How do the malicious miners confuse the reliable miners? This is something that is important to know to be alert to any non-legitimate transaction that could affect the capital that has been placed in a blockchain network. Precisely to understand this well is that we have talked about the issue of mining in the previous article entitled What is Bitcoin mining? To understand exactly what a miner does, what rewards he gets from his work and what is the difficulty of it, all through the “legal” and natural ways, however, there are always those who get out of that line and seek to commit actions “Illegal” in order to obtain greater benefits and that is where the famous “51% attacks” arise, of which we will speak next.
What is a 51% attack?
As we mentioned in the previous article entitled What is the blockchain technology? In the case of decisions in this technology, majorities always take them. If for example you want to add a new block to a chain is the group of miners or shareholders who have at least 51% of the hash rate or the computing power over the blockchain network can approve or reject the new blocks that are added to the chain, as well as they can decide on the changes that are going to be made.
This can be quite complicated for those who attempt to legally undermine a blockchain that is already controlled by a group that, having at least 51% control of the hash rate, can make a kind of private block chain where they only add the blocks of their convenience and control who can receive and who not the rewards of mining, by approving or rejecting transactions.
Operation of a 51% attack
Each blockchain contains statistics of miners or mining pools that are dedicated to finding new blocks in their network and each of them has a percentage of participation in it, this is how it could happen that a company that has a lot of computational power could get to undermine 51% of the transactions that are being made in that chain.
As this case is very difficult, what is more likely to happen is that the companies join, creating an alliance or agreement that adds 51% or more of the hash rate or computational power in the network, that way that association or group of companies would have the capacity to decide on what happens in the blockchain, bringing some negative consequences for the rest of the miners, such as those we will see below.
What are the consequences of the 51% attacks?
Inevitably one of the consequences if any of these attacks occurs is to generate mistrust on that network, which could result in a drop in the value of your cryptocurrency, because as we know, the value of cryptocurrencies is based on the trust of the users in the transactions they make with them.
Other important consequences if a 51% attack were to occur is that the miners who have the majority, would have the possibility of reversing transactions, even if they have gone through all the required confirmations (6 in the case of bitcoin), it could be incurred a double spending on the blockchain, could prevent transactions from being confirmed and even prevent other miners or mining pools from undermining new blocks.
Can 51% attacks be avoided?
Yes. It is possible to avoid them by improving certain aspects of network security. Actually one way to do it is to appeal to the good faith of the members of the blockchain, trying that the miners do not handle more than 49% of the computing power of the network. Penalties could also be established for mining pools that reach 50% or demand that they give a part of their computing power to other miners.
As for hackers, it is very difficult to defend against attackers, since they usually do not enter with the same strategies all the time, there have even been cases in which bifurcations are generated on the chain, which may end up generating new cryptocurrencies or generate new tokens that represent a large amount of money. A well-known attack was that of Verge, who managed to make a fraud of about 1.8 million dollars in just a matter of hours.
It is very important that users of cryptocurrencies and especially those who want to dedicate themselves to mining, can know and handle very well the terms that are used, since to the extent that they have more knowledge it will be easier to take the respective precautions and thus avoid falling into fraud or participate in them without realizing that they are doing it.
Does this mean that cryptocurrencies are vulnerable?
If they are vulnerable, but if the comparison is made with other types of transactions, the security that is handled in the crypto world is much higher, in addition to being more convenient and is the trend of the future to migrate from FIAT money to digital money where everyone will receive their rewards. As we mentioned before, it is about being very alert and knowing which blockchains are safer than others, and in that way there will be less risk of losing the accumulated cryptocurrencies.
What do you think about this topic? Did you know about the 51% attacks?
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