What Is Bitcoin 51% Attack, Should I Be Worried ?
Every cryptocurrency, which is related to mining is subject to a 51% attack. In Bitcoin, miners control the network, If a pool operator had 51% of the network, he could always have the “longest blockchain” and decide where all new bitcoins belong. In effect, bitcoin will continue, but no one can transfer their bitcoins to other users. In order to maintain a perfectly working bitcoin currency, no one single entity should ever have control of 51%, or greater, of the total network hashing power
If a miner gains 51% or more power, he is capable to:
- Reverse transactions that he sends while he’s in control. This has the potential to double-spend transactions that previously had already been seen in the block chain.
- Prevent some or all transactions from gaining any confirmations.
- Prevent some or all other miners from mining any valid blocks.
In his Bitcoin paper, Satoshi identified several issues, with the 51% attack being the greatest.
So what is the 51% attack? To understand that you have to understand how Bitcoin works. Essentially Bitcoin is a collection of nodes performing “virtual work”, the more work you do the higher your rating on the network. So what happens when malicious users get together and manage to do more “virtual work” than the “good people” ? Well that is the 51% attack, and it basically means you can wake up tomorrow with zero Bitcoins in your wallet. It means any business that accepts Bitcoins can get robbed and have all their goods taken with fake Bitcoins. It also means if they wanted, governments, large corporations or hackers can “shut down the network” by refusing to accept any new transactions. Complete network shutdown. Can’t do anything with your Bitcoins, neither can anyone else.
Should I be worried?
No, not really. It takes a gigantic amount of computational power to control more than half of the network’s processing power. As of today, 76,731 GH/s (76.73 TH/s) are consumed in mining. So it takes 38,500 + GH/s (38.5 TH/s) to make a 51% attack. Practically it’s not possible, unless an evil genius take control of the top three pools.