51% Blockchain Attacks: 3 of the Biggest Examples of Crypto’s Kryptonite and Worst Nightmare
A 51% attack is definitely the worst case scenario for any cryptocurrency. An attack done in this way will cause confidence in a cryptocurrency to plummet and anyone looking to create a cryptocurrency needs a robust, carefully planned PoW consensus.
What A 51% Entails
The detail is in the name. A 51% attack may occur when someone gains control of anything over 50% of a network's hashrate. Remember, a hashrate is the total computational power used by a network to validate any transactions on the network. Should a malicious entity gain that 50%+ power, they would be able to double-spend coin and, more horrifically, they would be able to invalidate transactions.
These attacks are generally extremely expensive to implement on blockchains that have enough computing power. Bitcoin's current 38000 PH/s (Pethashes per second) would cost around $380 thousand an hour to gain a 50% control of the network hashrate. However, other coins are not so robust with Bitcoin SV's 860 PH/s need a total of $8100 an hour to take over.
Centralization poses the most serious threat to a cryptocurrency. There was an uproar when BTC.TOP, a wildly popular mining pool gained control of 50.2% of Bitcoin Cash's mining power. However, nothing has happened, yet, with regards to either of those two coins. There are 3 prominent examples of 51% attacks though and they offer lessons for any crypto startups and projects that may be looking to get in on the crypto action.
Feathercoin: From Top 10 To Nothingness
Feathercoin currently sits at around 461st on the crypto charts, but in 2013 it was a major player. It was in the top 10 cryptocurrencies available and things were looking good.
Then the attack happened and everything changed. On the 8th of June in 2013, an attack was started when a noticeable increase in mining power was shown across the pool. Many thought it was due to the change in difficulty increasing mining profitability. The initial attack left 80 orphaned blocks and exchanges had to increase the requirements for Feathercoin's confirmations.
The website of the coin suffered a DDoS attack at around the same time and the coin fell into obscurity from then on.
Vertcoin: Rounding Off 2018 With An Attack
The 51% attack on Vert happened between October and December of 2018. Over eight reorganizations of the Vertcoin blockchain, attackers were able to double spend over $100 thousand. A chain reorganization happens when a miner with more than 50% of the hashrate creates an alternative transaction history that will eventually replace the network's transaction history. There was panic and the coin value plummeted.
In the time since the attack, Vertcoin has changed its algorithm to Lyra2REV3. This was done to stop specialized mining hardware from being used to overpower the system. The CEO of Vertcoin has said the problems started when specialized hardware was brought out that allowed cloud-mining services to lower their prices significantly.
The drop was not as severe as Feathercoin, but the coin did drop in the rankings by about 30 places. The project leaders are working on tackling the issues with Vertcoin's algorithm, particularly with regards to abrupt increases of hashing power that can be gained from cloud-mining services.
Ethereum Classic: Classic Coin, Classic Reasoning
Ethereum Classic is the original Ethereum. The current Ethereum project was forked from Ethereum Classic when the main developers wanted to reverse the now infamous DAO hack. There were many proponents of maintaining the Ethereum transaction history as it, but Ethereum was able to jump ahead of Ethereum Classic.
Ethereum Classic was attacked in January of this year with a 1.1 million US Dollar heist that attackers gained following 11 reorganizations of the blockchain. The attack was first reported by Coinbase on the 7th of January 2019.
The attack caused the rice of Ethereum Classic to plummet, but it has rebounded along with every other cryptocurrency in April, which was particularly kind to Ethereum classic as it returned the value lost due to the attack.
The project devs of Ethereum Classic once again decided not to reverse the attack, much like the decision taken after the DAO debacle that leads to the Ethereum fork. However, they also listed a number of steps that they would be taking to prevent future 51% attacks. Listed among the contingencies was a monitoring and alert system that would identify attacks much faster. They have also proposed a PoW algorithm change to make sure that the effect of NiceHash renting attacks is minimized as much as possible.