What is a 51% attack?

Blockchain technology is often praised for the high levels of security through the immutable and decentralised nature. Unfortunately no system is entirely invulnerable to attack.

One of the biggest risks to a blockchain network is a 51% attack, an event where a single entity or group gains control of the majority of the network’s mining power, potentially allowing them to manipulate transactions. While these attacks are rare on large, well-established blockchains like Bitcoin, they pose a serious risk to smaller networks.

How Does a 51% Attack Work?

A 51% attack occurs when a miner or group of miners gain control of more than 50% of a blockchain network’s total hashing power (for Proof-of-Work blockchains) or stake (for Proof-of-Stake systems). With this majority control, the attacker can manipulate the blockchain’s consensus mechanism in ways that are normally impossible.

One of the most damaging effects of a 51% attack is double-spending. Normally, once a transaction is confirmed on the blockchain, it cannot be altered. But when an attacker has the majority of control, they can reorganise blocks and create an alternative version of the blockchain where certain transactions never took place. This allows them to spend the same cryptocurrency twice (double-spending).

Other consequences of a 51% attack include preventing new transactions from being confirmed, selectively excluding or reversing transactions, and disrupting the normal function of the blockchain. While the attacker cannot create new coins or steal funds directly from wallets, they can cause severe disruptions that undermine trust in the network.

What Are the Risks and Consequences of a 51% Attack?

The impact of a 51% attack varies depending on the blockchain’s size, security, and level of decentralisation. Smaller networks with lower hash rates are more vulnerable because acquiring 51% of their computational power is easier and less expensive

Financial Loss

If an attacker successfully double-spends cryptocurrency, exchanges, merchants, and users may suffer significant losses. For example, if an attacker deposits cryptocurrency into an exchange, trades it for another asset, and then reverses the original deposit transaction, they can walk away with funds while leaving the exchange with invalidated transactions.

Loss of Trust

Blockchain technology relies on consensus and decentralisation to maintain security. If users and investors believe a network is vulnerable to attacks, its value and adoption may decline, potentially leading to the collapse of the project.

Exchange Delisting

Exchanges may respond by delisting compromised cryptocurrencies, further reducing their accessibility and usability. This has happened to smaller blockchains that have suffered repeated 51% attacks, leading to their gradual decline in relevance.

Which Blockchains Have Suffered 51% Attacks?

More established blockchain networks like Bitcoin and Ethereum have never experienced successful 51% attacks due to their massive computational power, but several smaller blockchains have been targeted:

Bitcoin Gold (2018, 2020)

Bitcoin Gold suffered multiple 51% attacks, resulting in millions of dollars in double-spent transactions.

Ethereum Classic (2019, 2020)

The Ethereum Classic network was hit by several 51% attacks, leading exchanges to increase confirmation times to prevent double-spending exploits.

Verge (2018)

Verge, a privacy-focused cryptocurrency, was attacked multiple times, leading to concerns about the security of its consensus mechanism.

How Can Blockchains Prevent 51% Attacks?

Preventing a 51% attack requires strengthening a blockchain’s security and decentralisation:

Increasing Mining Difficulty and Hash Rate

One of the best defences against a 51% attack is a high hash rate, making it extremely expensive for any single entity to control the network. Larger blockchains like Bitcoin benefit from a vast number of miners competing to secure the network, making an attack financially impractical.

Switching to a Different Consensus Mechanism

Some blockchains have transitioned away from Proof-of-Work (PoW) to Proof-of-Stake (PoS), where network security is based on the amount of cryptocurrency staked rather than computational power. Since PoS requires attackers to own a significant portion of the cryptocurrency itself, they would have more to lose if the attack destabilised the network.

Checkpointing and Finality Protocols

Some blockchains implement checkpointing, where validated blocks become irreversible after a certain period. This prevents attackers from reorganising past transactions, reducing the risk of double-spending.

Encouraging More Decentralised Mining

A blockchain’s security improves when mining power is widely distributed across independent miners instead of being concentrated in large mining pools. Some projects promote mining decentralisation by limiting individual mining rewards or adjusting difficulty dynamically.

Exchange Countermeasures

Exchanges can protect themselves by requiring a high number of confirmations for deposits before allowing withdrawals. This makes it more difficult for attackers to execute double-spending schemes within a short timeframe.

Is a 51% Attack Still a Major Threat?

51% attacks do still remain a theoretical risk, but it is becoming increasingly rare to see an attack like this on major blockchains. The sheer cost of launching an attack on networks like Bitcoin or Ethereum makes them impractical.

As blockchain technology evolves, new consensus mechanisms, hybrid security models, and enhanced decentralisation efforts are also reducing the risk of 51% attacks. For users, investors, and developers, understanding these threats is essential to making informed decisions about which networks to trust and support.