Recently, there have been series of 51% attacks on cryptocurrencies such as Verge and Bitcoin Gold, which saw Bitcoin Gold lose over $18 million. Crypto51.app is a website that seeks to highlight the risk of 51% attack that smaller cryptocurrencies like Bitcoin Gold, MonaCoin, Zcash, ZenCash and many more face to avoid losses.
The website also provides estimates on how much such attacks may cost different cryptocurrencies. Through the information it provides, the website aims at getting people to talk about this problem and its possible solutions.
The website calculates the cost of renting enough hash power to undertake a 51% attack on a cryptocurrency network. The calculations do not include the block rewards that a miner receives for mining. The block rewards in some instances reduce cost of the attack by up to 80%.
It uses the data from Mine-the-Coin for the hash rates, CoinMarketCap for the coin prices, and NiceHash for the hourly prices of renting the mining hash power.
What Is A 51% Attack?
A 51% attack allows the attacker to control the hash rate of a cryptocurrency and spend the funds twice. This is possible in cryptocurrencies that implement the Proof of Work(POW) algorithms as the nodes are built to recognize the blockchain with the most blocks and hashing power to be the right version of the transaction. This, therefore, means that miners with 50% or more the network’s hashing power can exploit this weakness by spending the coins on more than one transaction.
The double spending occurs when miners send the coins to a particular address on the main chain and at the same time send the same coins to another address on a forked blockchain where mining is silently taking place using more hash power than the main chain. The nodes are only aware of the main chain therefore they mark the first transaction as valid.
Afterwards, the malicious nodes release the silently mined blocks to the coins nodes, which will identify the blocks as the correct blockchain as they are longer. The attackers can the use their hashing power to delete traces of the transaction, which leaves them with the funds they sent and received.
Smaller Cryptocurrencies Prone To Attacks
Smaller cryptocurrencies are prone to such attacks since the security of the network does not use a lot of hashing power. Therefore, an attacker can rent hashing power from miners such as NiceHash who already have the necessary hardware. This makes it makes inexpensive for anyone with expertise to attack a smaller Proof of Work coin network. Attacks on larger cryptocurrencies are harder and expensive since they require hardware with a lot of processing power.
Proof Of Stake
Proof of stake systems prevent the 51% attack as in order for the attackers to have more than 50% of the hashing power they will have to purchase more than half of coin supply. This will increase the price of the coins making it expensive and difficult to estimate the hashing power required to execute the attack.
The website recommends interchain linking and building coins on top of other networks such as ERC20 as another possible solution in preventing the 51% attack.