51% Attacks Now Commonplace

| Publish date: 06/09/2018
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According to the latest news reports, at least 5 small cap cryptocurrencies have been hit by 51% attacks in just the last one month. Once upon a time, these types of attacks were considered more theoretical than a reality. However, now, 51% Attacks have become a common occurrence.

What is a 51% Attack?

A 51% Attack is an attack on a Blockchain by a group of miners who gain control of 51% or more of the network’s mining computing power (also called hashrate). The attackers can then stop new transactions from getting validated and can prevents payments between some or even all users. These attackers can also reverse transactions that had been completed during the time that they are in control of the network, which means they would be able to double spend those processed coins.

These miners can even prevent other miners from creating new blocks for the Blockchain, thereby monopolizing mining of new blocks for the chain and grabbing the rewards (read: new coins).

The entire concept of a 51% Attack originated in 2014, when Ghash.io, one of the biggest pools of individual Bitcoin miners, briefly crossed the 51% mark in terms of hashrate. This led the Bitcoin Blockchain to become vulnerable to double spending – if the group chose to do so. However, the group voluntarily reduced its hashrate to 40% for the sake of the Blockchain’s security.

Then, in 2016, Krypton and Shift – two Ethereum-based Blockchain – suffered from 51% attacks. However, even at that time, such attacks were considered rare, since carrying out such heists were considered too expensive to be profitable for attackers.

Changing Scenario

Today, however, more and more small-cap Blockchains are being targeted with 51% Attacks.

Last year, Joseph Bonneou, a computer science researcher from NYU, had published his research which showed how much money it would cost to launch a 51% attack just by renting hash power instead of actually buying all the equipment. Basically, his research showed that it had become cheaper to actually carry out a 51% Attack and that such attacks would increase in the future. His prediction seems to have been right.

Thanks to mining farms (also called mining marketplaces) popping up everywhere, people can rent hashpower and mine whichever cryptocurrency they like, buying expensive mining equipment is no longer a necessity. This means attackers can simply rent out the hash power they need to carry out their attacks.

In fact, someone even created a website called Crypto51 which lists out how much it would cost to carry out a 51% Attack on various Blockchains by using a mining marketplace. For example, a 51% Attack on Bytecoin would cost only $719.

While this might not be the worst kind of an attack a Blockchain can suffer, it does impact the smaller projects that are trying to scale up.

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