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What is a 51% attack?
This is referring to an attack on a blockchain, and the power they someone has when they have more than half of the total network hash rate. While controlling more than 50% of the total hash rate, they are able to:
Prevent new transactions
They can do this by denying confirmations of a transaction, transactions require several blocks to be confirmed and they won’t be able to get confirmations while the blockchain is being controlled by the attackers while forcing their own transactions to be confirmed
Double send coins
This is works by using your miners (more than 51% of the network) to confirm two seperate transactions, . So for an example:
You have 1 coin, you send that 1 coin to an address, then in the next block, send that same coin to another address
What usually happens is the first coin gets confirmed by miners, while the second one gets rejected as its the same as the transaction they just approved
What happens in the case of a double send, both get sent for confirmation and being able to control more than 50% of the miners, you can force the second transaction to be approved.
Controlling the blockchain
Similarly to double sending coins, you can effectively ‘claim’ every block, this is possible by using the miners to reject other pools block, but confirm your own. Having this kind of power allows you to reap all the block rewards, and you can still pay all your miners by double sending the coins.
Mind you, it won’t take people long to realise whats happening, but if the attacker is smart they’ll sell a large number of the coins before people notice.
A 51% attack, if done properly, will effectively kill a coin very quickly.
There has only been a handful of successful 51% attacks in the history of cryptocurrency.
Another article that helps explain a 51% attack is: https://learncryptography.com/cryptocurrency/51-attack
But how does a 51% attack actually destroy a coin??
It destroys a coin by doing a couple of things.
A 51% attack destroys the economy for that coin
All the ‘eggs’ go into one basket, the attacker gets to control all the new coins
By being able to do those few things, the attacker effectively destroys the market.
Here are some examples of some pools that could perform a 51% attack: