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Monday, February 6, 2023

51% Attack- What Does It Signify In Cryptocurrency?

The current world of cryptocurrencies is no stranger to malicious attacks or malware.

Now, while there are quite a few mechanisms through which malicious entities would be able to exploit blockchains, a majority attack, or 51% attack, takes place when a group of miners on a single entity is in control of over 50% of the hashing power of blockchain while assuming control over it.

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Although this is definitely the most tedious, as well as the most expensive method to compromise a single blockchain, almost 51% of the attacks have been highly successful with several smaller networks requiring lower hashing power in order to simply overpower the majority of the nodes. 

51% Attack and Its Impact On Blockchains

In order to understand how a 51% attack takes place, one needs to first imagine that around 50% of all blockchain nodes that have been performing validating functions are conspiring together to bring about a different version of the blockchain or even execute a complete denial-of-service attack.

The latter would be a type of attack in which the rest of the nodes are completely prevented from performing their actions- while the attacking nodes usually go about putting in more transactions to the blockchain, or removing old ones. In any case, the attackers could easily reverse the transactions and even double-spend the native token of crypto– which is quite similar to creating counterfeit currency. 

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Goes without saying, a 51% attack could easily compromise the entire network and also lead to great losses for investors who have been holding on to the native token. Now, despite the creation of an altered form of the original blockchain and the power, it takes in the case of blockchains like Ethereum or Bitcoin, it is nearly not as far-fetched as it might seem for the smaller blockchains.

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