51% Attacks Pose a Threat to Crypto Development

Most Blockchain networks have historically been secure, for the most part…

However, when one mining pool controls 51% of the network hash power, that group can potentially take over the network. A 51% attack gives a central power the ability to determine if certain transactions are executed. This centralized control could also enable double spending for  the interests of those in control.

This point is often brought into discussion with the mining company Bitmain. It would be in Bitmain’s best interest to keep the Bitcoin network secure. The cost of their mining hardware incentivizes them to be good actors, by keeping the network secure in order to maintain the rising price of Bitcoin.

The threat of centralization becomes an issue when a government or a malicious force wants to control Bitcoin, by seizing Bitmain. That entity could temporarily ruin the network by destroying millions worth of mining hardware.

In 2014, a Litecoin mining pool gained access to 48% of the total network hash rate. This incident ended for Litecoin but it brought awareness to the potential dangers which lay head. Monacoin experienced a 51% attack earlier in May and the situation remains unresolved. Other cryptocurrencies, such as Vertcoin, Verge, and Bitcoin Gold, have experienced recent 51% attacks which resulted in critical losses.

If communities do not organize against large mining pools, it is possible that many small proof of work systems will not survive in a continual crypto bear market.

Disclaimer: I am not a financial advisor. This is not financial advice. Please do your research independently and make objective decisions. This article is intended to educate readers about recent 51% attacks. The author holds positions in some cryptocurrencies discussed in the article.