Block withholding attack and it's effect on the blockchain network

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INTRODUCTION

Block withholding attacks just like most sophisticated attcks in the world of cryptocurrency represent and posses a significant threat to the integrity and efficiency of block chain networks, particularly those utilizing and operating on the proof of work (PoW) consensus mechanism or algorithm.

The block withholding attack basically involves an attacker, a malicious miner or group of miners who make it their aim to intentionally withhold discovered blocks instead of broadcasting them to the network for the purpose of creating a vulnerability in the networks consensus mechanism.

IT'S MAJOR EFFECT

In this post of mine I will be explaining and discussing some of the different critical and significant effects of a successfully launched block withholding attack on the different block chain networks.

• EFFECT ON MARKET AND ECONMICS

One of the effect and impact of the block witholding attack is clearly seen on the block chain economics and market particularly owing to the fact that cryptocurrency market is mainly dependent on security and stability and these attacks diminishes and compromises this security.

Additionally, when block chain attacks like the block withholding attack is successfully launched or carried out, they have the potential to significantly undermine investor and user confidence and as a result leading to decreased market value for the affected or compromised cryptocurrency network.

Furthermore, this loss of confidence can have drastic and cascading effects some of which includes diminishing and reducing the adoption and utility of the block chain network along with its long term viability as a financial and technological platform or network.

• DIMINISHED NETWORK EFFICIENCY

Another impact and effect of the block withholding attack, infact one of the most immediate effects is that it leads to a significant reduction in the overall efficiency of the block chain network, this happens when miners withhold blocks, thereby compromising and slowing down the network's ability to process and confirm transactions.

As a result we start to notice increased and longer transaction confirmation times and reduced throughput, ultimately undermining the network's primary function and promise of providing and facilitating fast and reliable financial transaction processing.

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You should also know that in extreme cases, this inefficiency can cause delays so significant that it basically makes the block chain network and system less competitive and operational when compared to other transaction processing systems even in their moments of inefficiency.

• REDUCES NETWORK SECURITY

Another effect of the block withholding attack, one of the basic and fundamental effect is that it compromises and reduces the security of a proof of work consensus based block chain network, seeing as its security is directly related to the amount of computational power (hashrate) devoted to the consistent and efficient mining process.

A successfully launched block withholding attack can typically lead to a decrease in the effectiveness of computational power or hashrate, as withheld blocks represent wasted computational effort that does not contribute or support the network's security.

Additionally, this reduction in security makes the network more vulnerable and prone to other forms of attacks, such as the double spending or 51% attacks, where by a malicious entity or individual gains control of the majority of the network's hashrate, you can just imagine all the cascading effect that will have on the market.

• INCREASED FORK RATE

Another effect, the last for this post of block withholding attacks is that they increase the likelihood of block chain forks, if you don't know what a fork is, a fork occurs when two or more blocks are found or existing simultaneously, leading to a temporary divergence in the block chain until one chain becomes longer and is accepted as the main chain.

Withholding of blocks basically increase the possibility and potential of a fork creation seeing as they can basically can create more opportunities for competing chains to emerge in the block chain network hence causing a longer lasting divegence of the network.

Additionally, frequent and constant forks can practically lead to instability and uncertainty within the proof of work based block chain network, as nodes need to and must continuously reorganize their chains so as to determine and follow the longest one.

CONCLUSION

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In conclusion, block withholding attacks pose a multiple part threat to block chain networks operating on the proof of work consensus mechanism by basically impacting and reducing their efficiency, security, miner incentives, consensus mechanisms, and influencing market perception.

Addressing these attacks is very important and by tackling these challenges, the block chain ecosystem can work and take steps towards sustaining its unhindered growth and realizing its full potential as a transformative and innovative technology.