51% attack

Introduction

A 51% attack is when one person or group gains more than half of a blockchain’s resources (hash power in PoW, tokens in PoS) in order to reverse a transaction. This is typically done in order to profit via a double spend or simply to maliciously attack a network. Once the 51% threshold is achieved, the entity is then able to validate blocks starting at an earlier block height. Since they can now create blocks at a faster rate, this new chain can outpace the canonical one and thus be considered the valid chain via the longest chain rule. All of the valid transactions that occurred originally are now nullified, leaving any party that exchanged something of value for assets on the 51% attacked chain with nothing. Another attack vector through a 51% attack is preventing transactions from gaining confirmations, effectively blocking certain users from using the network.

It should be noted that, theoretically, these attacks are possible in a PoW network with less than 51% of the hash power because of the randomness involved in block creation. However, it becomes increasingly difficult the less hash power maintained and the farther down the block height an attacker wishes to reverse. In addition, 51% of the network doesn’t let the attacker destroy the cryptocurrency network or create the transactions on behalf of other users, just revert previously confirmed transactions.

Suggested Reading

Blockchain: How a 51% attack works (double spend attack) - Jimi S.

Crypto Mythbusters: 51% Attack Explained - Mikhail Korolev

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