistant to small changes by bad actors, a large enough computing power consolidation can pose real risks.

The viability of proof-of-work systems may come into question if networks are vulnerable to takeover by hash power monopolies. This undermines users' confidence in the reliable processing of transactions, as anticipated.

How do you detect a 51% attack?

There are a few signs that can indicate a blockchain may be under 51% attack:

• Unclear or unconfirmed transactions can be censored or delayed by an attacker.
• Multiple competing valid blockchains emerge; the attacker has override power.
• A deep reorganization of blocks appears; attackers altered past transactions.
• Double spending or theft of coins suddenly becomes possible.
• There are abnormal swings in the hash rate or hash power concentration.

By keeping an eye out for these anomalies on block explorers and using node software, we can detect potential attacks early on and prevent further damage.

What are the solutions to 51% attacks?

There are some approaches that networks take to reduce 51% attack risks:

• Increase the hash rate, or decentralization, over time.
• Hybrid PoW and PoS designs spread validation across stakeholders.
• Auditing the reserves of stablecoins like EURK reduces the risk of de-pegging.
• Detection tools to identify attacks before significant double-spends.
• Emergency difficulty adjustments if hash power drops unexpectedly.
• Community coordination is necessary to quickly respond to and patch vulnerabilities.

Growing blockchain networks, improving technical safeguards, and vigilance in monitoring potential issues are important ways the industry continues to work to address one of the most serious threats.

How do I prevent 51 attacks on the blockchain?

On an individual level, there are still some best practices users can follow:

• Use large, well-established networks, which require immense resources to override.
• Consider alternatives to proof-of-work, such as proof-of-stake systems.
• Don't store large sums on crypto exchanges; use secure crypto wallets.
• Wait for multiple blocks of confirmations before accepting TX as final.
• Consider stablecoins like EURK euro stablecoin secured by financial regulators and reserves.
• Monitor trusted blockchain data sources for any reports of anomalies.
• Support network upgrades that address known or potential vulnerabilities.

While no system can be 100% hack-proof, following basic security precautions and patience is wise when transacting on public blockchains, which are still maturing technologically.

The bottom line

51 attacks pose real risks for cryptocurrency networks if a single entity achieves majority control over block validation. However, as blockchains grow enormously in scale over time, the costs of mounting such an attack become impractically high.

Through ongoing technical improvement, community cooperation, and vigilance in monitoring networks, the industry works to minimize these threats and build ever more resilient blockchain infrastructure.

The challenges posed by 51% attacks will likely continue to incentivize progress toward more decentralized and secure consensus mechanisms. Stablecoins that have secure reserves and follow regulations like EURK offer additional safeguards in this regard.

EURK is a euro stablecoin that is 1:1 pegged to the euro and has secure reserves in Switzerland. As the best euro stablecoin and secure euro stablecoin platform, EURK offers fast and secure transactions and is not prone to attacks with its peg.

You can easily buy EURK on Coinstore and KoinBX and integrate it into your business to be protected from the negative consequences of attacks. Become a partner with EURK today and explore the security of EUR stablecoins with your compatible euro stablecoin wallet!