Blockchain is a revolutionary technology that has brought on a lot of good in the world, from expediting shipping to slashing operational costs to empowering a digital currency revolution that is here to stay. Yet, the underlying technology is not without its faults, and blockchain vulnerabilities are a real thing. So, this begs the question: can blockchain be hacked?
The simple answer is – it depends. In theory? Sure, but in practice – we are not as specific. The most popular form of crypto attack is known as the Bitcoin 51% attack. It's defined as an attempt by a party or parties to assume control over 50% of the hash rate, which ultimately verifies transactions as genuine.
Now, in practice, this should not be possible because the sheer computing power and electrical energy needed to deliver such an attack make it challenging, to say the least,, and requires a concentrated, unfaltering effort by wrong-doers. As it happens, though, 51% attacks are possible, which begs the question – what can they do?
Defining Blockchain Systems and Disruption
As mentioned, blockchain is a revolutionary piece of tech in itself, specifically in Bitcoin and proof-of-work networks. Put another way, Bitcoin is supposedly unhackable because it works based on particular protocol rules, requiring all network participants to verify a transaction. In other words, all network participants control the hash rate.
It's a sort of shared ownership, or instead, shared responsibility for the system's well-being. Nodes are verified by individual users and approved automatically as genuine, or conversely, rejected as suspicious. It's a unique ecosystem in which every participant has their say.
But, there is one small caveat. This blockchain system of fairness only works until nobody exceeds the 50% threshold of ownership, hence the 51 percent rule. When participants hash a transaction, it proves that a miner did enough work to receive or send that transaction or mine BTC.
This pretty much begins to explain why you don't have one entity controlling the entire blockchain. It is improbable to generate such an amount of energy to claim the entire network, no matter how rich you are or your resources.
Put very simply – the hash rate is distributed between everyone. Alright, but what happens during a Bitcoin 51 attack? As it turns out, a single entity capable of obtaining – or tricking the blockchain into thinking as much - 51% of the hash rate can mess many things for a lot of people!
What is a 51% Attack AKA Majority Attack?
So, a 51 percent attack does sound scary, and it can be, but guess what? Satoshi Nakamoto was thinking way ahead of potential disruptors when they, or even they, created the Bitcoin and blockchain back in 2008.
This type of crypto attacks can still be quite disruptive to the blockchain network; there is no denying that. If a single entity were to obtain control over the majority of the supply, i.e., rule 51 of the Internet, this means they have enough hash power to disrupt the network.
As a result, the perpetrator(s) could influence the ordering of transactions, for example, or even exclude and modify them. They could cause a bit of a double-spending problem there as well, as they could reverse their transactions after the majority has approved them of participants on the blockchain.
If an attack succeeds, it should stop some transactions, like 'denial of service,' or even eliminate some minority stakeholders from accessing the blockchain and mining, giving the parties exclusivity over the process.
Of course, this is not ideal because you still need to be generating a tremendous amount of energy, enough to power a small country for years. However, there is a silver lining to rule 51. Even when a majority attack occurs – if successful – it still can't prevent participants from creating transactions or sending them out to fellow participants.
Another thing is that even if someone was to hold most Bitcoin on the network or somehow trick the blockchain into believing this, the perp(s) are not gods. They can't make Bitcoin tokens appear out of thin air, and they can't breach your wallets and steal coins.
Are 51% Attacks Possible?
Anything is possible, and if you are asking how to hack Bitcoin or can Bitcoin be hacked, the answer is definitely. However, to deliver on this, you would need a tremendous amount of energy that would generate so much energy that you are very likely to melt through hundreds of millions of hardware for a return that would be negligible at best.
Without owning your nuclear plant, it's impossible even to begin to imagine such an attack, and skeptics would even argue that a nuclear plant may hardly be enough to generate the sheer amount of energy needed to deliver such a decisive blow to the blockchain in the first place, let alone maintain and control it in the long-term.
Let's get real for a moment here. Controlling most stakes on the blockchain seemed very likely at first, but that's why some powerful entities joined in the early days of the blockchain as guarantors and balancers.
Things could have gone wrong if those entities had decided to hog the resources and exert control, but then, Bitcoin would never have grown as much as it has today. Delivering a successful 51% attack today is impossible, given the network's volume and its constant growth.
You see, as we keep adding to the volume as participants, blockchain attacks become next to impossible because of the 51% rule. How can you control a network that takes millions of owners' collective computing power to maintain, verify, and execute?
The answer is you can't unless there is some new energy source that would allow you to claim monopoly without burning through unimaginable amounts of money. So, yes, in theory, you can deliver a blockchain hack, but here is the thing – you won't benefit from it at all.
What to Do in a Case of a 51% Attack?
By now, you are aware that completing a 51 percent attack is highly improbable in practice. While the theory work is there, seeing its realization is a challenge that is not very likely to take.
Should a 51% attack occur, there are several possible scenarios? Bitcoin whales could cut their losses, leave the network, send repercussions across the network, and destroy an entire ecosystem.
However, today, Bitcoin is so popular that it's unlikely that investors will give up without a fight. Directing Bitcoin resources will help outpace the 51% entity quickly, and participants will come together to outweigh the perpetrators.
Of course, in the event of such an attack, Bitcoin's probably going to take a severe hit, and its validity is going to be questioned, but if we have learned anything over the past years, is that no matter how hard and fast Bitcoin falls, it always finds its way to the top.
The question is if you should sell your stakes and run for the exit. It will really depend on how bad the situation is. With Bitcoin, though, we are fairly sure that even the most advanced hardware would not be able to initiate a 51 percent attack.
51% Crypto Attacks on Other Networks
Of course, Bitcoin is not the only network out there, and there are others. In fact, all cryptocurrencies are using blockchain to guarantee that they are transparent, safe,, and reliable. However, the advances made in ASIC mining hardware mean that all blockchain face the same problem.
Nefarious parties may attempt to assume control and wreak havoc across entire digital ecosystems for their personal benefit. Thankfully, 51% of crypto attacks are known, and they can be anticipated.
Developers have to face the threat of ASIC companies, which have been able to enhance the mining process, but taking on an entire blockchain is still a challenge that only a few individuals could dream of pulling off. Even then, enhancements on the blockchain's security are carried out daily, and even new players are already hedging against the 51 rule of the Internet.