DEFINITION of '51% Attack'

51% attack refers to an attack on a blockchain – usually bitcoin's, for which such an attack is still hypothetical – by a group of miners controlling more than 50% of the network's mining hashrate, or computing power. The attackers would be able to prevent new transactions from gaining confirmations, allowing them to halt payments between some or all users. They would also be able to reverse transactions that were completed while they were in control of the network, meaning they could double-spend coins.

They would almost certainly not be able to create a create new coins or alter old blocks, so a 51% attack would probably not destroy bitcoin or another blockchain-based currency outright, even if it proved highly damaging.

BREAKING DOWN '51% Attack'

Bitcoin and other cryptocurrencies are based on blockchains, a form of distributed ledger. These digital files record every transaction made on a cryptocurrency's network and are available to all users – and the general public – for review, meaning that no one can spend a coin twice. (So-called "private blockchains" introduce permissions to prevent certain users of the general public from seeing all the data on a blockchain.)

As its name implies, a blockchain is a chain of blocks, bundles of data that record all completed transactions during a given period of time (for bitcoin, a new block is generated approximately every 10 minutes). Once a block is finalized – "mined," in the jargon – it cannot be altered, since a fraudulent version of the public ledger would quickly be spotted and rejected by the network's users. 

However, by controlling the majority of the computing power on the network, an attacker or group of attackers can interfere with the process of recording new blocks. They can prevent other miners from completing blocks, theoretically allowing them to monopolize the mining of new blocks and earn all of the rewards (for bitcoin, the reward is currently 12.5 newly-created bitcoins, though it will eventually drop to zero). They can block other users' transactions. They can send a transaction, then reverse it, making it appear as though they still had the coin they just spent. This vulnerability, known as double-spending, is the digital equivalent of a perfect counterfeit and the basic cryptographic hurdle the blockchain was built to overcome, so a network that allowed for double-spending would quickly suffer a loss of confidence.

Changing historical blocks, transactions locked in prior to the start of the attack, would be extremely difficult even in the event of a 51% attack. The further back the transactions are, the more difficult it would be to change them. It would be impossible to change transactions prior to a checkpoint, past which transactions are hard-coded into bitcoin's software.

On the other hand, a form of a 51% attack is possible with less than 50% of the network's mining power, but with a lower probability of success.

Ghash.io

The mining pool ghash.io briefly exceeding 50% of the bitcoin network's computing power in July 2014, leading the pool to voluntarily commit to reducing its share of the network. It said in a statement that it would not reach 40% of the total mining power in the future.

Krypton and Shift

Krypton and Shift, two blockchains based on ethereum, suffered 51% attacks in August 2016.

Bitcoin Gold

In May of 2018, Bitcoin Gold, at the time the 26th-largest cryptocurrency, suffered a 51% attack. The malicious actor or actors controlled a vast amount of Bitcoin Gold's hash power such that even with Bitcoin Gold repeatedly attempting to raise the exchange thresholds, the attackers were able to double-spend for several days, eventually stealing more than $18 million worth of Bitcoin Gold.

34% Attack

The tangle, a distributed ledger that is fundamentally distinct from a blockchain but designed to accomplish similar goals, could theoretically succumb to an attacker deploying over a third of the network's hashrate, referred to as a 34% attack.

RELATED TERMS
  1. Bitcoin Unlimited

    A proposed upgrade to Bitcoin Core that allows larger block sizes.
  2. Bitcoin Mining

    Bitcoin mining is the process by which transactions are verified ...
  3. Bitcoin Core

    Bitcoin Core is software that includes a wallet, and helps keep ...
  4. Block Reward

    Bitcoin block rewards are the new bitcoins that are awarded by ...
  5. Bitcoin Cash

    Bitcoin cash is a cryptocurrency created in August 2017, arising ...
  6. Uncle Block (Cryptocurrency)

    Uncle blocks are orphan blocks on the Ethereum network, and miners ...
Related Articles
  1. Trading

    Bitcoin Cash: The New King of Cryptocurrency?

    Investors are wondering if the popularity of Bitcoin Cash poses a serious threat to the Bitcoin throne.
  2. Tech

    How Will Bitcoin 2.0 Change The World? (MSFT, OSTK)

    Since Bitcoin's 2009 launch, the decentralized, peer-to-peer digital currency and payment system has garnered worldwide interest.
  3. Tech

    How Bitcoin Can Change The World

    Bitcoin has the potential to not only create savings for consumer, but also to transform global transactions.
  4. Tech

    Why You Shouldn't Ignore Cryptocurrencies

    There are three big reasons why cryptocurrencies and the blockchain technology they are built on should be taken seriously.
  5. Tech

    Speed Is Essential for Bitcoin Platforms

    Why does speed especially matter with Bitcoin technology? It's because Bitcoin platforms using blockchain need to meet the needs of users in times of high volatility.
  6. Tech

    Bitcoin Gold Is Now Live

    A formal software client download was released at 7 p.m. UTC on November 12.
  7. Tech

    What Is Bitcoin Unlimited?

    And why is there now more than one type of bitcoin?
  8. Tech

    What Determines the Price of 1 Bitcoin?

    There are several factors that affect bitcoin's price, including supply and demand, forks, and competition.
  9. Tech

    Bitcoin vs. Big Finance (opinion)

    Bitcoin and big finance occupy parallel universes of value, cooperation, and trust. Understanding these differences helps to decipher the meaning behind the blockchain news cycle and how to recognize ...
  10. Personal Finance

    UBS to Test Blockchain Settlement System (BK, DB)

    A team of banks led by UBS is developing a digital cash system using the blockchain technology that forms the backbone of bitcoin.
RELATED FAQS
  1. What Does the Bitcoin Blockchain Record?

    Read about the bitcoin blockchain, a public ledger shared among all bitcoin users that records the information of every single ... Read Answer >>
  2. What are the advantages of paying with Bitcoin?

    Learn how payments made with Bitcoins offer certain advantages over standard currency, including user anonymity, no taxation ... Read Answer >>
  3. What impact have terrorist attacks had on the insurance industry?

    Learn about the impact of terrorist attacks on the insurance industry and how the 9/11 terrorist attack led to important ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but ...
  2. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  3. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  4. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  5. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  6. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
Trading Center