Number of 51 Percent Attacks on Cryptocurrencies IncreasingMay 30, 2018, 9:11PM
The security of blockchain networks has come into question as a 51 percent attacks led to a loss of $20 million in the past week
There has been an increase reported in the number of 51 percent attacks on cryptocurrencies. Dedicated ASICs employing the Proof-of-Work consensus mechanism are being used to facilitate these attacks. Earlier this week, Bitcoin Gold suffered a loss of $18.6 million due to a double spending of coins.
The Proof-of-Work consensus mechanism involves miners validating new transactions for that particular network. They are then rewarded proportionally to the amount of computational power contributed. However, in the event that a miner has control over a majority of mining resources on the network, they can carry out a 51 percent attack. This would allow them to double spend coins and even verify malicious transactions, ultimately causing financial losses to honest users.
A website has been set up to estimate the cost of carrying out a 51 percent attack for all major cryptocurrencies. The cost to gain control of a majority of a coin's mining resources varies from $538,000 per hour for Bitcoin to as low as $7 an hour for Mooncoin and PinkCoin. The rates were estimated for a cloud mining contract with NiceHash. For a cryptocurrency with a market capitalization of around $500 million, an attacker would spend around $778 an hour to hack the network. It is often not worth it.
However, some 1600 digital coins have such a low hashrate that it is possible to carry out a 51 percent attack without having to spend much. Verge lost $1.9 million to a recent 51 percent attack, for instance. The most commonly proposed solution is for cryptocurrencies with lower hashrates and market capitalization to move to the Delegated Proof-of-Stake (DPoS) consensus mechanism to prevent miners from carrying out such attacks.
Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.