What is 51% Attack

A 51% attack occurs when a single entity or coordinated group gains control of more than 50% of a proof-of-work (PoW) blockchain's total mining hash rate. This majority control gives attackers the power to manipulate the network in deeply damaging ways, fundamentally threatening the integrity of the blockchain.

HOW A 51% ATTACK WORKS

In a healthy blockchain, thousands of independent miners worldwide compete to validate transactions. When one party controls the majority of this computing power, they can: reverse their own recent transactions (double-spending, spending coins and then undoing the payment), prevent other users' transactions from getting confirmed, and block competing miners from successfully adding blocks. What attackers cannot do steal funds from wallets they don't own, create coins from nothing, or alter deeply buried historical blocks.

REAL-WORLD EXAMPLES

Ethereum Classic (ETC) suffered multiple successful 51% attacks in 2020, with attackers double-spending millions of dollars worth of coins. Bitcoin Gold (BTG) was attacked in 2018 and again in 2020. These smaller PoW networks were targeted because renting enough mining power was relatively affordable compared to the potential double-spend profit.

WHY BITCOIN IS ESSENTIALLY IMMUNE

Bitcoin's hash rate, hundreds of exahashes per second, requires billions of dollars of specialized ASIC hardware and electricity to even approach 51%. The cost far exceeds any realistic profit, making attacks economically irrational on Bitcoin.

VULNERABLE CHAINSAny :PoW chain where mining power can be cheaply rented (via NiceHash or similar services) faces risk. If attacking costs less than the double-spend profit, the attack becomes economically rational.
DEFENSESNetwork :defenses include transitioning to Proof of Stake (as Ethereum did via The Merge), ASIC-resistant mining algorithms, merge mining with larger networks, delayed finality checkpoints, and exchanges requiring more block confirmations before crediting deposits.

Terms in addition to the 51% Attack

Blockchain

A blockchain is a subset of a distributed database. The Bitcoin inventors originally prototyped the system in 2008. This modern database is made up of separate blocks that are connected together in a chronological chain. Blockchains may be used to store a wide range of data types. It has mostly been utilized as a public ledger for bitcoin transactions to date. A peer-to-peer network comprised of independent nodes uses a consensus process to ensure the blockchain's security and legitimacy. Each node in the network keeps a public and immutable copy of the data.

2 Factor Authentication (2FA)

2 Factor Authentication is a security measure with two layers. It is used by the majority of cryptocurrency exchanges. To log in, you must provide not only a password, but also a code obtained, for example, from the Google authenticator.

Airdrop

An airdrop is a method of distributing coins. End users can typically obtain coins for free or in exchange for doing a small task, such as subscribing to a newsletter, sending a tweet, or inviting others via a personal affiliate link. Cryptocurrency airdrops — the act of depositing cryptocurrency into public crypto wallets — are utilized as a marketing, liquidity creation, and network bootstrapping technique for many different types of blockchain initiatives.

Altcoin

Altcoin - "alternative coin" - is any kind of digital currency other than Bitcoin. Since the launch of Bitcoin, the world's first digital currency, many altcoins (as well as supporting blockchains) have been created. Altcoin digital currencies share many similarities to Bitcoin, but consistently and have significant differences. There are about 20,000 altcoins, and this number is expected to grow significantly in the coming years. Altcoins often develop Bitcoin features. Ethereum, currently the most widely used blockchain, supports digital contracts and separate applications where Bitcoin does not. Altcoins are also often created to cater to the needs of different users. The Litecoin blockchain, for example, can process payments quarterly for the duration of Bitcoin.

Cold Storage

Cold storage is the way to store cryptocurrency offline. The word refers to the use of offline wallets that are not connected to the internet. Cold storage is the most secure way to keep cryptocurrencies since an offline currency becomes less likely to be hacked and stolen. Paper wallets, printed renditions of private keys, and offline hardware and software wallets are all examples of cold storage.