WHY THIS MATTERS IN BRIEF
51 percent attacks are rare, but as criminals continue to gain access to more computing power smaller cryptocurrency networks are in increasing danger of being comandeered.
This week not one but three cryptocurrencies, Bitcoin Gold, Verge Coin, and Monacoin, were hit with a rarely seen cyber attack, and the hack, called a “51 Percent attack,” allowed the hackers to steal about $20 million, mostly from the Bitcoin Gold ledger. Bitcoin Gold published their advice and response to the attacks here.
If you’ve never heard of a 51 percent attack, that’s because for the most part, crypto experts weren’t particularly worried about them until now, according to Motherboard, because up until now these trypes of attacks weren’t very common and had only affected very small coins. For example, the last knock 51 percent attacks were carried out against two smaller, less popular cryptocurrencies in 2016 where just a few thousand dollars was stolen, and also in part because, until recently, there had been only a few cryptocurrencies out there. In addition to this the ones that did exist, like Bitcoin, were so popular that they would have been incredibly difficult to commandeer in this way.
A 51 percent attack works when someone takes over the majority of a blockchain network’s computational mining power, one of the reasons why experts up until now it seems, haven’t been too concerned about them. It’s this control that allows the person or group behind the attack to start their own, private ledger for the particular cryptocurrency, and with this majority share of the network the hackers who are now in control can buy something with their cryptocurrency, or cash out, on the public, official ledger, and then send out their private ledger, which other computers on the network adopt as the real thing.
As for these latest attacks though it’s likely the hackers never spent their cryptocurrency at all but still benefitted from the transaction, essentially double spending whatever coin they’ve taken over, because while they control the network, a person conducting a 51 percent attack can also make sure they get all the newly mined coin that appears on the network.
So far, it’s not clear who committed the cybercrime., and, perhaps more worryingly, there’s no indication that authorities have yet started looking into it. In the future, smaller cryptocurrency blockchains may be able to protect themselves by upping the amount of computational power required to buy or sell the currency. While that wouldn’t make them invulnerable to 51 percent attacks though it does mean that hackers would need many more servers and computing power to take over such a big chunk of the network making the attack harder to perform, but still not impossible – especially as increasingly powerful computing platforms , like quantum computers, start coming on line.