51% Attack

The Bitcoin network is decentralized. This means that no central authority governs the Bitcoin protocol. So-called Bitcoin miners are responsible for validating transactions on the blockchain. Even though the network is designed for decentralization, there is a danger that targets exactly this property: the 51 percent attack.

What is a 51 Percent Attack?

In a 51 percent attack, the attacker brings together more than 51 percent of the hash rate. This allows them to validate transactions that are not correct. This would allow for a double spend (double booking of transactions). In addition, the attacker could reverse or otherwise falsify any transactions. Ultimately, transactions must be confirmed by the network. However, if an instance is responsible for over 50 percent of block creation, it can confirm false transactions.

Is a 51 Percent Attack Realistic?

Depending on the network, a 51 percent attack can be quite realistic. The danger is especially present in small protocols where not much computing power is needed. With Bitcoin, however, the hash rate has been increasing unabated since the protocol was published. The so-called mining difficulty makes it all the more difficult to mine Bitcoin the more computing power is already available. Therefore, it is almost impossible for an instance to bring together over 50 percent of the computing power.

The costs for such an attempt to carry out a 51 percent attack would also run into the billions. Therefore, such an attack is not possible by simple private individuals.

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