What is a 51% attack?

What is a 51% attack?

In Proof of Work (PoW) cryptocurrencies, nodes typically are set up to recognize the blockchain with the most blocks (and therefore the most hashing power) as the correct version of history. Miners with > 50% of the network hashing power can take advantage of this by sending funds to one address on the main chain, while sending the same funds to another address on a forked copy of the blockchain that they are silently mining with more hashing power than the main chain.

Since other nodes only know about the main chain, they will see the first transaction as valid, and exchanges, etc will accept this transaction as valid. This malicious node can later release these silently mined blocks, and other nodes will accept this as the new 'correct chain' since it is longer. This will cause the original transaction to effectively dissappear, and nodes will recognize the funds as being sent to the address from the new chain instead. This is known as a 'double spend' attack.

Most bigger cryptocurrencies have sufficient mining capacity behind them, making it extremely expensive to acquire the necessary hardware to pull an attack like this off. Smaller cryptocurrencies have less hashing power securing the network, making it possible to simply rent hashing power from miners on a service like Nicehash for a few hours. This significantly reduces the capital costs of an attack.